Delta closed out 2017 with its strongest corporate revenue
growth in years and expects that momentum to continue this year, executives
said in the carrier's fourth-quarter earnings call.
Both a higher volume of corporate travelers and higher fares
paid by those travelers pushed fourth-quarter corporate revenue up by the
highest percentage since 2014, Delta president Glen Hauenstein said. According
to a recent survey by Delta, more than 88 percent of corporate travel buyers expect
to maintain their spending or increase it this year. That's up 3 percentage
points year over year and "the most positive outlook we've seen in three
years," he said. The recent U.S. tax bill, which significantly lowered
corporate tax rates, seems poised to push demand up further in the first
quarter, though Delta has not yet seen effects on corporate demand materialize.
Even so, corporate fare growth has moved "a few
percentage points higher than the trough, so there's a lot of opportunity going
forward as demand continues to improve," Hauenstein said.
Total passenger revenue in the fourth quarter rose 7 percent
year over year to $8.5 billion, and a significant portion of that growth came
from Delta's branded fare initiatives. An
upgrade capability added in May enabled passengers to pay for an upgrade
using a different method of payment than the one they used to purchase the
ticket. That means business travelers confined to economy by travel policy can
move to Comfort Plus or First Class on their own dime. The initiative brought
in about $100 million in its first six months, Hauenstein said. Delta plans to
broaden it this summer to enable travelers to use miles for that purchase, he
said.
A December snowstorm in the southeastern and eastern U.S., along
with a power outage that ceased operations at Delta's Atlanta hub, caused about
a $60 million hit to the airline, with about 2,900 cancellations, CEO Ed
Bastian said.
Delta's traffic in the fourth quarter rose 2.4 percent year
over year as capacity increased 2.3 percent, edging up its load factor 0.1
percentage points to 85.2 percent. Yield increased 4.1 percent.
For the quarter, Delta reported a net income of $572 million,
down 8 percent year over year. Operating expenses rose 7 percent, including a
21 percent increase in fuel expenses. For the full year, net income declined 18
percent to $3.6 billion.
Delta also reported strong operational performance in 2017.
The carrier had 242 days with no mainline cancellations. It also had 90 days
with no cancellations across its entire platform, an increase of 10 percent
compared with 2016, Bastian said. FlightGlobal named the carrier the world's
most on-time airline in 2017, the first time a U.S. carrier has earned that
distinction in the nine-year history of its Annual Airlines On-Time Performance
Service Awards, he said.
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