Delta Air Lines posted a record $12.8 billion in revenue in the first quarter of the year, as demand for air travel soared and travelers paid more for flights and premium seats.
But the company still reported a quarterly net loss of $363 million, a smaller loss than the first quarter of last year, after making one-time payouts to pilots, who had not gotten a raise in more than three years.
The bonuses to pilots amounted to $735 million and came from a new contract that assured the airline would not endure a potentially devastating strike.
The pilots received a one-time payment equivalent to 14% of their pay last year plus 4% of their pay for each of the previous two years. They also got an initial pay raise of 18% with the new contract.
“We wanted to ensure that we have the very best contract to attract the very best pilots in this industry to come work for Delta,” said Delta CEO Ed Bastian in an interview with The Atlanta Journal-Constitution.
The company’s loss for the January-March 2023 quarter was about 62% narrower than its $940 million loss in the first three months of 2022. The first quarter of the year is the slowest season of the year for airlines like Delta.
The airline had a 36% year-over-year increase in operating revenue. Its operating expense increased 29% to $13 billion, including a 20% increase in payroll after hiring thousands of new employees and hiking pay across the company.
Looking ahead, in spite of concerns about economic uncertainty this year, Bastian said sales are strong. Delta has seen record advance bookings and recently had its 10 highest sales days in the company’s history.
“That portends very, very well for the strong spring and summer travel season,” Bastian said.
But the strong demand also brings challenges. Airlines and the entire aviation industry are coping with limited staffing and struggling to keep up with the onslaught of passengers.
Bastian had previously hoped for Delta’s flight capacity to be fully restored to pre-pandemic levels this summer, but said the airline has cut some flights from its schedule “to make sure that we’re able to reliably manage the summer.” That echoes similar challenges Delta dealt with last summer.
Now, it’s more likely that Delta’s flight capacity will be fully restored towards the end of this year, he said.
Delta and other airlines have also reduced flight schedules into airports in New York and Washington, D.C., after the Federal Aviation Administration warned of air traffic controller shortages in those areas. Bastian said Delta was pleased to make the adjustments because it “would otherwise be in very difficult shape for the summer.”
Strong demand for travel combined with limited airline flights often results in crowded planes and high fares. Delta’s planes averaged 81% full in the first quarter, up from 75% a year earlier.
The airline’s passenger revenue per available seat mile, a measure of how much customers pay for airline tickets, was up 27% in the first quarter compared with a year ago. Growth in sales of premium seats like first class, business class and Comfort+ seats with extra legroom is outpacing sales of regular seats in the main cabin.
Bastian said every new plane Delta gets delivered has about 1/3 of the seats in premium cabins, because those are the areas of highest growth in demand.
He said the revenue increases the airline has seen show that consumers want “to be able to get the best product available, and they’re willing to pay for it.”
Delta by the numbers
In the January-March 2023 quarter, Delta reported:
Operating revenue: $12.8 billion, up 36% year-over-year
Operating expense: $13 billion, up 29% year-over-year
Passenger traffic (in revenue passenger miles): Up 28% year-over-year
Source: Delta
