Delta CEO: ‘Health of the demand environment’ has helped offset rising fuel prices

Yahoo Finance Live looks at Delta Air Lines' earnings report beat and the travel industry's outlook as summer travel demands continue to rise.

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BRAD SMITH: It's been a big ticker that we've been tracking here on the day, as Delta Air has been reporting-- and they did report earlier this morning-- Q1 earnings and signaling where the consumer profile has changed and how the company may reestablish profitability. Adjusted earnings per share, they've recorded a loss of $1.23 versus $1.26 expected. Revenue, that came in above expectations at $8.16 billion versus the $8.07 billion expected.

Revenue also reached 79% of the levels that the carrier was accustomed to pre-pandemic or during the before times, if you will. And what investors turned bullish on after the results dropped was the business operations, returning to profitability during the month of March during a surge in customer demand. That customer demand comes amid higher jet fuel pricing. And I had the chance to ask Delta Airlines CEO Ed Bastian about the current pricing strategy. Here's a soundbite from that conversation.

ED BASTIAN: Well, we have a long-term plan for where we think jet fuel is going, which we continue to update. And in typical years, it takes a little bit of time before an increase in commodity costs finds its way into pricing. It's really been the unprecedented health of the demand environment that's enabled pricing to cover this higher cost of jet fuel on a more real-time basis.

BRAD SMITH: And so, Dave and Rachelle, I want to bring you in here. I don't know what your travel experience or planning experience has been like, but it seems right now that the customer profile is opting for some of the higher fares, even in spite of the passthrough costs that are clearly showing up in those ticket prices as well right now, and contributing to this strong demand that Delta is seeing.

DAVE BRIGGS: I'm cheap, but I look for bargains wherever I can find them on airlines. But you're not finding them anywhere right now. So at this point, you really just have to accept that you might have to pay an upsized cabin, an upsized seat, an upsized fare, because you're not getting deals out there. You're not able to use frequent flyer miles. We saw 11% CPI increase in airline tickets in one month alone. So this is a great environment for these airlines, really.

And once you see these prices go up, which they have each month this year, you rarely ever see them correspondingly go back down when the price of jet fuel subsides a little bit. But a lot on their plate, right? I mean, the CDC mask mandate extending 15 days, that's not going to go over well with passengers. I don't think it'll impact demand, but it's not the environment that those flight attendants want. We've seen record incidents aboard planes. Hopefully, people take that in stride.

But the big issue that he's got to figure out, Ed Bastian and all the other airline CEOs, is this worker shortage at JetBlue. Alaska Airlines said they had to cut their schedule this summer because of the employee shortage. Southwest today, Rachelle, just said their pilots union is suffering from fatigue, and you're hearing those whispers as well from several other airlines. So the employee pilot shortage a major issue for all these airlines.

RACHELLE AKUFFO: And I mean, there really is just this domino effect. I mean, we're seeing Delta paid an adjusted fuel price of $2.79 per gallon during the first quarter. They're expecting that to go up to a range of $3.20 to $3.35 a gallon. As you mentioned, we're trying to find bargains. We're trying to find good deals. I myself am very thrifty. I've never looked for anything and not looked for at least a coupon. That's just who I am as a human being. Even if I was--

BRAD SMITH: Me, too.

RACHELLE AKUFFO: --Elon Musk rich, I'm looking for that coupon. And so it's hard as you try and figure these things out. You are waiting for prices to go down. They just don't seem to be happening fast enough. All right, well, we do have--

BRAD SMITH: When you do become Elon Musk rich, we hope you don't forget the little people like us.

DAVE BRIGGS: Right?

RACHELLE AKUFFO: I would never tell you if I was Elon Musk rich. That's how you stay rich.