Delta Air Lines (DAL) posted a second-quarter earnings miss, with CEO Ed Bastian citing prolonged pricing challenges for low-end consumers. As summer travel demand shifts into its next gear, Bastian outlines a major player that could be here to stay in the experience economy: Taylor Swift.
“Our consumers are driving the experience economy, whether it’s traveling to Europe to see a Taylor Swift concert or going to see friends in another part of that country,” Bastian told Yahoo Finance, “that’s driving a tremendous amount of our stability.”
In May, Bank of America noted significant travel spending by US consumers following Swift’s Eras Tour as it transitioned into its European leg of the tour.
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This post was written by Luke Carberry Mogan.
Well.
Shares of Delta Airlines are plunging this morning as the airline misses on profit expectations for the third quarter now profits for the second quarter.
They also came in just slightly below analysts expectations.
I had the opportunity to speak with Delta Airlines CEO Ed Bastian, and he touted the company’s record revenue for the June quarter and said that summer travel demand remains very healthy.
He did have something to say, though, about where the company is seeing some challenges within the consumer.
Take a listen.
Our consumer is very healthy.
Uh, our consumer tends to be a bit more affluent.
Uh, our our consumer, uh, tends to have more discretionary, uh, wealth and and and purchasing capability.
Our consumers tell us that one of their top, uh, uh, purchase drivers for their for their, uh, their well, their their their funds are to continue to travel.
So our consumers are driving the experience economy, whether it’s, you know, travelling to Europe to see a Taylor Swift concert or going to see friends, uh, in another part of the country that’s driving a tremendous amount of our stability.
Uh, I do acknowledge that in the lower fare, excuse me the lower end of the consumer, Um Ri, that that’s been a more challenging picture for the the airline industry.
And that’s probably what led to some of those price declines that you mentioned last year was really, really high.
Uh, but as supply came back, you’re starting to see, uh, prices start to to, uh, to to match that accordingly.
Always weird to hear that Taylor is still very much a part, Uh, and perhaps core driver of some of the experience economy right now, especially with some of the touring still taking place.
All that said and jokes aside here, this is a quarter where you look across the TS, a passenger throughput data that we’ve seen over the course of this year.
Thus far.
The number of passengers who have been in error are going through these checkpoints.
It’s running above those 2023 markers, which was the post pandemic high and also set some new records of its own.
2024 is outpacing 2023 by about 6% so that’s just about 100 4,546,000 passengers every single day.
And so, as you’re thinking about that And as you’re thinking about where this consumer is pushing back, it also comes back to some of the routes that Delta is running to here.
So that is something that certainly could challenge margins not just for Delta, but for the industry as a whole.
And I wouldn’t be surprised if we heard something similar from United Airlines from American Airlines as well here this quarter.
Yes, And I think when you take a look at the stock’s reaction here to this I mean, you’re looking at losses of nearly 9% in shares this morning, and you’re seeing that across the board when you take a look at Piers.
And the reason why is because, yes, there are reasons to be optimistic about what happened last quarter.
But when it comes to current quarter trends and some of the commentary that even you mentioned on on on the phone with you last night, Brad is pointing the fact that consumers are under pressure.
These airlines simply don’t have the pricing power that maybe they did over the last several quarters.
We’re seeing that reflected in margin.
We’re seeing that reflected even in demand numbers, uh, here, today or in the in those guidance numbers, and because of that, that’s obviously a bit worrisome on the street and a huge reason why we’re looking at the stock under a tremendous amount of pressure here this morning.
