sky

Taylor Swift boost fails to allay discounting fears at Delta

Taylor Swift fans travelling to Europe for her concerts helped Delta Air Lines report record revenue levels in the second quarter but failed to allay fears about peak summer travel and the oversupply of seats. The US carrier reported adjusted revenue of $15.4b in the three months to the end of June, but its shares declined after its forecasts for the peak summer travel season fell short of analysts’ expectations, raising concerns that airlines will be forced to discount airfares. CE Ed Bastian acknowledged fares had declined from a year ago as US carriers have flooded the market with seating capacity. 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 per cent over last year, and we think that real demand this summer is probably in the 4 to 5% range,” Bastian said. “So that 3 per cent of additional supply . . . is causing a lot of discounting in the lower-fare buckets,” he said. Bastian said transatlantic travel was stronger than domestic travel in the second quarter, noting that some young US travellers were boarding flights to see pop star Taylor Swift play in Europe, where tickets were generally cheaper than in the US. He also cited the strong dollar as a driver of trips between the US and Europe, as well as continued strong appetite for travel following the pandemic.<br/>

Delta says the Olympics will cost it $100m as travelers skip Paris

For more than 10,000 Olympic athletes, making it to Paris this summer is a dream come true. Thousands of potential tourists feel otherwise. Delta Air Lines says travelers are avoiding the city this summer and booking to destinations elsewhere, amounting to a $100 million hit for the airline during an otherwise bustling summer for European travel, CEO Ed Bastian said. Delta’s Q3 profit and revenue forecast fell short of Wall Street expectations after airlines flooded the market with added flights. The airline reiterated its full-year outlook on Thursday. “Unless you’re going to the Olympics, people aren’t going to Paris ... very few are,” Bastian told CNBC. “Business travel, you know, other type of tourism is potentially going elsewhere.” Delta has the most service of any US airline to Paris and holds a joint venture with Air France. Together, the two carriers have approximately 70% market share in nonstop service between the US and France, according to consulting firm ICF.<br/>

Delta credits weak yen with boom in demand for flights to Japan

Delta Air Lines is seeing a surge in demand for flights to Japan as the yen’s fall against the dollar has led more travelers to flock to a suddenly much-cheaper Asian destination. “We have really record numbers of US tourists heading to Japan,” Delta President Glen Hauenstein said on a conference call Thursday to detail second-quarter financial results. The recent upswing in leisure adds to the recovery in US-Japan business travel since the end of the pandemic, he said. The yen has languished in recent weeks near its lowest levels against the dollar since 1986, and has been the worst performer against the greenback this year among major currencies. The slump is mainly caused by Japanese interest rates that are much lower than those in the US and elsewhere. It’s spurring tourism by boosting the buying power of inbound travelers. “What we’ve seen is really a new Japan as a destination market,” Hauenstein said, noting that years of yen strength had made it too expensive for many American tourists to afford vacations in the country. “It’s a very different world for US travelers, and they seem to be taking great advantage of that.” Asia-Pacific markets have joined Europe in attracting leisure passengers beyond the traditional end of summer travel after August, extending leisure trips through November, he said.<br/>

Boeing nearing deal to sell 777X jets to Korean Air, sources say

Boeing is nearing a potential sale of some two dozen 777X jets to Korean Air in a roughly $4b to $6b deal that could be finalised as early as July's Farnborough Airshow, industry sources said. South Korea's largest carrier has been in talks over a potential return to its traditional supplier of long-haul aircraft for months after placing a surprise order for 33 A350 jets from Boeing's European rival Airbus in March. The sources said the potential new order could involve as many as 20 to 30 of the 777X aircraft, which are worth some $198m each after typical market discounts, according to estimated delivery prices from Cirium Ascend. "We are discussing with manufacturers but nothing has been confirmed yet," an airline spokesperson said. Boeing said it does not comment on commercial discussions and referred any queries on Korean's intentions to the airline. The fleet review comes as Korean plans to purchase nearly two-thirds of smaller domestic rival Asiana for about $1.4 billion. The European Union approved the tie-up in February and the airline has indicated it expects U.S. approval by the end of October. Following the breakthrough by Europe's Airbus, Reuters reported in April that Korean was also discussing a new Boeing order focused on the 777X, an upgrade of the 777 mini-jumbo. Asked in April about Boeing's ongoing corporate crisis, Korean Air Chairman Walter Cho told CNBC that Korean was a "satisfied customer of their 777s and that's what I'm looking at right now". In June, Cho told Bloomberg News the airline was weighing a choice between the smaller Boeing 787 or more A350s. Since then, talk of a potential Boeing deal once again has focused mainly on the 777X, industry sources said. Details still have to be ironed out and there is no guarantee talks will conclude by the July 22-26 air show in Britain.<br/>