International air travel giant Delta Air Lines is hoping to increase hiring efforts for both onboard staff—pilots and flight attendants—and reservation and other airport staff after better-than-expected third-quarter profit helped boost a surprisingly higher demand in travel services. According to Delta Air Lines Chief Executive Ed Bastian, this growth has, unfortunately, driven up expenses. This, of course is a concern for investors, evidenced by a 3.5 percent drop in premarket trading late in the week.
To put this in another perspective, pilots for Delta received a record amount of overtime over the summer, with Delta flying on a heavier schedule than expected. Some of this business boost came out of competitors canceling flights (itself a result of the grounding of Boeing 737 MAX planes), leaving larger fleets like Delta to scoop up the passengers desperate to find alternative seats.
Now, the Atlanta-based air carrier does not own any 737 MAX planes. You may recall this was the plane model involved in two fatal crashes since March. Because of this, carriers who had scheduled flights on these planes had to quickly switch fares over to other planes; but, of course, many carriers did not have extra planes to accommodate this. This helped Delta to increase passenger volume at a time when Southwest Airlines and American Airlines (among others) saw a significant drop.
All of this in mind, Delta forecast capacity growth of approximately 4.5 percent in fourth quarter. However, the company is also saying that cost per available seat mile, excluding fuel, has also jumped between 4 and 5 percent in the same period. In addition, higher employee wages, increased demand volume, and weather incidents helped to boost costs 2.4 percent in the third quarter (again, excluding fuel).
This has contributed to net income climbing 13.1 percent to $1.5 billion the quarter ending September 30, on an adjusted revenue of $12.56 billion.
Bastian comments, “The size of the demand surprised us. Given the high volume that we’ve experienced and the demand for the product, it’s created a need for additional resources across all of our work group…”
And this, he says, has forced them to work harder to fill the open positions sooner than usual.