By Rajesh Kumar Singh
CHICAGO (Reuters) -Delta Air Lines said on Thursday its bookings have stabilized after a sharp pullback in March and April, but are at a lower level than the company’s estimates at the start of the year.
Still, the improvement was enough for the Atlanta-based carrier to provide a full-year profit outlook and forecast stronger earnings in the current quarter, sparking a rally in airline shares.
Like most U.S. airlines, Delta pulled its full-year 2025 financial forecast in April as President Donald Trump’s trade war dented consumer and business confidence, making it harder for carriers to forecast their business.
Since then, industry executives say travel demand has stabilized. Passenger traffic in the U.S., however, is still down from a year ago, leading to a decline in airfares, government data shows.
Delta’s second-quarter earnings report on Thursday reinforced that view. While the company’s passenger revenue in the June quarter was flat compared to last year, its pricing power remained weak in most geographies.
The weakness was most pronounced in the U.S. domestic market, where unit revenue – a proxy for pricing power – was down 5% from a year ago.
Company executives held out hopes of improvements to domestic airfares in the coming quarters, thanks to the industry’s plan to slash supply of price-sensitive airline seats to prevent more discounting pressure.
“We’re encouraged by (industry’s) actions to align capacity with demand as we move beyond the peak summer period,” CEO Ed Bastian told analysts. “Importantly, seats at the lower end of the market are scheduled to contract.”
Delta’s shares surged about 13%. Peers United Airlines and American Airlines were about 15% and 13%, respectively.
Southwest Airlines rose about 8% and Alaska Airlines gained about 10%.
Bastian also tried to ease concerns about the broader U.S. economy, citing robust demand for the airline’s premium services, as well as a double-digit increase in consumer spending on its co-branded credit card.
He added that the passage of Trump’s tax and spending bill, as well as continued progress in trade negotiations, was expected to boost consumer and corporate confidence in the second-half of the year and drive up travel demand.
“The fundamentals of the U.S. economy are solid,” Bastian said.
TRAVEL SPENDING OUTLOOK
In contrast to the company’s optimistic tone, consumer surveys and spending data point to an uncertain outlook in the remainder of the year.
Fewer consumers expect to spend more on travel compared to 12 months ago, according to a survey published by Bank of America last month. The bank’s debit and credit card data also showed consumer spending on airlines fell at a faster pace in June than in previous months.
