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While Delta was holding its investor conference call in the second quarter on Thursday, it seemed that CEO Ed Bastian was about to take a victorious turn.
While other US airlines have maintenance problems, labor relations disasters and scheduling problems due to the constant stranding of the Boeing 737 Max, Delta has managed to avoid these problems. problems.
However, it was not just about avoiding the pitfalls that have hurt competition in recent months – although it certainly did not hurt. Delta also notes that its past investments are starting to pay off.
The airline raised its outlook for the year and exceeded Wall Street's expectations with record earnings of $ 1.5 billion. It also saw first-clbad ticket sales and its overall loyalty strengthen, contributing to success.
Over the past year, Delta has found that more and more customers are willing to book directly with the airline and pay for more expensive seats, removing the idea that customers are primarily looking for fares. the lowest possible.
In recent years, Delta has introduced new features and commitments related to pbadenger experience to build customer loyalty and appears to be paying off.
According to Bastian, travelers buy between 65% and 70% of premium cabin seats, including on international and domestic routes. In 2011, only 13% of first clbad national seats were sold.
However, while revenue is concentrated on premium seats, Delta is also recovering its brand and previous investments, generating loyalty in the main cabin.
While this means fewer free upgrades for frequent flyers, Delta's loyalty program also adds to its results.
Read more: Boeing has announced a major reshuffling of the leaders of its distressed team, the 737 Max, and the program manager has come out
The airline signed a new contract with American Express earlier this year to issue co-branded reward credit cards – the value of the contract was estimated at $ 7 billion a year by 2023. Revenues from the Loyalty grew by just under 20% to $ 1.2 billion this quarter.
Loyalty income is almost certainly a product of the brand. Delta's reputation as the leading US carrier in the US market, coupled with new upscale features in the economy cabin, builds loyalty and, in some cases, drives customers to pay more. Even the commitment often encouraged to have in-flight entertainment screens on most planes – compared to other airlines that cut screens – is helpful.
This has also pushed more people to book directly with the airline, rather than consulting third party sites and comparing prices with other carriers. According to Bastian, 10 to 15% of customers currently book through online travel agencies, compared to one third of customers 10 years ago.
Rhonda Crawford, vice president of global distribution and digital strategy at Delta, said at a call to Business Insider that the airline was striving to put forward its new improved products during the flight search process, thus giving pbadengers an additional reason to buy directly.
"That's why we give you a flag, when searching, to find out, are you going to be in a new plane, are you going to be in a new improved cabin?" she says.
This flag will become even more common as Delta takes delivery of the new Airbus A330neo and A220. At the investor's call, Bastian said the airline had advanced its plan to retire its aging two-year-old MD-90 fleet. The last flights on these devices will take place in 2022.
"When you get on a new plane, the feeling is very, very different," said Crawford, anticipating the future return on investment in new aircraft. "Everyone is excited about this – it's the same as when we get into a new car."
The results were good news for all, pbadengers and shareholders, as Delta shares were about to close Friday afternoon at their highest level in five years.
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