Oct 26, 2019
Tell us about the airline’s performance.
We are having a good year. Top line revenues are up in excess of 8%. There is a strong demand for travel and Delta is well positioned to address that. But we must always watch the macro indicators, such as fuel prices and geopolitical tensions. You have to, especially as a large international carrier.
Is the US-China trade war or tensions along the Mexican border affecting business?
We are always concerned with anything that causes disruption to trade. But our US-China traffic is up 25%. They are two of the largest markets in the world and there is still strong traffic between the two countries. Cargo is the one part of our business that has been affected by trade concerns. Cargo is not a significant contributor to our bottom line though. It’s roughly $1 billion out of $50 billion in revenues. So, it’s not something that will change our strategy, but we hope the situation improves. Regarding Mexico, we have a great partner—Aeromexico. Mexico is a young market. There is a really bright future together with Aeromexico. Whatever the politics of the day it doesn’t change our long-term aspirations.
Whatever the politics of the day it doesn’t change our long-term aspirations
Are all your partnerships living up to your expectations?
Aside from the partnerships mentioned, we own 10% of Air France-KLM and there is a very strong relationship there. We hope Virgin Atlantic will join the joint venture (JV) once we get the relevant approval and we will acquire a 49% stake in Virgin Atlantic. It gives us the ability to connect over significant hubs in Europe. So far, some $2 billion has been invested in stakes in our partners. But I don’t envision a future where Delta controls them. The investment was for strategic reasons, not financial.
In brief… Delta
- As one of the four legacy carriers in the US, the airline currently operates more than 5000 daily flights across the world
- Headquartered at Atlanta, Delta Air Lines has a fleet of 918 aircraft, comprising Airbus, Boeing and McDonnell Douglas aircraft
- Delta Air Lines was founded in 1924, with the first flight taking place in June 1929.
So, you are a believer in consolidation?
If you look at the US, consolidation was one of the forces that helped stabilize the industry. And competition is still fierce—there are four major carriers about the same size. In Europe it has helped, as you can see by improving results. Consolidation allows airlines to bring scale to the market. This is a capital-intensive industry and so scale really helps. Most importantly, it benefits the consumer. Consolidation means airlines can invest in the overall product, adding quality and value.
What challenges do you see ahead for the industry?
Safety is always something you keep working at. The aviation system is the safest form of transportation in the world and we want to keep it that way. I think too many people are looking for the end of economic growth and are being too cautious. That stops investment and you end up causing what you fear. At Delta, we are investing back into the business and it is helping our profitability. Our environmental responsibility is also vital. It is in everybody’s interest to keep the planet healthy.