The airline said that travel demand is improving after hitting a flat spot when COVID-19 infections in the U.S. jumped over the summer, fueled by the rise of the so-called delta variant. “We are seeing bookings pick up materially over the past four or five weeks,” CEO Ed Bastian said. “As the variant has receded, people are starting to get back out.”
The airline also expects higher labor costs as it hires thousands of employees to replace some of those who left the company last year, when the pandemic’s impact on travel was most brutal. Delta shares fell more than 4% in morning trading. Business and international travel continue to lag, however — corporate travel stalled at about 40% of its pre-pandemic level. Airlines are hoping for a boost as more workers return to their offices and as the U.S. relaxes border restrictions in November.
Delta is rebuilding more of its previous schedule. The airline operated at 71% of its 2019 passenger-carrying capacity in the third quarter and expects that to rise to 80% in the fourth quarter. That will help revenue rise slightly, to more than 70% of where it stood in late 2019, the airline forecast. PoliticsSocial Security COLA largest in decades as inflation jumpsFDA spells out lower sodium goals for food industryAim to ease supply chain bottlenecks with LA port going 24/7US talks global cybersecurity without a key player: Russia
For the most part, Delta has avoided the high numbers of canceled and delayed flights that have affected rivals, like the meltdown that caused Southwest Airlines to cancel nearly 2,400 flights from Saturday through Monday. Delta had just over 20 cancellations in the same three days, according to FlightAware. In a thinly veiled critique of Southwest, Bastian said Delta has been more conservative about adding flights until it has enough employees to operate them. “Some carriers have tried to be opportunistic over the course of the pandemic to take market share, and some carriers have been a little more disciplined,” he said during an interview. “I think you see the effects.” Delta is also setting its own course on vaccine policy. The company is pushing employees to get vaccinated against COVID-19 and will impose a $200 monthly health insurance surcharge on unvaccinated employees next month.
But unlike its rivals — and in a seeming challenge to the White House — Delta continues to offer regular testing as an alternative to the shots. Major U.S. carriers have government contracts to provide airlift flights, and a recent order by President Joe Biden requires federal contractors to vaccinate their employees by Dec. 8; testing is not an option for contractors and their employees. Bastian said he has discussed the matter with administration officials, but he declined to detail those talks. He argues that if Delta can ensure that a very high percentage of employees get vaccinated, that should be good enough. He said 90% of Delta employees are already vaccinated and it will be 95% by November. “Mandates are one way to get people vaccinated,” he said. “What we’re showing is there are alternative means by which we can get people vaccinated and still meet the substance of the requirements. We will assess if we need to, but I trust we’ll be effectively vaccinated.”
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