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Delta Air Lines Chief Executive Predicts There Will Be A Boom In Business Travel In September

Published on Jun 9 2021 12:47 PM in General Industry tagged: Trending Posts / Delta Air Lines / American Airlines

Delta Air Lines Chief Executive Predicts There Will Be A Boom In Business Travel In September

Delta Air Lines chief executive Ed Bastian has predicted that there will be a boom in business travel in September as corporate America emerges from the COVID-19 pandemic and businesses reopen, with leisure travel already fully restored.

American Airlines has also pointed to continued strength in leisure bookings and said that it is starting to see increased demand among small and medium sized enterprises and certain large corporate customers.

Shares

But investor concerns about higher fuel costs and disappointing second quarter revenue guidance from both airlines sent US airline shares sharply lower in morning trade.

The market has mostly priced in the idea of a US domestic leisure recovery and is now weighing the impact on airlines' bottom lines after heavy losses in 2020.

"Shares are either back to pre-pandemic levels or close to, and earnings aren't expected to return to those levels for at least another 18 months to two years," Cowen analyst Helane Becker said.

Uncertainty

One point of uncertainty continues to be the timing and strength of a recovery in business and international travel.

Bastian Statements

Speaking at a virtual Bernstein conference, Delta's Bastian said, "I think there's going to be a renaissance of business travel in our country, not just for the airlines, I think in general."

He cited a strong desire for people "to get back out on the road and reconnect like never before," something he said "technology can't possibly replicate."

But that does not mean that overall volume will be 20% to 30% lower from 2019, he said, as different types of business travel emerge.

Airlines have said, for example, that as more people work from remote places, they may make trips to the corporate offices once or twice a month.

"I think the lines actually will hold in just fine with where we were in 2019," Bastian said.

American Airlines President Statement

Robert Isom, president of American, said that "advancements in technology ultimately drive a need for people to be together."

Results Expectations

American said that it had positive adjusted cash flow in May for the first time since the pandemic began but still expects revenues to decline 40% in the second quarter versus 2019.

Delta said that it expects a pre-tax profit in the second half of 2021 and forecast a second-quarter pre-tax loss of between $1 billion and $1.2 billion, compared with an earlier expectation of between $1 and $1.5 billion loss.

It expects total adjusted revenue of $6 billion to $6.2 billion in the second quarter, versus Wall Street estimates of $6.2 billion.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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