Delta Air Lines saw second quarter profits drop by 11% year-on-year amid higher costs and discounted economy fares across the US airline sector.
The decline to $1.5 billion came despite improved international revenue helped by strong transatlantic travel demand.
Figures for the three months to the end of June saw record total adjusted revenue of $15.4 billion, up 5.4% over the same period in 2023.
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The Atlanta-based carrier said peak summer travel demand remained strong.
Chief executive Ed Bastian said: “For the September quarter, we expect a double-digit operating margin and a pre-tax profit of approximately $1.5 billion. With strong first half results and visibility into the second half, we remain confident in our full-year guidance.”
However, he acknowledged fares had declined from a year ago as US carriers have flooded the market with seating capacity, the Financial Times reported.
While Delta has been relatively insulated thanks to its revenue from first- and business-class travellers, its economy class revenues have been affected.
“In the domestic market, as a whole, capacity is up 8% over last year, and we think that real demand this summer is probably in the 4% to 5% range,” Bastian said. “So that 3% of additional supply is causing a lot of discounting in the lower-fare buckets.”
Delta cited business travel demand having grown by double-digit levels for six consecutive months and pointed to premium revenue for the past quarter rising by 10%.
International passenger revenue was 4% higher than the same quarter in 2023.
Delta implemented the “largest ever” international summer schedule in its history with more than 1,700 weekly flights to 80 international destinations.
“Demand across the transatlantic remains very strong, with unit revenue in line with last year’s record performance excluding the impact from the summer Olympics in Paris,” the carrier said.
“Pacific and Latin America accounted for the majority of international capacity growth on continued network restoration and improving connectivity with our joint venture partners.”
However, capacity growth for the second half of the year is to be reined in, with revenue growth declining to 2%-4% in the three peak summer months.
Delta president Glen Hauenstein said: ”Peak summer travel demand remains strong and Delta is delivering elevated experiences for our customers.
“Consistent with our guidance, we generated record June quarter revenue 5.4% higher than the prior year.
“Diverse revenue streams, including premium and loyalty, contributed higher growth and margins, underpinning Delta’s industry-leading financial performance and increasing our financial durability.
“As our international network and core hubs approach full restoration and we return to a normal cadence of retiring aircraft, Delta’s capacity growth is decelerating into the second half.
“We expect September quarter capacity growth of 5% to 6% and revenue growth of 2% to 4%, with sequential improvement in unit revenue trends through the quarter.”