Ed Bastian Also Isn't Sure About ULCCs

Speaking on his airline's second quarter earnings call, Delta's CEO wasn't as blunt as Scott Kirby. But he also wasn't optimistic about the discount airline model.

Dear readers,

Delta CEO Ed Bastian usually maintains a laconic presence on earnings calls, offering unrevealing answers to analysts' questions, especially the ones where he can tout the durability of his airline’s premium model. But during Thursday's second quarter call, Bastian channeled his inner Scott Kirby, speaking not only about what’s happening at Delta but also about the competitive landscape and the inferiority of the ULCC model that is struggling in today's environment and reducing pricing power for all carriers.

I can’t tell you his motives or why he made the rhetorical shift, but as Bastian offered some interesting commentary about how Frontier and Spirit have struggled despite historically strong demand, I wondered whether he sought to shift the focus from Delta's results — which were strong (and likely will be the industry's best, as usual), but not quite as robust as last year.

Delta posted a second quarter operating margin of 13.6 percent, down 15 percent year-over-year. Net income was about $1.3 billion, a decrease of 29 percent compared to the same period in 2023, while adjusted unit revenue was down 2.6 percent.

Investors didn’t love the news, and the stock lost 4 percent on Thursday. But the situation could be worse. Much worse. Frontier and Spirit won't report earnings for a few weeks, but insiders have been bracing for rough second quarter results from both ULCCs. Last month, United CEO Scott Kirby told our podcast, The Air Show, that some wounded ULCCs eventually are going to go "out of business” because they have inferior models. Insiders know Bastian never is as inflammatory as Kirby. But he also had harsh words for ULCCs.