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

Jamie Baker : And on the corporate survey work, any shifts in how individual sectors are responding? For example, is the messaging from your tech customers unchanged from what it’s been, that sort of thing?

Glen Hauenstein : I think we pointed out that the laggards are the ones that are most encouraged as you get to the fall. And I think Ed has always said, and I agree with him 100%, that your propensity to travel is directly related to whether or not you’re in the office. And as we see more and more offices trying to reopen or reopening and people are trying to get back into the — corporations trying to get people back in the office, I think that’s a great constructive backdrop for us as we head into the fall and the post Labor Day period.

Ed Bastian : I’d like to add one additional comment there. All these comparisons in terms of corporate travel, unfortunately, are still all made to 2019. And we lose sight of the fact that our economy is 20% plus or minus larger than it was in 2019. So what you’re talking about actually is there is a lot of room to improve for corporate America on travel. And I think that’s part of the underpinning why we think there’s going to — you’re going to continue to see some steady improvement here this fall, and you’re hearing it from the travel managers as well.

Operator: Your next question is coming from Conor Cunningham from Melius Research.

Conor Cunningham : Just to follow up on Jamie’s question. So you do sound a bit better on corporate travel recovering in the back half. But I’m just curious — like just to be clear, is that in your guide? Or is that additional upside if those things do come in a little better?

Glen Hauenstein : We have a continued slow and steady build in our guide. If it was to accelerate beyond what it’s been doing, that would be upside.

Conor Cunningham : Okay. That’s helpful. And then just on the domestic RASM, I think you guys are going to be one of the best in the industry, if not the best. I was just curious if you could unpack what was the outperformance? Is that purely just your core hub rebuild and coastal investment kind of coming in at higher unit revenues? Just trying to understand maybe back to Catie’s question, like the differences between regular economy seats and what Delta kind of offers out there?

Glen Hauenstein : Well, I think we said that it’s been continuing to be led by premium products and services. And our domestic rebuild has as we’ve spoken about earlier, initially focused on the coastal gateways and now — right now moving back into the core. And so we have the lapping of the investments we’ve made in the coastal gateways coming out of COVID now producing very good returns for us as well as the investments in the core, which, of course, come in at higher unit revenues. So I think it’s a combination of those two factors moving together.

Operator: Your next question is coming from Savi Syth from Raymond James.

Savi Syth: Just curious on the international capacity. It’s been growing at a faster pace in domestic given that that’s where the restoration has been to a greater degree. I was curious how long you expect international capacity growth to kind of continue to outpace domestic here?

Glen Hauenstein : Well, as capacity trends down, as we head out of restoration into a more normal growth cycle, I think you will see a pretty even distribution between domestic and international as we head into ’24. We really haven’t given any guidance on that yet. And internally, we haven’t even completed our ’24 plan yet, but I would expect it to be very similar split between domestic and international.