Optimism Reigns at United and Delta
Management teams at both airlines believe the premium strategy is the right one for this cycle.
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Last week, I wrote about how American is staking its future on regional jet flying from smaller Sunbelt cities. It’s a contrarian approach that may benefit American's shareholders someday (the jury's still out), but in the short run, it should boost United’s and Delta’s fortunes. Instead of three competitors fighting over the same coastal premium customers wishing to fly long-haul point-to-point routes, the industry has two.
If the management teams at United and Delta are as gleeful as I assume they are about American’s pivot away from New York and Los Angeles and toward Tallahassee and El Paso, they weren’t showing it on Tuesday at the J.P. Morgan 2024 Industrials Conference. Perhaps that’s because they knew American’s intentions well before the airline’s investor day earlier this month, when chief commercial officer Vasu Raja made the strategy clear. Or maybe it’s because they both ascribe to that old adage of business: If your competitor is doing something stupid, stay away and let it happen.
J.P. Morgan’s Jamie Baker, the most incisive sell-side analyst of the bunch, tried to goad United CEO Scott Kirby into criticizing his old employer. But Kirby, who has improved his communication skills1 considerably since American’s board fired him, wasn’t interested in swiping at the team in Fort Worth. Instead, during a rare investor event appearance, he endorsed his old employer’s plan, saying it’s a reasonable approach for an airline with so many Sunbelt hubs.
While Baker didn’t push Delta CEO Ed Bastian or president Glen Hauenstein so directly on American’s plan, both executives spoke confidently about their plan to invest in brand, product, and long-haul routes, including in Latin America and Asia.
Let’s take a look at what else Kirby, Bastian and Hauenstein said during Tuesday’s event.