Delta Air Lines said it hasn’t grown profits as much as it had hoped, amid higher fuel costs earlier this year — but the Atlanta-based carrier still expects to bring in about $5 billion in pre-tax income for 2018.
“We did not grow earnings as anticipated,” said Delta CEO Ed Bastian during the company’s annual investor day in New York on Thursday. “But the good news is we did not shrink our earnings either.”
After fuel costs went down, the company wasn’t able to increase fares as much.
“But our pricing did not step back,” Bastian said. “There’s no giveback because fuel prices came down in our business.” He said revenue will still grow 3 to 4 percent year-over-year.
A big reason for that is Delta’s increased focus on charging more for premium seats. Today, less than 50 percent of the company’s revenue come from passengers in the main cabin, where “the most price-sensitive travelers” sit, Bastian said.
As Delta replaces older aircraft with newer planes, it is putting in more premium seats.
Eight years ago, Delta was primarily a two-class carrier with first class or business class up front, and coach class in back.
Since then, the airline has added Comfort+ seats with extra legroom, Premium Select on international flights, Delta One business class suites and, at the low end, Basic Economy — with the idea of upselling travelers.
“When we thought about what individual customers want to buy from us… we found out they wanted to buy a lot more than we were supplying, and they were willing to pay for it,” said Delta president Glen Haeunstein.
Separately, Delta is preparing to announce a new route to India in early 2019, Bastian said. Hartsfield-Jackson International Airport general manager John Selden said Atlanta is competing with New York’s John F. Kennedy International for the Mumbai route.