Taylor Swift is still the driving force behind adventure travel: Delta CEO

Delta Air Lines (DAL) posted a second-quarter profit decline, with CEO Ed Bastian citing ongoing pricing issues for lower-end consumers. As summer travel demand shifts into the next gear, Bastian outlines one major player that could stay in the experience economy: Taylor Swift.

“Our consumers are driving the experience economy, whether they’re traveling to Europe to see a Taylor Swift concert or visiting friends in another part of the country,” Bastian told Yahoo Finance, “that drives a tremendous amount of our resilience.”

In May, Bank of America recorded significant travel spending by American consumers following Swift’s Eras Tour as it transitioned to the European leg of the tour.

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This article was written by Luke Carberry Mogan.

Video transcript

So.

Delta Airlines shares are plunging this morning as the airline missed third-quarter earnings expectations and now reports second-quarter earnings.

They also remained just below analysts’ expectations.

I had the opportunity to speak with Ed Bastian, CEO of Delta Airlines. He touted the company’s record third-quarter revenue and said that demand for summer travel remains very strong.

However, he did have something to say about where the company sees some challenges on the consumer side.

Take a listen.

Our consumer is very healthy.

Uh, our consumers tend to be a little bit wealthier.

Uh, our consumers tend to have more disposable wealth and purchasing power.

Our consumers tell us that one of their top reasons for spending their money is to be able to travel further.

So our consumers are the engine of the experience economy. Whether it’s a trip to Europe to see Taylor Swift in concert or visiting friends in another part of the country, they contribute a lot to our stability.

Uh, I admit that at the lower price point, excuse me, at the lower consumer end, it is a bigger challenge for the airline industry.

And that’s probably the reason for the price declines, which were very, very sharp last year, as you mentioned.

Uh, but when supply came back, you started to see prices go up accordingly.

It’s always strange to hear that Taylor is still an important part, er, and maybe even the driving force behind some of the current experience economy, especially with some of the tours still happening.

The story goes on

That being said, and all joking aside, this is a quarter where you look at the TS, which is the passenger throughput data that we’ve seen over the course of this year.

So far.

Many passengers pass through these checkpoints because they made a mistake.

It is above the 2023 levels that represented the post-pandemic peak and has also set some new records of its own.

The year 2024 exceeds the year 2023 by about 6%, which is only about 100,4546,000 passengers on any single day.

So when you think about that and where that consumer is resisting, you also come back to some of the routes that Delta serves here.

So this is something that could certainly pose a margin challenge not just for Delta but for the entire industry.

And I wouldn’t be surprised if we heard something similar from United Airlines or American Airlines this quarter.

Yeah, and I think if you look at the stock’s reaction to this, you see losses of almost 9% in shares this morning, and you see that across the board when you look at Piers.

And the reason for that is that there are actually reasons to be optimistic about the events of the last quarter.

But in terms of the trends in the current quarter and some of the comments that even you mentioned on our call with you last night, Brad points out that consumers are under pressure.

These airlines simply no longer have the pricing power they may have had in recent quarters.

This is reflected in the margin.

We’re seeing that reflected even in the demand numbers here today or in the guidance numbers, and so that’s obviously a concern on the Street and a big reason why we see the stock under tremendous pressure this morning.