Despite Loyalty and Credit Card Growth, Delta Reports Second Quarter Mixed Results
Joe Cortez July 14, 2021
While SkyMiles performance indicators are recovering to 2019 figures, Delta Air Lines says they still won’t be fully profitable until the second half of 2021. The airline was the first of the major legacy carriers to report second quarter numbers, stressing optimism for the rest of the year.
Delta Air Lines says they are planning to harness “the power of our differentiated brand and resilient competitive advantages” to drive towards profitability in the second half of 2021. In their second quarter 2021 results announcement, the Atlanta-based carrier reported a GAAP pre-tax income of $776 million and earnings per share of $1.02 on total revenue of $7.1 billion, but an adjusted pre-tax loss of $881 million and adjusted loss per share of $1.07 on adjusted operating revenue of $6.3 billion.
With Demand Increasing, SkyMiles Seeing Pre-Pandemic Activity
While Delta’s results are reason to look towards happier days, the carrier has yet to match their activity in 2019. The adjusted operating revenue of $6.3 billion (excluding refinery sales) declined 49 percent versus the second quarter of 2019, on 39 percent lower sellable capacity. Looking forward to the third quarter of 2021, the airline anticipates running approximately 70 percent of their capacity compared to the same time in 2019, with revenue potentially dropping between 30 and 35 percent.
Skyrocketing fuel prices are also expected to dig into Delta’s bottom line. Executives note the airline is expecting to pay as much as $2.15 per gallon. The projection is in line with the latest data from the U.S. Department of Transportation, which showed airlines paid an average of $1.98 per gallon in May 2021.
The one area where Delta is seeing increased performance is in the SkyMiles loyalty program. In June 2021 alone, the airline set a new record for flyers signing up for the frequent flyer program. In addition, credit card signups also increased, with more people not only spending on the American Express cobranded cards, but also upgrading their cards to higher tiers.
“The resilience of our American Express co-brand credit card program is a great testament to the increasing brand affinity that we have,” said Ed Bastian, chief executive of Delta, on the results call, as quoted in a Seeking Alpha transcript. “Cards spend on the Delta American Express portfolio in the month of June was 115% recovered to 2019 levels for the same month despite travel purchases still being off by 25% in that same period.”
Delta president Glen Hauenstein elaborated further on the call, noting that “cash remuneration from American Express in the month of June [exceeded] 2019 levels.” The carrier expects to remain at or above 2019 levels from credit card spending for the remainder of the year.
Delta First to Reveal Results Among Legacy Carriers
With their announcement, Delta is the first among the three legacy carriers to share their results. United Airlines will be the next to share results on July 21, 2021, followed by American Airlines on the next day.
You’re Reading
I have been searching affordable Delta tickets out of Albany, NY. Tickets are more than double their usual prices. $800 for main cabin to go from Albany to Florida for example would have been $300 two years ago.
Interesting loosing money. Delta's Tickets to Eugene Oregon are always way higher than America and United. like $350 for America and $1,600 to $2,600 for regular coach seats and they say they are not making that much. Interesting and let me tell you the planes seats are just as uncomfortable. I am not gong to pay 3 times the price. In fact you can by 1st class tickets on Americn for less than Delta's coach fare.
My first post pandemic flight was last week- on Delta. What a nice surprise! I rarely have flown Delta because mostly, they don't go my typical destinations from SFO. Yet, this time when I had to go to Denver, I could not bear to fly the crappy major carriers on the SFO-DEN route, Frontier and United. Rather than take nonstops with them, I elected to fly Delta with a change in SLC, adding another 1 or 2 hours. I would do it again in a heartbeat. In all 4 segments there and back, I received SERVICE! Just as good if not better, the seats in our A220 were COMFORTABLE even in coach! The point here is that the pandemic has caused many of us to reconsider what we will put up with, and what we won't. I predict that Delta will come roaring back to record profits, if my flight is an indication of their willingness to be better than the others.
Gee, Ed. I thought people were flocking to fly DL because of the empty middle seats? Could it possibly be that you HAVE NO FOOD??