Delta's strategy to increase its offering of higher-end seats
is paying off.
For the second quarter, Delta reported a 4.6% increase in
the average fare that passengers paid per mile -- a key airline industry metric
known as yield. The bump was driven by an 8% increase in premium seats in
the second quarter, Delta president Glen Hauenstein said during the carrier's
earnings call Thursday. Those seats drove a 20% increase in premium revenue.
Delta counts as premium all seats located in its domestic
first class, Delta One international business class and new Premium Select
cabin that for now is available almost entirely on transpacific routes. The
carrier also counts its Comfort Plus extra legroom product in the economy cabin
as a premium offering.
Delta flies just one transatlantic route with Premium
Select, but plans to offer the product throughout its international fleet by
"Our fleet sets up nicely over the next few years to
continue to expand those number of seats," Hauenstein said.
Strength in the transatlantic market also boosted Delta's
results during the second quarter. Yields on transatlantic flights were up
11.1% compared with just 2.5% in the domestic market.
"With higher fuel prices, you're going to continue to
see ticket prices go up, as well," Delta CEO Ed Bastian confidently
predicted during the call.
His comments came on the same morning that the Department of
Labor released its monthly Consumer Price Index, which showed that airfares
dropped 0.9% between May and June, the third straight month-to-month decline.
For the second quarter, Delta reported net income of $1.03
billion, down 14% year-over year.
The carrier's revenue for the period jumped 10%, to $11.78
billion. That increase was more than countered by a 15% jump in expenses, more
than half of which was due to a $578 million, or 33%, increase in fuel costs.
Delta reported earnings per share in the second quarter of
$1.77, beating analyst expectations by a nickel, according to the website