Despite some economic indicators that suggest a sluggish economic outlook, U.S. business travel demand in the latter half of the third quarter has bounced back from the lows of the spring and early summer, executives from the largest U.S. carriers said Thursday at a Morgan Stanley conference.
After a chaotic spring featuring the introduction and subsequent postponement of some tariffs and major stock market swings helped dampen demand for corporate travel, and though U.S. job growth has been slow and inflation persistent, Delta Air Lines president Glen Hauenstein told attendees of Morgan Stanley's 13th annual Laguna conference that "we're seeing very strong domestic corporate demand into the fall, which we're very excited about."
Hauenstein added the carrier recently "actually had our highest post-pandemic corporate sales number for any day and any week in September."
Hauenstein suggested the corporate growth was more predominant on domestic U.S. routes than international routes, and Delta EVP and CFO Dan Janki said sectors including "banking, financial service technology" were "leading the way."
"It's still choppy in areas like industrials, manufacturing and those areas, but there's real momentum and strength there," Janki said.
Delta on Thursday filed with the U.S. Securities and Exchange Commission notice that it had revised its third-quarter revenue projection to a year-over-year increase of 2 percent to 4 percent, compared with the projected flat revenue to a 4 percent increase issued in July. Delta was the only presenting carrier to file an updated outlook with the SEC.
Other presenting carriers agreed corporate demand was looking up. United Airlines EVP and CFO Mike Leskinen, for example, said the "corporate recovery is leading really good."
Leskinen said overall United bookings since Labor Day for travel at least two months out had increased year over year by double-digit percentages. "That's a short trend, but I mean, the bookings are really strong, particularly corporate going into the fourth quarter," he said.
American: Demand Developing 'Nicely'
American Airlines chief strategy officer and vice chairman Stephen Johnson at the conference said "our business traffic has continued, I think, to develop nicely," but noted that some of the rebound was due to the carrier's continuing recovery from the ending last year of its controversial sales and distribution strategy that alienated some corporate clients.
"We do have a little bit of a tailwind because we are winning back corporate share as part of our sales and distribution strategy," Johnson said. But nevertheless, you can see that business traffic is staying pretty firm, particularly as you come out of August, which is a slow business travel month."
In July, American president and CEO Robert Isom during an earnings call said the carrier remained "on track to get back to our historical share of indirect channel revenue as we exit 2025." Johnson on Thursday said that American was "on track to beat the objective that we've set out in our earnings calls to restore our performance by the end of this year to where it was in 2023 before we actually started the new strategy."
Johnson noted that American hasn't had "to make any sort of crazy investments in winning back or buying back that business. … It's coming back deliberately and incrementally over time," but noted that returning to Q1 2023 levels of indirect share wasn't the carrier's goal.
"The opportunity is bigger than just returning to where we were by the end of this year," Johnson said. "In first-quarter 2023, we weren't in a great place. That was one of the reasons why we considered an alternative strategy. And so we're looking not just to finishing the year strong but also to opportunities to grow our corporate share in 2026 and 2027."
Southwest: 'Good Inflection'
Southwest Airlines president and CEO Bob Jordan at the conference agreed that "we are seeing a good inflection back in corporate right now," with "no reason to believe that won't be sustained."
Jordan said the uptick in corporate demand "feels like it is broad-based but then also specific to certain sectors. … We're seeing a steady improvement month-to-month in areas like health care, technology and professional services." He added there were some regional variations to the trend with strength in the Midwest and Southeast, particularly Nashville, Tenn.
Jordan, meanwhile, reiterated executives' statements from the carrier's July earnings call that the revenue generated by its first fees for checked bags had overperformed expectations and would total more than $350 million of earnings before interest and taxes for full-year 2025.
"We just aren't seeing a lot of customer pushback," Jordan said. "We're not seeing any evidence of book-away."