Delta CEO Sees U.S. Business Travel Recovery by Summer 2022
(Bloomberg) -- Delta Air Lines Inc. expects U.S. corporations to reopen for business no later than Labor Day and resume domestic travel at levels from before the pandemic by July of next year.
Domestic travel is at about 30% of 2019 levels but will quickly rebound once workers return to offices, Chief Executive Officer Ed Bastian said Thursday. Trans-Atlantic travel will begin to return in the second half, and other long-distance trips next year, he said.
“No one is going to be waiting for the government to say now is the right time to travel,” Bastian said at a Sanford C. Bernstein conference. “Businesses are going to be making those decisions and pushing their people out on the road, and I think there’s going to be a renaissance of business travel in our country.”
Corporate demand is particularly important to Delta, which reaped about 50% of its passenger revenue from business customers in 2019. International corporate travel is especially lucrative. Air travel was nearly wiped out in the early months of the coronavirus pandemic, with demand recovering in fits and starts since then.
While Bastian continues to expect that videoconferencing will reduce corporate travel 20% to 30%, “that doesn’t mean the overall volume” will be at the same level. Business travel eventually will be in line with figures from before the pandemic, he said.
“The mix is going to change, the nature of the travel is going to change,” Bastian said. “These tools are going to be a complement to business travel going forward. They’re not going to be a substitute for business travel.”
His view was echoed by Scott Kirby, the CEO of United Airlines Holdings Inc. Corporate views on travel have evolved through the past year, with trips for internal purposes no longer thought to be as discretionary as they had been during the depths of the pandemic, he said in a separate Bernstein presentation.
The leisure market has led the travel recovery, and Atlanta-based Delta has said that segment should reach its prepandemic point this month.
Delta in a regulatory filing projected a second-quarter pretax loss of $1 billion to $1.2 billion, better than the $1.5 billion loss it previously forecast.
But the airline was more cautious about when it would post a profit, projecting it will reach that mark on pretax basis in the second half. It previously forecast a profit by the third quarter “if recovery trends hold.” The company didn’t immediately return requests for elaboration.
Delta fell 3.4% to close at $46.13 in New York, in line with other major U.S. carriers. United declined 4.2% to $57.73.
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