Airlines executives saw a strong fall after a strong summer, and believe that the economic momentum will continue. Alison Sider reports in The Wall Street Journal:
Airline executives say that the resurgent travel demand over the summer didn’t immediately cool off, as it often does in the fall, even as inflation and fears of a recession affected consumer spending in other areas. This year, strong sales continued through September, airline executives said. At the same time, delayed plane deliveries and staffing shortfalls have curtailed some carriers’ growth. Passengers are paying more as airlines have been able to raise fares enough to cover higher costs of fuel and labor without derailing demand.
Flights are routinely 90% full despite the higher price tag, as consumers give priority to spending on travel and experiences over some goods, Delta Chief Executive Ed Bastian said in an interview.
Delta’s operating revenue of $12.8 billion, excluding third-party sales from the oil refinery it owns, surpassed 2019 levels by 3%, even though Delta still isn’t flying as much as it did in 2019.
Hurricane Ian, which barreled into Florida at the end of September, was another challenge. Delta said the storm caused a $35 million hit to revenue as flights were canceled and bookings in the affected areas slowed, reducing adjusted earnings by 3 cents a share.
Investors have been nervous about whether an economic downturn would cut the travel rebound short and make it difficult for airlines to cope with higher costs.
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Mr. Bastian said the fears are unwarranted. “As we look into the fourth quarter, there’s nothing that gives me pause to think that this momentum isn’t going to continue,” he said, adding that people are continuing to book trips for the winter holidays and that U.S. travelers are still heading to Europe despite travel disruptions there over the summer.
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