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

Dan Janki : Yes. We’ve held our — even as we updated our free cash flow for the year from 2 to 3, we’ve held our CapEx at 5.5. We’re still holding right around that 42, 43 aircrafts for the year, that can always move around as it has the year by a view.

Operator: Your next question is coming from Scott Group from Wolfe.

Scott Group : Glen, you said that the third quarter RASM would have been in line with seasonality if you make a few adjustments. Can you just maybe give a little bit color on the adjustments you’re sort of thinking about? And then just — I don’t know if I heard it yet. So maybe just share domestic versus international RASM expectations for the third quarter?

Glen Hauenstein : Yes. On the seasonality between 2Q and 3Q, we had some of the days shipped. The outbound 4th of July was in 2Q, which are some of the best days of the summer, as we pointed out in this. So if you take that and adjust for that, we’re about 1 point off to the normal and hopefully we can make that 1 point up in a quarter. But if you look back to last year, I think that’s the more important comp when you see the deceleration from 1 to a midpoint of minus 3. Last year’s international RASM went between 2Q and 3Q was up 16 points as the restrictions, travel restrictions went off in 2Q so that had that big surge in demand on a limited capacity last year. So I think we’re really — we’re looking at a 2Q to 3Q that’s really right in line with what we think the seasonal norms are.

Scott Group : Okay. Helpful. And then, Dan, I don’t know if I’m getting a little ahead of myself, but when I think about the inflection in CASM in the back half of this year, that’s still with a pilot deal. So as we look ahead to next year — I know you’ve already said down low single digits, but strong in thinking that the first half is going to be better than that?

Dan Janki : Well, the pilot deal you have throughout this year. And as we’ve talked about, you have every quarter, and it’s about 4 points along with the wage increase overall for all for the entire Delta workforce that came through for the year. When you think about next year and you think about what we talked about is low single digits, really, we’ve out there with mid-single-digit capacity growth. You get that benefit. And then as you get into the scale and efficiency and rebuild, that is another element that we’ll benefit from. So we get efficiency. You won’t have the repeat of the rebuild that we had this year. And then the offset to that is the continued movement as it relates to a couple of points when you think about pilots and wages into next year. And that’s what gets you to low single digits is the general framework associated with the drivers there.

Operator: Your next question is coming from Jamie Baker from JPMorgan.

Jamie Baker : So Glen, does your third quarter RASM guide assume any share pickup at the expense of any competitors that may be alternating their distribution strategy or rethinking their Northeast footprint?

Glen Hauenstein : There’s two questions in there. And the first question is, I think our third quarter is based on what we see in the second quarter and moving forward, and there haven’t been any changes to distribution strategies in the quarter. So I’d tell you, it’s what we see today just moving forward from there. And on the cessation of the NEA, listen, we compete well in New York. We’ve had a long history of competing well in New York, and we’re really confident how that — as it evolves, that we’ll be able to continue to win in New York, which has been our long-term strategy for 10 years and we are not deviating from that. So…