Delta Air Lines painted a rosy picture of its operations during last week's Investor Day presentation, despite not knowing the effect of the Covid-19 omicron variant on travel in the coming months.

The company estimated it will see $200 million in profits for the fourth quarter of 2021, and that the airline will deliver "meaningful profitability in 2022 on its path to improved earnings power beyond pre-pandemic levels by 2024." 

The airline also projected capacity will be at about 90% of 2019 levels by the end of 2022 and back to 100% by the end of 2023. 

"The [fourth-quarter] numbers look really quite promising," said Delta CEO Ed Bastian. "And that puts us on a good platform to look at 2022 truly as a recovery year, but it will be a profitable year."

The company's domestic consumer travel volume is already above 2019 levels, while Delta's domestic business travel volume is at about 60%, president Glen Hauenstein said. The international consumer segment is at about 60% to 65% of 2019 levels, while international business travel is at about 25%.

Bastian noted that Delta gained new leisure customers during the pandemic and its recovery but acknowledged business travel is a "different set of customers" and "no one knows" what is going to happen when that travel returns. "But we do know it's not going to come back the way it was," he said. "We know videoconferencing will be a substitute, and we've studied this a lot."

Bastian was referencing a business travel study Delta recently completed but did not publish. He said Delta held off because of the omicron variant. Findings showed that roughly 30% of business travel might not come back, such as conferences and internal meetings, "things that probably are most susceptible to doing over Zoom or videoconferencing or not seeing a direct return for your business," Bastian said. "But even if a third of that goes, it's only 10% of overall business travel. I think that's where the risk is." 

The other 70% of business travel is split between commercial travel -- people that need to be out with customers and managing their businesses --and essential travel, he continued. Bastian added that Delta expects that 70% share to be fully recovered by 2023. "If our math's right, maybe it's 90% by 2023 that comes back in terms of the traditional form of business travel," he said.

Bastian also noted that the new flexible way of working will enable mobility, and that's going to feed into travel, but so will employees returning to traditional office work.

Hauenstein also referenced Delta's corporate survey, conducted between Nov. 29 to Dec. 10, which showed that 61% of respondents had offices open, which "ties almost exactly to the 60% of business travel we have recovered," he said.

Bastian said that anecdotally, some large corporate clients are being asked by recruits about travel policy because "they want to travel, and they want to travel at a different level," he said. He also is seeing companies offer more flexible upgrades and premium services "that we haven't seen in years." 

Source: Business Travel News

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