Delta Air Lines' corporate travel demand displayed strong year-over-year growth but flattened in March amid economic upheaval, and with its outlook uncertain Delta plans to begin cutting capacity in August, the carrier's executives said Wednesday during its quarterly earnings call.
Delta CEO Ed Bastian suggested there was "about a 10-point velocity rate change" from year-over-year business travel demand levels "at the beginning of the year to where we are now, which is flat."
That follows comments Bastian made last month at the J.P. Morgan Industrials Conference in New York that Delta's corporate revenue had been growing 10 percent year over year in the first half of the first quarter, before flattening in the remaining weeks.
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Bastian blamed "broad economic uncertainty around global trade" for what he called the softness of demand for corporate travel and domestic main-cabin demand alike. International and premium-class travel has proven more resilient so far, he said.
U.S. President Donald Trump last week announced a range of tariffs on dozens of countries, shaking stock markets and raising concerns about continued corporate travel demand.
Of the carrier's corporate clients, "some of the more industrial companies that have been impacted on the front end of these tariffs" have reduced travel demand, Delta president Glen Hauenstein said Wednesday, including the auto industry, which he said has "taken a disproportionate hit." That was offset by increases in the banking and technology sectors, he said.
Delta's executives made their remarks a few hours before Trump postponed full implementation of the full range of tariffs, while keeping some in place.
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Delta projects "choppy" second-quarter corporate travel demand to be "flattish" year over year, Hauenstein said, "similar to what we saw in March." But Bastian noted that economic uncertainty in the past has led to reductions in corporate demand.
"In a period of maximum or potentially maximum uncertainty all companies do what they can to make sure they protect their future," Bastian said. "Historically, corporate travel has been the first thing, one of the easiest things to minimize if you are a company."
He continued: "If we continue on in this elongated sense of uncertainty, no question you'll see continued reductions in corporate travel. But I think it is premature to project too far ahead at this time."
Delta declined to offer a projection for full-year 2025 revenue, "given the broad macro uncertainty," Bastian said.
Capacity Cuts Ahead
In an effort to manage costs, Delta plans to keep its second-half 2025 capacity flat year over year, "with domestic main cabin seats declining as we align supply to demand," Bastian said.
Executives declined to offer much detail about the pending capacity cuts, but Hauenstein said that "I think we will be looking at Canada and Mexico as places that we probably want to reduce our capacity levels as we move forward," given declines in transborder demand from both countries.
The Trump administration has placed tariffs (and in some cases revoked, if temporarily) on goods from Canada and Mexico. This move has angered many citizens of both neighbors, particularly amid Trump's repeated suggestion that Canada join the U.S. as a state, triggering calls for boycotts of travel to the United States.
"In Canada, we have seen a significant drop-off in bookings," Hauenstein said. "In Mexico, it is kind of a mixed bag. Some of the markets are performing better, some are performing worse. I think there is a lot of pressure on [visiting friends and relatives] more than business traffic to Mexico right now."
Hauenstein said some capacity cuts particularly in the U.S. Southeast could begin in mid-August to correlate with usual back-to-school dates in that region.
Delta Q1 Metrics
Delta reported first-quarter passenger revenue of nearly $11.5 billion, up 3 percent year over year, and total revenue of more than $14 billion, up 2 percent.
The carrier posted first-quarter net income of $240 million, compared with $37 million one year prior.
Delta said its average first-quarter fuel price was $2.47 per gallon, down from $2.79 the year prior.
The carrier projected second-quarter revenue in a range between a 2 percent year-over-year decline to a 2 percent increase.
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