Delta is optimistic that policies to be pursued by the
incoming administration of president-elect Donald Trump will benefit the
airline, CEO Ed Bastian said Thursday.
"We're very excited," Bastian during carrier's
fourth-quarter earnings call.
In particular, Bastian laid out opportunities for Delta
under Trump. The president-elect has proposed spending $1 trillion on U.S.
infrastructure, a plan that Bastian said could lead to improvements at
important Delta bases, including Los Angeles, Salt Lake City, Seattle, New York
LaGuardia and Atlanta.
"Clearly, a big deal to us," he said.
Bastian also said that Delta is looking forward to
presenting its case to the incoming administration that U.S. expansion of Gulf
carriers Emirates, Etihad and Qatar should be halted if they don't comply with
open-skies agreements. Bastian accused the carriers of accepting $50 billion in
prohibited government aid over the past decade. Emirates, Etihad and Qatar deny
In what appeared to be a reference to Norwegian Air
International -- the Ireland-based subsidiary of Norwegian Air Group that
received approval last month to operate in the U.S. -- Bastian also said he's
optimistic the Trump administration will protect trade deals.
Delta, United and American, along with U.S. airline industry
unions, say Norwegian is using the Ireland base to take advantage of that
country's relatively lax labor laws. Norwegian says that's not true and
counters that network planning is easier under the Irish entity than it is
under its original Norway-based license because, unlike Norway, Ireland is part
of the EU.
Finally, Bastian said Delta could be a beneficiary of tax
reform under Trump. The president-elect has proposed reducing the corporate tax
rate from 35% to 15%.
His comments came as Delta reported net income of $622
million during the fourth quarter, down 37% year over year. The decrease was
due in large part to the deal Delta signed with its pilots union in early
December, which increased labor costs by $475 million. Delta reported operating
revenue of $9.46 billion, down $44 million but $60 million more than analyst
For the year, Delta reported net income of $4.73 billion,
off 3% from its record-breaking 2015 performance.
Delta said it plans to reduce capacity by up to 1% during
the first quarter of this year in an effort to counter the corrosive impact
that growing fuel and labor costs are having on profit margins. The company
projects that its cost per available seat mile, a key industry metric, will be
up 5% to 7% in the first quarter.
But the airline does expect to turn the corner on another
key metric. Driven partly by increased business demand after the presidential
election, Delta said revenue per available seat mile should rise up to 2%, the
first quarterly increase in two years.