Delta CEO upbeat about Trump administration

Delta is optimistic that policies to be pursued by the incoming administration of president-elect Donald Trump will benefit the airline, CEO Ed Bastian said Thursday.

“We’re very excited,” Bastian during carrier’s fourth-quarter earnings call.

In particular, Bastian laid out opportunities for Delta under Trump. The president-elect has proposed spending $1 trillion on U.S. infrastructure, a plan that Bastian said could lead to improvements at important Delta bases, including Los Angeles, Salt Lake City, Seattle, New York LaGuardia and Atlanta.

“Clearly, a big deal to us,” he said.

Bastian also said that Delta is looking forward to presenting its case to the incoming administration that U.S. expansion of Gulf carriers Emirates, Etihad and Qatar should be halted if they don’t comply with open-skies agreements. Bastian accused the carriers of accepting $50 billion in prohibited government aid over the past decade. Emirates, Etihad and Qatar deny receiving subsidies.

In what appeared to be a reference to Norwegian Air International — the Ireland-based subsidiary of Norwegian Air Group that received approval last month to operate in the U.S. — Bastian also said he’s optimistic the Trump administration will protect trade deals.

Delta, United and American, along with U.S. airline industry unions, say Norwegian is using the Ireland base to take advantage of that country’s relatively lax labor laws. Norwegian says that’s not true and counters that network planning is easier under the Irish entity than it is under its original Norway-based license because, unlike Norway, Ireland is part of the EU.

Finally, Bastian said Delta could be a beneficiary of tax reform under Trump. The president-elect has proposed reducing the corporate tax rate from 35% to 15%.

His comments came as Delta reported net income of $622 million during the fourth quarter, down 37% year over year. The decrease was due in large part to the deal Delta signed with its pilots union in early December, which increased labor costs by $475 million. Delta reported operating revenue of $9.46 billion, down $44 million but $60 million more than analyst projections.

For the year, Delta reported net income of $4.73 billion, off 3% from its record-breaking 2015 performance.

Delta said it plans to reduce capacity by up to 1% during the first quarter of this year in an effort to counter the corrosive impact that growing fuel and labor costs are having on profit margins. The company projects that its cost per available seat mile, a key industry metric, will be up 5% to 7% in the first quarter.

But the airline does expect to turn the corner on another key metric. Driven partly by increased business demand after the presidential election, Delta said revenue per available seat mile should rise up to 2%, the first quarterly increase in two years.

Sourse: travelweekly.com