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Delta CEO bullish on U.S.-U.K summer travel

Updated: Apr 17, 2021

Delta Air Lines CEO Ed Bastian is optimistic that travel between the U.S. and the UK will reopen for the summer travel season. But he's less bullish on travel to the remainder of Europe, as well as Asia and South America.

"Hopefully, early summer we will see that market open," Bastian said during the carrier's earnings call on Thursday, noting that Delta is working with the broader travel and hospitality sectors in pushing for a U.S.-U.K. travel corridor. "We're making progress in that regard."

The two countries are among the world's leaders in getting residents vaccinated, especially in comparison to other countries with large populations.

Bastian said that travel between the U.S. and select Mediterranean countries could also reemerge this summer, but overall he doesn't expect a meaningful resumption of travel between the U.S. and continental Europe soon.

"We'll probably miss most of the summer," he said.

Bastian is even more bearish on U.S.-Asia travel, expecting a broad easing of restrictions to be more than a year off, though he said the carrier is hopeful U.S-South Korea travel could open more quickly. Delta and Korean Air are joint-venture partners, and Delta also owns a 10% stake in the Asian carrier.

On the South American front, Bastian predicted broader openings could come in the winter. Chile, notably, is moving forward quickly with vaccinations. But other countries on the continent, including Brazil, have made far less progress. Meanwhile, the Brazilian Covid-19 variant is causing transmission surges in Brazil, Paraguay, Uruguay and elsewhere.

The Delta CEO's take on the international travel landscape came as the carrier reported net losses for the March quarter of $1.2 billion and pretax losses of $2.9 billion. The net-loss figure was aided considerably by the $1.2 billion Delta received in federal payroll support during the first quarter.

Nevertheless, Delta executives offered a bullish outlook, with domestic travel having begun a rapid ramp-up.

In March, said Delta president Glen Hauenstein, daily net bookings were up 50% from the January and February average. He said domestic leisure bookings are 85% recovered to 2019 levels.

Delta also turned cash-burn positive in March, with daily cash generation of $4 million compared with daily losses of $11 million for the first two months of the quarter.

Passenger revenues in the March quarter were still down 70% compared with 2019, but the carrier expects the unblocking of middle seats on May 1 to drive big improvements for the second quarter, with passenger revenues reaching as high as half of the 2019 figure. Further revenue recovery, though, will continue to be held down by low corporate and international demand, which remain approximately 80% off 2019 levels.

Hauenstein projected that Delta will reduce pretax losses by more than half in the second quarter and said that the carrier could return to profitability as soon as the third quarter.

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