Delta provides investor update

Delta Air Lines provided an update to investors on March 10 ahead of presenting at the J.P. Morgan Industrials conference on March 11. View the 8-K filing on updated quarterly financial guidance and presentation.

CEO Ed Bastian appeared on CNBC’s "Closing Bell: Overtime" to discuss the update and other news of the day.

Full transcript for Ed Bastian, CEO, Delta Air Lines on “Closing Bell: Overtime”

CNBC TV

March 10, 2025

Jon Fortt: Welcome back. Shares of Delta falling in overtime. News breaking moments ago that the airline is lowering its first quarter guidance after seeing softness in domestic demand. Joining us now on set is Delta Air CEO Ed Bastian and our own Phil LeBeau.

Phil LeBeau: Jon, thank you very much. Ed, thank you for being here. It's good to see you.

Ed Bastian: Good to see you.

Phil LeBeau: I think the main question that I think a lot of people have is softness in domestic demand, it sounds pretty generic. What does that mean? Where are you actually seeing the weakness?

Ed Bastian: Well, we'll be here tomorrow in New York at an investor conference. So we'll be presenting and getting into a lot more detail. In fact, I think I'll be speaking at 7:30 in the morning, so I'll have a chance to get through that. But at a high level, first, you know the first quarter is always the seasonally most difficult quarter of the year for our industry and historically somewhat tough to project. You couple that with the fact that we entered the quarter with high growth expectations. We finished the year strong. We were up, in the fourth quarter, a meaningful amount. We anticipated an 8% growth rate in terms of top line. We're going to come in at a 4% growth rate. So it hasn't snuck on backwards. But it's not growing as fast as we were anticipating. We know that GDP is one of the most important factors that our industry is correlated to. We saw in February a pretty significant shift in GDP sentiment and the output and the confidence signals that we monitor. Consumer confidence is coming down a little bit, as we all know. That's why the market is in the challenge that it is. And as a result of that, we saw companies start to pull back in terms of corporate spending - started to stall. Consumer spending started to stall. Largely domestic, largely in the close-in. But it was also exacerbated, as you know, the uncertainty that's out there and consumers in a discretionary business do not like uncertainty. And while we do believe this will be a period of time that we pass through, it is also something that we need to understand and get to calmer waters.

Phil LeBeau: Let's split these two from the consumer and the corporate CEO. And I want to talk first about corporate CEOs. You were just with a number of CEOs this last weekend. Who are the industries or what are the industries A. that you're noticing the biggest pullback in demand right now in terms of bookings, and what are they saying about their concern about the macro environment and the uncertainty that's out there right now? Because the policies in Washington, we know in a broad sense what the president wants to do, but we're a long way from seeing these things put in place.

Ed Bastian: There would be the industries you'd anticipate. It'd be aerospace and defense. It would be autos. It would be the media, entertainment and tech space. Where there are places where people just aren't quite sure what's going to happen, companies are pulling back. But at the same time, it's not just corporates. At the same time, we also have the impact of the aircraft accident that American experienced at the end of January. And then we had our own Toronto incident that was also happening all around the same time. So these events somewhat exacerbated the impact on us. So it's not just corporate and consumer. It was also a question about safety in our industry. And we do know it's safe to fly. And we do see that starting to dissipate. All these factors had a compounding effect that led to the size of the impact which we're talking about- it's about a $500 million impact in the quarter.

Phil LeBeau: Given the fact that government spending is being slashed in Washington, is that impacting your bookings right now?

Ed Bastian: Yeah, I'd say to a modest degree. You know, the government contractors, the aerospace and defense business, certainly the employees that feel threatened as to whether they're going to have a job are not out there spending money traveling. That said, you know, we're looking at this as the weakest time season of the year. We're starting to head into spring. We're starting to head into the summer. I think we'll have a much better handle on this. I think a lot of the impact we saw in the quarter is transitory and that we'll push through. The other thing that we had is our inventory systems were booked and anticipating that we would start to see a strong close in demand, higher pricing yield that never showed. So we had to recalibrate our systems all during the quarter. All these factors we're working through. So the $500 million, I feel optimistic that at least half of that is transitory as we start to go into the second quarter. And then you look at the other side of it. Oil prices are also down by $10 a barrel.

Phil LeBeau: Which certainly benefits.

Ed Bastian: Which is why we're not changing our full year forecast.

Jon Fortt: And across the industry there has been this reliance, I think, on premium. On, beyond main cabin, consumers were spending more. Has that changed also with what you're seeing in this trend?

Ed Bastian: No. There are several green shoots here. Premium is held up and continues. It's on plan. The loyalty base, the co-brand spending that we have with American Express. I was with Mr. Squeri over the weekend. That's running at a double digit clip for us in the first and second month of the year - that's held up. We see international, particularly trans-Atlantic and Trans-Pacific, holding up in our unit revenues growing into the through the winter and into the spring and summer. So we really do believe this is a domestic issue. We'll find out, of course, as the weeks go on and policies start to get decided upon. But I think we have plenty of green shoots out there to give us some room of optimism that we're going to be able to continue moving through this period of time, and we'll still be profitable this quarter. Our profit level is going to be consistent with where it was a year ago. So even with all these challenges in the quarter we just talked about, we're still delivering the same level of profit. So it's not growing, but it hasn't gone backwards.

Jon Fortt: And what about that biz leisure trend of people extending business trips and maybe bringing their families along. Does that continue or are people pulling back?

Ed Bastian: I think, Jon, that's overstated candidly. I think that's dissipated over the last couple of years, with the return to offices mandates that you have. People have learned to travel in different ways. And yes, you have hybrid travel as a bigger part than ever, but not nearly as much as it was in the early years of COVID.

Phil LeBeau: And you've been through more than a few economic cycles in your career. You hear a lot of people right now talking about potentially a recession in this country later this year. Do you get that feeling? You've seen this, you know what a recession feels like, and you see it in terms of bookings. Do you get the feeling that we potentially are headed towards a recession?

Ed Bastian: I don't feel it. As you just said, we're growing 4%, not 8%. If it was a recession, we'd be down 10%, right? So you don't see it. I think there's a lot of uncertainty, but I still think there's cautious optimism that as the uncertainty starts to clear, then businesses are going to be ready and poised to start to grow.

Jon Fortt: All right. Ed Bastian, CEO of Delta. Thank you. And our own Phil LeBeau as well. I know you're going to unpack all of that at the investment conference tomorrow, but thanks for doing it first with us here on CNBC.

 

Delta financial information and SEC filings can be found at ir.delta.com.