Delta Air Lines Inc Q2 2024 Earnings Call Transcript

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

Question: Conor Cunningham - Melius Research - Analyst : Congratulate and good luck in on the golf game. In terms of the comment on September for the US domestic market, can you just help bridge the gap there? My guess is that you're pretty minimally booked for September so is just an industry supply getting better -- just given a discounting that's happening, right now. Just all hard around macro matter and so just any thoughts there would be helpful. Thank you, sir.

Question: Conor Cunningham - Melius Research - Analyst : Helpful. And then maybe bigger picture issue that we've been grappling with is just like the overall structure of the industry over the next couple of years. I get the idea that the current state of industry margin into changing outside of Europe and United. But can you just give us how confident are you not there actually be structural changes going forward? Is the pushback we get? Is that as just kind of just the same old industry that just continues to oversupply the market from time to time? So just any thoughts on the bigger industry, our industry picture that? Thank you.

Question: Conor Cunningham - Melius Research - Analyst : Great. Thank you.

Question: Savanthi Syth - Raymond James - Analyst : Just I think, Conor Boeing challenges. I well understood that the uptake from Airbus a few weeks ago was surprising. And I wonder you could talk about how you're managing through the supply chain issues and any early thoughts on how you're thinking things evolve in 2025 in terms of just managing the operation, but also in terms of kind of planning for growth.

Question: Savanthi Syth - Raymond James - Analyst : I am guessing then on an operational standpoint, maybe not expecting any improvement cited as having just extra buffers will continue.

Question: Savanthi Syth - Raymond James - Analyst : That's helpful. Thanks, Ed. And if I might, Glen, asked about on the left-hand side, you mentioned kind of encouraged that we are seeing that as kind of curious on the unit revenue pressure. Is that still coming from short haul with long haul still largely flattish even despite the growth? And where are you expecting the improvement as you go through?

Question: Savanthi Syth - Raymond James - Analyst : I appreciate it. Thank you.

Question: Jamie Baker - JPMorgan - Analyst : So Glen, this concept of unbundling the front cabin is one that I've been thinking about. And in part because unbundling segmenting the rear cabin has been such a success for Delta and a few others. I want to be careful about asking about future pricing on that, but I'm curious what the pros and cons are in terms of possibly going down this path or is one price for all how we should continue to think about the D1 cabin? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2024 / 2:00PM, DAL.N - Q2 2024 Delta Air Lines Inc Earnings Call

Question: Jamie Baker - JPMorgan - Analyst : I'm confident that we'll work it into by his schedule. And then, you know, maybe maybe for Ed or for Glen, at a high level, it seems that those airlines that are currently under duress are sort of beginning to lean into premium and maybe premium is too strong of a term. But you know, some of the more punitive ancillary charges, change fees are disappearing, but as an option of empty middle seat, Southwest and said they're looking at some sort of enhancements to their product. I'm just curious if this is something you and the team think about the conventional wisdom is that premium spoils belong to Delta, but what we're seeing today is that Delta is not entirely isolated from a low-end overcapacity. I'm just thinking down the road if we could find Delta isn't it isolated from, let's call it, pseudo-premium overcapacity? Any thoughts there? Thanks in advance.

Question: Jamie Baker - JPMorgan - Analyst : Yes, that's great. Thank you very much for that response. Take care. See you at the Investor Day.

Question: Tom Fitzgerald - TD - Analyst : Sticking with the premium cabin for a little bit, would you mind just unpacking to some of the trends in the first half and outlook in the second half is among the different buckets like D1, Premium Select, domestic first class and Comfort plus, Pay load factors booking? Anything else notable you'd call out? Thanks.

Question: Tom Fitzgerald - TD - Analyst : That's definitely helpful. Thanks for that color, Glen. And then just quickly, if I may, one for Dan, how should we think of? And this is a topic for the whole industry, I think. But just how are you that the team thinking about the PSP loans resetting to a variable rate? I think it's [SOFR] plus two and 2025 and 2026 and just in the context of the broader deleveraging story. Thanks again for the time.

Question: Mike Linenberg - Deutsche Bank - Analyst : I guess I had a question to Dan and even the team. You guys are very helpful when you guys call out where air traffic liability and how much it's up at least since your end. And I certainly think we're at a point a year where only the next few weeks that's going to shift the other way. And I think you can have a bit more pronounced for some of those who maybe having more scale in our northern hemisphere route network. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2024 / 2:00PM, DAL.N - Q2 2024 Delta Air Lines Inc Earnings Call When I think about, you know, maybe, Glen, can you talk about the extension of a transatlantic and authentic strength that you're paying now. It's deep South America and how that's going to improve in the back part ofthe air combined with corporate. How should we think about yourself air traffic liability and a half to be a much bigger hit to cash? And I still think for some carriers is going to be a bit of a wake-up call as we head into the back half of the year. But I think for you guys, like how should we think about it and maybe some of those measures that you've done to sort of mitigate? Thanks. I have a follow-up.

