By Rajesh Kumar Singh
CHICAGO (Reuters) -Delta Air Lines on Thursday forecast a better-than-expected profit for the current quarter and full year as it expects the industry’s efforts to align capacity with demand to improve pricing power.
Shares of the carrier were up nearly 8% in premarket trading.
Like most U.S. airlines, the Atlanta-based carrier pulled its full-year 2025 financial forecast in April as President Donald Trump’s trade war dented consumer and business confidence, hitting bookings.
Since then, industry executives say travel demand has stabilized. Passenger traffic in the U.S., however, is still down from a year ago, leading to a decline in airfares, government data shows.
Delta’s second-quarter earnings report reinforced that view. The company said its bookings have stabilized and are now flat to last year. But its pricing power remains under pressure, particularly in the U.S. domestic market.
Carriers plan to slash capacity after July to match supply of airline seats with demand to prevent more discounting pressure.
Delta said the capacity rationalization is expected to improve unit revenue, a proxy for pricing power, through the second half of the year.
The company is also leaning on cost-control measures to protect margins. It expects non-fuel operating costs to be flat-to-down in the third quarter from a year ago.
CEO Ed Bastian said the airline was focused on “managing the levers within our control to deliver strong earnings and cash flow.”
Delta forecast an adjusted profit of $1.25 to $1.75 a share for the quarter ending September. The midpoint of the forecast is $1.50 per share, compared with analysts’ average estimate of $1.31, according to data compiled by LSEG.
For the full year, the company expects adjusted earnings in the range of $5.25 a share to $6.25 a share. That compares with a profit of $5.39 per share expected by analysts.
While a slump in travel demand has left all U.S. carriers reeling, a diversified revenue stream, strong demand for premium travel and the growing value of customer loyalty programs have helped Delta and rival United Airlines perform better.
For example, Delta’s premium ticket revenue was up 5% year-on-year in the second quarter even as its main-cabin ticket revenue declined from a year ago. Its loyalty revenue was up 8% year-on-year.
Meanwhile, a booming demand for aircraft maintenance and repairs drove up revenue at its Maintenance, Repair, and Overhaul business by 29% in the June quarter from a year ago.
It reported an adjusted profit of $2.10 a share in the quarter through June, compared with analysts’ average estimate of $2.06 per share, according to LSEG data.
(Reporting by Rajesh Kumar Singh in ChicagoEditing by Matthew Lewis)
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