The On-Time Machine is Roaring Back
Delta is back to bragging about how many cancellation-free days it had in a quarter.
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Dear readers,
By now, you probably know that Delta eked out a net profit of $37 million for the first quarter on total revenues of $13.7 billion. That's not a great result, but in winter, any profit counts as victory.
What’s perhaps more important, for all of you insiders, is that Delta claims it has its operational mojo back. Before the pandemic, Delta repeatedly bragged about its reliability, highlighting metrics in almost every earnings press release. Along with the onboard product, Delta bet that its operational acumen gave it an advantage because high-value customers expect an airline to deliver them to their destination on schedule. About eight years ago, Delta even ran ads calling itself “the on-time machine,” a phrase it had trademarked.1
Last year, Delta’s performance was fine — not bad, but not so amazing that business travelers might choose Delta over its competitors. Delta (along with its regional partners) was fifth among U.S. airlines in completion factor — behind Allegiant, Alaska, Southwest, and American, according to Department of Transportation statistics. It was, however, first in on-time performance, at 83.5 percent, more than two points ahead of Alaska.
On completion factor, Delta still trails its 2019 figure — that year it had 165 days of zero system cancellations — but Delta is once again talking about its operational excellence. In a release this week, Delta said it "operated 26 cancel-free, brand-perfect days” between January and March, setting a company record for first quarter completion factor.2
CEO Ed Bastian said the airline made reliability a priority last summer, when it made “forward-leaning investments in the operation,” leading to “operational performance that is among the best in our history with mainline cancellations down 85 percent.”
I’m glad to see it. I know it takes more than one man to lead a company-wide initiative. Yet for years, we heard that former COO Gil West (who left early in the pandemic and is now CEO of Hertz) was the brains of Delta’s excellence. It’s nice to see that Delta has been able to get back on track without him.
Moving on from Delta’s return to its boastful ways, let’s look at some other things I found most interesting from the earnings call on Wednesday, including the airline’s incredibly tight relationship with American Express, its record first quarter load factor, its plans to increase utilization on regional jets, its comments on the return of business travel, and its expectations for the busy spring and summer travel seasons.