As Delta Air Lines reported a $730 million profit for the first quarter of the year, CEO Ed Bastian said the company is increasingly looking beyond selling seats for growth.
The net income total was up 31 percent year-over-year. It comes on a 5 percent increase in operating revenue, in spite of what Bastian said is typically a seasonally weak quarter for flights.
Results for the trans-Atlantic market were “choppy” in the first quarter, Bastian said during remarks on the company’s earnings on CNBC’s Squawk Box news program Wednesday morning. Trans-Atlantic flights are a major source of international revenue for the airline, but it’s also “a very seasonal market,” he said, adding that the outlook for spring and summer is good.
The company reported Wednesday that 55 percent of its adjusted revenue in the quarter came from “premium products and non-ticket sources.” That’s up from less than 40 percent about 8 years ago, according to Bastian.
Delta over the next five years plans to double the size of its maintenance business, which handles lucrative contract maintenance for other carriers and aircraft operators, to about $2 billion in revenue annually. In 2018, Delta’s total operating revenue from passengers, cargo and other sources was $44.4 billion.
To enable the growth in its TechOps maintenance business, Delta last year opened a new engine repair shop and is ramping up operations of a massive new engine test cell.
The airline also announced last week that it struck an early agreement to renew its contract with American Express, which Bastian said will double its revenue from American Express to $7 billion by 2023. Airlines generate millions of dollars in revenue by selling miles to credit card issuers like American Express.
Such sources of revenue “are decoupled from air fares and provide stability in any economic environment,” Bastian said during an investor conference call Wednesday.
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