(Bloomberg) -- Delta Air Lines Inc. is confident it will return to sustained profit starting in 2022, in part fueled by “a new class” of premium travelers.
With business bookings making a slow recovery during the Covid-19 pandemic, consumer demand for the higher-priced seats typically occupied by corporate executives has climbed. The airline expects that trend to stick.
“The pandemic created a new class of customer: high-end consumers that want these products but didn’t have access previously because they were given to business customers,” Delta President Glen Hauenstein said on a conference call Wednesday to discuss third-quarter earnings.
“We do think there’s a higher level of demand for those products moving forward,” he said.
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Demand for premium-class seats, often provided free to reward elite travelers, is higher than in coach, even with business customers mostly on the sidelines. That’s why Delta will resume installing premium economy seats on long-distance international aircraft -- a process that had been interrupted by the pandemic.
“What we’re seeing is people are willing to pay us for those seats,” Hauenstein said. “That’s why we want to create more over time. We’re making sure we have enough for customers who are willing to pay for them and for complimentary upgrades.”
Domestic business travel demand was close to 50% of 2019 levels last week, Delta said. International flights have been flying about half full, a situation that is expected to improve when the U.S. opens its borders to flights from Europe next month, Chief Executive Officer Ed Bastian said.
Delta dropped 5.4% to $41.20 at 12:04 p.m. in New York after warning in its earnings report that fuel costs are likely to produce a small loss in the fourth quarter.
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