Question: Mike Linenberg - Deutsche Bank - Analyst : Okay. Very good.

Question: Scott Group - Wolfe Research - Analyst : So we've talked a lot about just the overall industry capacity outlook, but I wanted to get a little bit of Delta color, right. So your capacity was up 8% in the second quarter. You're saying 5% to 6% in the third quarter. I guess any color you can share on your capacity plans entering 2025 just to help get the industry supply demand more imbalanced. Do you anticipate getting GDP or sub GDP type capacity growth? Or do you think as you plan for Delta specifically, do you think you stay above GDP?

Question: Scott Group - Wolfe Research - Analyst : Okay. And then I just wanted to when I think about the guide, right, if I just take the midpoint of the Q3 guide and then the midpoint of the full year guide, it basically implies fourth quarter earnings, just the absolute earnings pretty similar with the third quarter, and that's pretty atypical rate. It's usually we usually see a step down. Any color on how to think about that dynamic this year? It might be different.

Question: Scott Group - Wolfe Research - Analyst : Thank you, guys. Appreciate the time.

Question: Sheila Kahyaoglu - Jefferies - Analyst : Maybe just taking the last two questions and putting it together, your Q4 guide and it's about wide. And how do you think about the industrial capacity issues? Does it get better, does it get more rationale? Or does it get worse from '25 of selling up delivery Cadence back?

Question: Sheila Kahyaoglu - Jefferies - Analyst : Can you maybe comment on how you think about Boeing delivering cadence improving next year and how that impacts the industry?

Question: Sheila Kahyaoglu - Jefferies - Analyst : Okay, thank you.

Question: Duane Pfennigwerth - EVERCORE ISI - Analyst : Hey, thanks. Good morning. Just to follow up on corporate travel into September and beyond. Can you remind us what the headwind was in the fourth quarter of last year from strikes in the auto and entertainment industries?

Question: Duane Pfennigwerth - EVERCORE ISI - Analyst : Thanks. And Glen maybe just to stick with you, can you talk a little bit about your outlook for Transatlantic in 3Q overall, maybe overall, and ex-Paris any bookings commentary you could point to post the Olympics? Appreciate you taking the questions. without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2024 / 2:00PM, DAL.N - Q2 2024 Delta Air Lines Inc Earnings Call

Question: Duane Pfennigwerth - EVERCORE ISI - Analyst : I didn't want to remind you of it, but on the call, but I'm glad you brought it up --

Question: Brandon Oglenski - Barclays - Analyst : Thanks for taking my question. Ed or Glen, if I can come back to Scott's first question, you know, thinking about things you can control, especially as margins are at your target yet. Ed, I know you talked a lot about industry capacity coming down into the fourth quarter, but maybe beyond your own capacity in the seats discussion, what are other levers you guys are pulling behind the scenes here to help drive improvement?

Question: Brandon Oglenski - Barclays - Analyst : I appreciate that response. And maybe, Dan, as a follow-up, can you talk about headcount trends into next year? And if you're seeing efficiencies that, you know, as you restore your core hubs? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2024 / 2:00PM, DAL.N - Q2 2024 Delta Air Lines Inc Earnings Call

Question: Brandon Oglenski - Barclays - Analyst : Thank you both.

Question: Ravi Shanker - Morgan Stanley - Analyst : I just want to follow up a couple of follow-ups here. One is on the international commentary you guys, as I said, a couple of ancillary international is looking pretty strong through the fall. Is that just in a spillover or like out from the air pocket for the Olympics spreading to other periods? Are you seeing an acceleration there? And any particular geographies is going to unpack that'd be great.

Question: Ravi Shanker - Morgan Stanley - Analyst : Understood. That's great color. And maybe a follow-up on the previous discussion on the premiumization of the industry can have as the lower cost carriers push towards premium. I just wanted to clarify your comments. Are you saying that there's more opportunity for you guys to push up kind of as the bottom comes out and do you have a sense of how high you can go on these those as I'm concerned that now as others premiumize, there's going to be more competition for a fixed set of premium demands? How do you see that playing out? without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its affiliated companies. JULY 11, 2024 / 2:00PM, DAL.N - Q2 2024 Delta Air Lines Inc Earnings Call

Question: Ravi Shanker - Morgan Stanley - Analyst : Very helpful. Thank you.

Question: Andrew Didora - BofA Global Research - Analyst : Thanks for squeezing me in here. I mean, Dan, helpful commentary on the 2% fleet growth this year. And I know you aren't prepared to give the 2025 capacity growth now. But can you maybe help us think about the 2025 fleet seat growth based on wondering you see deliveries and expected retirements over the next 18 months?

Question: Andrew Didora - BofA Global Research - Analyst : Got it. That's actually very helpful. Just as my follow up count and I know you mentioned on the last call that you felt like you still have more depth in your comfortable with. Is there any framework you can -- you have align in terms of -- just give us a sense of how you think about a proper level of debt that gets you to a much more comfortable place. Thank you.

Question: Andrew Didora - BofA Global Research - Analyst : That's great. Thank you.