Please try another search
© Reuters. FILE PHOTO: A Delta Air Lines aircraft flies past the U.S. Capitol before landing at Reagan National Airport in Arlington, Virginia, U.S., January 24, 2022. REUTERS/Joshua Roberts
By Rajesh Kumar Singh and Aishwarya Nair
(Reuters) -Delta Air Lines Inc and United Airlines on Wednesday played down the risk of a U.S. economic recession and said a switch in consumer spending to services from goods would keep their businesses humming.
Delta also lifted its revenue forecast for the quarter through June despite trimming capacity, suggesting rising air fares have not deterred travelers.
"The demand is off the charts," Delta Chief Executive Ed Bastian told the Bernstein Conference.
A 40-year high inflation and rising interest rates have increased the possibility of the world's biggest economy slipping into a recession, according to some economic experts.
Bastian, however, said there was no evidence to back those concerns. "Our consumer is quite healthy," he said.
United Chief Executive Scott Kirby (NYSE:KEX), who also spoke at the conference, echoed that sentiment. "The economy is just returning to normal," Kirby said.
The surge in bookings is driven by pent-up demand as the COVID-19 pandemic limited air travel for two years. Office reopenings and easing border restrictions have also helped.
Delta is the latest American carrier to raise its revenue estimate. Last month, United, Southwest Airlines (NYSE:LUV) Co and JetBlue Corp Airways all upgraded their revenue outlook for the current quarter.
Strong consumer demand is also helping carriers deal with soaring fuel costs, which have more than doubled in the past year.
Delta raised its fuel bill estimate for the June quarter by up to 13%.
Fuel is the industry's second-biggest expense after labor, but major U.S. airlines do not hedge against volatile oil prices like most European airlines.
Instead, they typically look to offset fuel costs with higher fares. Average fares are up about 50% from a year ago, according to data from Cowen equity research.
Some analysts are concerned that rising fares could dent travel spending.
But Kirby said there was "not a hint of evidence" that rising ticket prices were hurting consumer demand.
"We're just back to normal pricing," he said. "It feels like high pricing today because we're comparing to an artificial low coming off the pandemic."
By Yasin Ebrahim Investing.com -- The S&P 500 gave up gains Monday, following an Nvidia-led slump in tech after the chipmaker cut its guidance. The S&P 500 fell 0.19%, the Dow...
By Chibuike Oguh, Kane Wu and Anirban Sen (Reuters) -Carlyle Group Inc Chief Executive Kewsong Lee has abruptly stepped down months before the scheduled end of his five-year...
By Tim Hepher PARIS (Reuters) -Airbus on Monday confirmed slower deliveries in July as a supply crunch left semi-finished jets outside its factories without engines, but bolstered...
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
I feel that this comment is:
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.