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Delta Air Lines painted a rosy picture of its operations during last week’s Investor Day presentation, despite not knowing the effect the Covid-19 omicron variant will have on travel in the coming months.

The company estimated it will see $200 million in profits for the fourth quarter of 2021, and that the airline will deliver “meaningful profitability in 2022 on its path to improved earnings power beyond pre-pandemic levels by 2024.” The airline also projected capacity will be at about 90 percent of 2019 levels by the end of 2022, and back to 100 percent by the end of 2023. 

“The [fourth-quarter] numbers look really quite promising,” said Delta CEO Ed Bastian. “And that puts us on a good platform to look at 2022 truly as a recovery year, but it will be a profitable year.”

The company’s domestic consumer travel volume is already above 2019 levels, while Delta’s domestic business travel volume is at about 60 percent, president Glen Hauenstein said. The international consumer segment is at about 60 percent to 65 percent, while international business travel is at about 25 percent.

Bastian noted that airline gained new leisure customers during the pandemic and its recovery but acknowledged business travel is a “different set of customers” and “no one knows” what is going to happen when that travel returns. “But we do know it’s not going to come back the way it was,” he said. “We know videoconferencing will be a substitute, and we’ve studied this a lot.”

Bastian was referencing a business travel study Delta recently completed that he said the airline nearly published but instead held off because of the omicron variant. Findings showed that roughly 30 percent of business travel, most likely related to conferences and internal meetings, “things that probably are most susceptible to doing over Zoom or videoconferencing or not seeing a direct return for your business,” might not come back, Bastian said. “But even if a third of that goes, it’s only 10 percent of overall business travel. I think that’s where the risk is.” 

The other 70 percent of business travel is split between commercial travel—people that need to be out with customers and managing their businesses—and essential travel, he continued. Bastian added that Delta expects that 70 percent share to be 100 percent recovered by 2023. “If our math’s right, maybe it’s 90 percent by 2023 that comes back in terms of the traditional form of business travel,” he said.

Bastian also noted that the new flexible way of working will enable mobility, and that’s going to feed into travel, but so will employees returning to traditional office work.

Hauenstein referenced that recent corporate survey, conducted between Nov. 29 to Dec. 10, which showed that “61 percent of [respondents had] offices open [and] that ties almost exactly to the 60 percent of business travel we have recovered,” he said, adding that they expect—”and this again is a very current survey and may push out because of omicron”—that number to be 83 percent with a 10-point improvement, and their company will accept visitors on campus. “All very positive signs.”

In response to an analyst question regarding travel policies, Hauenstein said that Delta asked corporate respondents how many would enhance their travel policy. “It’s about eight points minus two on more restrictive and plus 10 on less restrictive,” he said, adding that “in this tight labor market,” to attract top talent, companies have to make their products more competitive. For example, if Brand X tells recruits who will potentially be doing a lot of business travel that they will fly domestically on first class, “then Brand Y has to do it. That plays very, very well into our premium spectrum.”

Bastian added that anecdotally, some large corporate clients are being asked by recruits about travel policy, because “they want to travel, and they want to travel at a different level,” he said. He also is seeing companies offer more flexible upgrades and premium services “that we haven’t seen in years.” 

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