Delta's profit miss signals cost-increase spiral for U.S. airlines

Delta Air Lines fell short of profit expectations in the second quarter and said high operating costs will persist through the rest of the year, weighing on a possible rebound as carriers try to capitalize on continued strong travel demand.

So-called unit costs will climb as Delta extends constraints on its flying capacity for the remainder of 2022 in an effort to reduce flight delays and cancellations, the carrier said in a statement Wednesday. Delta’s adjusted profit was US$1.44 a share in the second quarter, missing the US$1.64 average expected by analysts. 

US carriers are trying to return to consistent profits after the rout in travel during the pandemic, and Delta said it expects “meaningful full-year profitability.” But elevated expenses and flight disruptions are limiting carriers’ ability to take advantage of higher fares, strong domestic demand and growing international travel.

“We’ve got to do everything we can, and we have been, to ensure we serve that demand and serve the quality of the operation and not try to grow beyond our means, which is tempting to do when you see the level of demand,” Chief Executive Officer Ed Bastian said in an interview. “I’d almost call it a seismic shift in where we’ve been over the last three or four months.”