Delta Air Lines Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Conor Cunningham - Melius Research - Analyst : I was hoping you could provide some context just to the high and the low end of the guide in the second quarter. Glen, you mentioned stabilizing trends, exiting the quarter, but then noticed -- noted the policy changes. So we're just trying to figure out how the weakness you're seeing in the price sensitive US domestic market doesn't eventually bleed over to international and premium as you guys highlighted those areas of strength. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 09, 2025 / 2:00PM, DAL.N - Q1 2025 Delta Air Lines Inc Earnings Call

Question: Conor Cunningham - Melius Research - Analyst : And then bigger picture, does the slowdown change your view just on the long term industry structure? Just trying to understand how your conviction level has changed with demand weakening and just if your priorities are shifting at all as you look like over the next couple of years?

Question: Andrew Didora - BofA Global Research - Analyst : Maybe first question. Just kind of a few quick ones here just on the capacity cuts that you talked about. I guess first, when we look at the 2Q schedules, are those set right now? Should we expect any changes there? And then second, just on the back half cuts, should those start over the summer or is this something that you're thinking about kind of post Labor Day and any color you can give geographically would be helpful as well?

Question: Andrew Didora - BofA Global Research - Analyst : Glen then maybe as a follow up, in a recessionary environment, can you maybe talk to maybe how the different demand cohorts have performed? Maybe corporate premium, main cabin, international? I know every downturn is different, but what have you learned from history?

Question: Catherine O'Brien - The Goldman Sachs Group, Inc. - Analyst : My first question is for Dan. So you're cutting capacity in the back half and based on 1Q actual and 2Q schedule, give or take, I think that means you'll increase capacity closer to 2% this year. So about 1 point below the low end of your initial guide. Makes a lot of sense given the uncertainty. But you're maintaining your CASM-ex outlook. You called out attrition and maintenance in your prepared remarks. But can you just give us some examples of where you have the ability to get cost out of the system this year?

Question: Duane Pfennigwerth - EVERCORE ISI - Analyst : Just on the capacity cuts, maybe you've touched on this, but what regions if you had to guess now, will you be most focused on and what fleet types as we think about maybe retirements, would you be most focused on?

Question: Duane Pfennigwerth - EVERCORE ISI - Analyst : And then on loyalty, if you can disaggregate that a little bit for us. Kind of on the same-store sales basis, how are you seeing card spend? And how much of the double digit growth is being driven by card growth versus card spend in the current environment? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 09, 2025 / 2:00PM, DAL.N - Q1 2025 Delta Air Lines Inc Earnings Call

Question: Mike Linenberg - Deutsche Bank - Analyst : I got two here for Glen. Glen, can you just talk about how bookings have trended over the last week or so? Presumably they took a hit. And are you actually seeing a notable increase in cancellations, tickets that have been booked where maybe people are backing away?

Question: Mike Linenberg - Deutsche Bank - Analyst : And then just as you think about the booking curve and maybe how it could potentially shift, sort of two things on that. One, how much of, say, transatlantic is on the books for, say, summer, right, or maybe I should ask international more broadly? And last quarter, or I'd say earlier this -- in the March quarter, you made some tweaks to how you priced along the booking curve given the fact that you weren't seeing strength close in. Are you seeing an improvement from some of those changes that you made on the pricing side, or is it still a work in progress?

Question: Thomas Fitzgerald - TD Cowen - Analyst : There's a debate about trade down in this environment. And I think the low cost carriers often say that they should see a share gains, but I feel like given that your evolution with revenue segmentation and the carrier stake that you have with the loyalty program and the global network, I feel like Delta and other legacy carriers are better positioned for -- to retain share in this environment. But I let me get your view on trade down and it's the broader competitive environment in the demand slowdown.

Question: Thomas Fitzgerald - TD Cowen - Analyst : And just as a follow up. I'd love to get your perspective on the risk that tariffs can have in your cost structure. You have a bigger Airbus order book, but you called out a Champagne partnership today. I'm just also curious on the food and the catering side, maybe on spare parts within tech ops, but then any color there and how investors should be thinking about how you manage that risk?

Question: Savanthi Syth - Raymond James - Analyst : I wanted to take a step back and just on the revenue expectations in the guide for the second quarter. Could you talk about like how you're thinking about the four entities that's and what's reflected in that guide?

