Delta's Drama-Free Quarter

Yes: Delta angered some frequent flyers with changes to its SkyMiles program. But that probably was just noise. The Delta profit machine keeps humming.

Dear readers,

Some U.S. low-cost airlines have warned of weak demand, resorting to deep discounts to fill airplanes. Sometimes, when executives from those airlines speak to investment analysts or reporters, you can sense fear in their voices. Because they don’t know when cost-conscious travelers will return, they can’t answer questions confidently, and it shows.

Delta’s executives have no such problem. While sharing their third-quarter earnings on Thursday, Delta’s executives had their usual swagger — the one that sounds like they’re on top of their peer group and they know it. Despite a big run-up in fuel prices, the airline racked up a pre-tax margin of 9.8 percent, with pre-tax net income of $1.5 billion. This wasn't quite 2019-style profitability — that summer, it made $1.9 billion in pre-tax net income — but considering several low-cost airlines have warned of possible losses for July-September of this year, Delta came out of the summer a big winner.

By now, you probably know what makes Delta stand out — or at least what management says makes Delta different, and thus more consistently profitable, than many competitors. On Thursday, executives highlighted their usual talking points, including the strength of Delta’s premium products, its loyalty advantage, and its powerful international franchise that relies on joint venture partners. Executives said they expect these strengths to buoy the airline into the fall and winter, even though "at the bottom end, there's some discounting," Delta president Glen Hauenstein said. And they told analysts to expect another profit for the final three months of the year, with estimated operating margin of about 10 percent.

I admire Delta’s top executives for their ability to participate in clear, concise and drama-free earnings calls. Of course, that’s easier to do when you have mostly good news to share. Because of all that good news, there wasn’t much excitement on Delta’s call, so I’ll keep it short today, focusing on a few things that caught my interest.