Delta Air Lines (DAL) is apparently set to face a million-dollar loss due to an unexpected change in consumer behavior that’s tied to a major event that is about to kick off later this summer.
Delta CEO Ed Bastian revealed that the company is staring at a $100-million loss, and the upcoming Paris Olympics, which kicks off on July 26, is to blame, according to a new interview with CNBC.
Related: Airline issues could get worse as Boeing’s top rival faces headwind
“Unless you’re going to the Olympics, people aren’t going to Paris...very few are,” said Bastian while speaking to CNBC. “Business travel, you know, other type of tourism is potentially going elsewhere.”
In Delta’s latest earnings report, issued July 11, the company revealed a significant loss in profits. During the second quarter of 2024, it generated net income of $1.31 billion, down 29% from the second quarter of 2023. Its earnings were $2.36 per share, lower than the consensus estimate of $2.37.
Shares dropped 4% on July 11 and another 3% on Friday. The stock is down 8.1% so far in July.
Bastian’s comments come after Air France-KLM revealed in a July 1 press release that it is also set to lose €160 million to €180 million (which is about $174 million to $196 million) due to travelers avoiding Paris.
“International markets show a significant avoidance of Paris,” said Air France-KLM in the press release. “Travel between the city and other destinations is also below the usual June-August average as residents in France seem to be postponing their holidays until after the Olympic Games or considering alternative travel plans.”
The Paris Olympics is set to bring in about €6.7 billion to €11.1 billion (which equates to $7.3 billion to $12.1 billion) in net economic benefits to Paris, with tourism being a major factor, according to a recent study by the University of Limoges. Also, between 2.3 and 3.1 million tourists with tickets to the games are expected to visit the region.
More Travel:
- Disney World shuts down classic ride amidst controversy
- Boeing to get off easy for 737 Max crashes, victims’ families say
- Margaritaville and Virgin offer a new take on cruises
Despite the expected boost to Paris’ economy, flight bookings to Paris, from June 6 onwards, are expected to increase by only 10% year-over-year, according to data from ForwardKeys, which was reported by Reuters. This is a large difference from the 115% increase in tourism that Rio faced for the 2016 Rio Games.
Reuters also revealed in its report that “high prices and security concerns” are making travelers steer clear of visiting the region amid political unrest.
Related: Veteran fund manager sees world of pain coming for stocks