Question: Savanthi Syth - Raymond James - Analyst : Just to clarify, so maybe domestic getting a little weaker and the rest similar. And I'm kind of curious as you talk about more expensive capacity, does that mean you can see more regional capacity cuts in the second half as well or is -- am I kind of reading to that incorrectly?

Question: Tom Wadewitz - UBS - Analyst : I wanted to ask you a little more on international. And I guess that what you've seen perhaps in Canada, US, and if you've seen something, Mexico, US that how have those markets played out. I guess the kind of bad news on tariffs came a bit earlier than April 2 with the kind of really high tariffs on the broader world. Can you tell us what you've seen on that and does that inform what you think could be the risk looking forward on transatlantic? So that's the first question.

Question: Tom Wadewitz - UBS - Analyst : And how do you think about the risk for transatlantic? I know you skew pretty heavily towards US point of sale. If that continues to be strong, but Europeans traveling to the US fall off meaningfully. So I guess that would affect your partner or the European airlines. But presumably, that would negatively affect the market as well just supply and demand. So how do you think about that if it's kind of one side of the equation falls off more sharply and and the US point of sale is strong? How does that affect the international?

Question: Sheila Kahyaoglu - Jefferies - Analyst : I want to ask two questions. The first on corporate. That is always on top of corporate demand surveys. So obviously, you talked about some of that changing. Maybe can you talk about how much risk there is given we're just getting back to pre-pandemic levels in the corporate and why corporate flowed? Was it just the volatility or are they actually cost cutting? And if you want to talk about industries?

Question: Sheila Kahyaoglu - Jefferies - Analyst : And maybe one for Dan. Dan, what do you need to see your flat capacity in the second half? What do you need to see to actually have reduce your fleet and increase your retirement?

Question: David Vernon - Bernstein - Analyst : So Dan, when you think about the CapEx budget going forward, how should we be thinking about the impact of tariffs on new deliveries and what that might kind of do in terms of your appetite to maybe defer some aircraft that might be coming into the network?

Question: David Vernon - Bernstein - Analyst : And then maybe Glen, just as a quick follow up. And when you're thinking about the buyups that you're seeing between main cabin and adult comfort, is there anything you're seeing in terms of how those are holding up in relation to this downturn in the main cabin? Like I mean are the biops actually getting a little bit wider right now? Are you seeing them just going to kind of stay the same absolute level? I'm just trying to get a sense for kind of how this new segmentation strategy is actually sort of acting in this weaker demand period.

Question: David Vernon - Bernstein - Analyst : And do you think that's sustainable?

Question: Scott Group - Wolfe Research - Analyst : So as others expand their premium product and some make changes like bank fees and things like that, how do you think about the risks and the opportunities that that presents?

Question: Scott Group - Wolfe Research - Analyst : And then Glen, if you look at historically in a downturn, international can be down more than domestic. And I know there's been some questions about this, but that's not happening yet. Do you think that's just the longer booking curve for international that you talked about? And this is bound to get worse in the second half of the year? Maybe that speaks to the lack of full year uncertainty, or do you think there's a reason why international just holds up better this time?

Question: Jamie Baker - JPMorgan - Analyst : Glen, does the booking curve for premium differ meaningfully from that of main cabin?

Question: Jamie Baker - JPMorgan - Analyst : And look, most of my RASM and CASM questions have been addressed, but I do have a question for Ed. Obviously, there have been a lot of new hires post-COVID. That's put some strain on operations in the past. And so for some portion of your workforce, this is going to be their first crisis or downturn or bump in the road, however you want to characterize it. Does that change how you personally, Ed, think about managing the business day to day? I'm just trying to think through the implication of lower profit sharing this year relative to last year, whether that feeds through to operations or customer service, anything like that. And any thoughts on how you might be managing the workforce differently?

Question: Brandon Oglenski - Barclays - Analyst : So Ed or Glen, I mean I know this year is different with our self-inflicted liberation tariff wounds here. But if I just rewind the tape, for the industry, I feel like the last three years, we've been talking about off-peak weakness, and that's through what's been pretty much a growing economy for the past few years. So I guess at what point does the industry say we really have to restructure the way we look at off-peak or is that just too challenging from a cost perspective for a network like yours?

Question: Brandon Oglenski - Barclays - Analyst : And Dan, maybe just one quickly on the fleet because I think you guys mentioned maybe incremental retirements. Is that correct? And how does that impact your maintenance planning and incremental maintenance spending outlook?