Delta Air Lines, Inc. (NYSE:DAL) Q2 2023 Earnings Call Transcript

Michael Linenberg : Yes. Can I — I just want to touch back on, I think, Ed, you talked about summer being strong, maybe Glen also added to it, for international, not summer but international being strong extending into the fall. And I did note that for many of your seasonal European markets, it does look like you have extended the season into November, December instead of restarting in April and May. It seems like they are coming back in early March, maybe even February. What is — is there a secular shift that is going on here where you’re just picking up more and more international, it’s a longer season. Maybe these markets are becoming more mature on one hand? And my follow-up would be, when you look at your domestic, what’s the load factor points that are being driven by international? Is it 5 points of load, 8 points of load factor that are on a connecting itinerary?

Glen Hauenstein : Sure. On the seasonality, we have extended a lot of those seasonal deferrals because of the way we did maintenance in the past, and we’re adjusting that. I think what we want to accomplish for most of our markets is at least a full season of summer IATA, which is, of course [Indiscernible]. And so you’ve seen a lot of extensions into that period. We’ve seen travel patterns emerging post-pandemic to Europe that tend to see that Southern Europe has a longer season than it has had historically. And so we’re taking advantage of that, while Northern Europe does have a much shorter season. And so trying to work both of those issues to create a network that produces the best returns on a year-round basis. And we have a lot of improvement.

We’re going to have a really great summer, and our goal is to have a great winter as well. And so that’s what we are doing. And on the domestic portion of international journey, I think in the last call, we said it was about 10. And I think that’s about where it’s staying. And again, that depends whether you call domestic portion of international journey to the long hauls or to the short haul, including the Caribbean and Mexico. And so the number I’m giving you includes the Caribbean and Mexico, which is really part of North America. If you took the truly long hauls out of that, it would be a lower number.

Operator: Your next question is coming from Sheila Kahyaoglu from Jefferies.

Sheila Kahyaoglu : You have raised the margin guidance for the year for 12% for 2023, that implies 100 basis points of improvement in the second half. How much of that is coming from fuel and nonfuel cost? You mentioned that down to 1 to 3 points. Is it all just cost benefits? Or are you assuming some continued yield strength in the Atlantic like we were just talking about and benefit from domestic hub restoration?

Dan Janki : Yes. When you think about it, first half to second half, a couple of things to think about, certainly nonfuel is the biggest driver there. We were up in the first half, going to be down low single digits in the back half. That’s your real benefit related to that on that basis. The other benefit you have is when you think about the halves, you really have a second quarter, pretty similar when you have a fourth quarter versus a first quarter performance in that half performance. And when you put all that together, that also drives that margin performance first half versus second half.

Sheila Kahyaoglu : Great. And then if I could just ask a follow-up on cash. The CapEx assumption, does it still remain 5.5? And should we think about the skyline at 43 aircraft for the year, given you mentioned some delivery constraints?