Delta Air Lines posted a $940 million net loss for the first quarter of the year, battered by the omicron surge and higher fuel costs.
The loss wasn't unexpected as Atlanta-based Delta predicted the first quarter would be in the red because of COVID-19 impacts. But the carrier said it expects to be profitable the rest of the year.
Some of that reported loss also stems from soaring personnel costs as Delta hired thousands in recent months to accommodate surging travel demand.
Delta CEO Ed Bastian said the airline has seen "a strong rebound in demand as omicron faded," allowing the airline to turn a profit in the month of March, even though results for the full quarter amounted to a loss.
"Sales for the last five weeks have been the highest level in our company's history," Bastian said in an interview with The Atlanta Journal-Constitution. And "there's still no signs of pulling back."
Airlines have been raising fares as demand increases and fuel costs rise. Prices for domestic flights last month were 20% higher than 2019 levels, according to a report from Adobe Analytics this week. Domestic air fares are averaging $330 for a round trip, up 40% from the beginning of the year, and will continue to rise, according to a report from travel app Hopper.
The rebound in travel, particularly on domestic flights, helped push Hartsfield-Jackson International Airport, where Delta operates its largest hub, back to being the world's busiest airport in a ranking released this week.
"Our restoration is really focused on where the demand is healthy," Bastian said. "Atlanta has been healthy."
The airline reported $9.35 billion in revenue in the quarter ended March 31, 2022, up from $4.15 billion a year earlier. However, it's still below the company's first quarter 2019 revenue of $10.47 billion. Passenger revenue was 25% lower than pre-pandemic levels, offset by growth in cargo and other revenue, including sales of frequent fliers miles to credit card partner American Express.
Delta had quarterly operating expense of $10.13 billion, up from $5.55 billion a year earlier and $9.45 billion in 2019.
Aircraft fuel expense, the company's second largest cost, doubled compared with a year earlier to about $2.09 billion, with the airline paying higher fuel prices and flying more. Bastian said Delta's oil refinery helped to reduce the airline's fuel costs by about $50 million in the quarter.
The airline's largest expense, salaries and related costs, was up 28.3% year-over-year. During the pandemic, the company slashed its payroll through buyouts and early retirements, then had to quickly ramp up staffing as travel recovered. Bastian said the company has hired nearly 15,000 people since the start of 2021 and expects to hire roughly 1,000 more to prepare for the summer rush.
For the second quarter, Delta president Glen Hauenstein said revenue will reach 93% to 97% of pre-pandemic levels, with 84% of flight capacity restored. There's a potential to restore 100% of flight capacity by the end of this year, according to the airline.
Fares have risen as business travel recovers with offices reopening and travel restrictions easing, according to Delta. Domestic corporate sales were about 70% recovered in March, the airline said, while international corporate sales were 50% recovered.
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Delta's recovery, by region
(First quarter revenue, capacity compared with pre-pandemic first quarter 2019.)
Domestic
$5.56 billion, capacity down 7%
International
Atlantic: $539 million, capacity down 33%
Latin America: $680 million, capacity down 12%
Pacific: $125 million, capacity down 69%
(Source: Delta Air Lines)
