Brian Summers pokes at the Delta machine
Brian Summers, writing in his Substack, the “Airline Observer,” takes on Delta. The Atlanta-based carrier faced significant challenges in recent months, including a five-day operational meltdown caused by Crowdstrike, its chosen security vendor, in July. The meltdown lost $380 million revenue and added $170 million in extra costs, yet Delta executives, including CFO Dan Janki and President Glen Hauenstein (with operational responsibility), remain optimistic about the airline's long-term outlook. They addressed these issues at Morgan Stanley’s Laguna Conference, sharing updates on the airline's performance and addressing the Department of Transportation’s (DOT) investigation into frequent flyer programs. Note:
- Tech outage aftermath: Delta blames the Crowdstrike error for July's chaos, downplaying its long-term impact on operations and customer loyalty.
- Financial resilience: Despite setbacks, Delta expects earnings to hit or slightly exceed earlier guidance, aided by lower fuel prices and increasing revenues.
- DOT investigation: Delta's SkyMiles program is under scrutiny, alongside other major US airlines, with the government questioning whether loyalty programs exploit consumers.
- Corporate travel pivot: Delta is shifting its focus to individual traveler loyalty over traditional corporate agreements. You may remember the American CFO was just fired for doing this.
- Premium seat strategy: Delta may increase premium seating to meet rising demand, a trend echoed across the airline industry.
Delta remains arrogant as ever despite ongoing challenges, including regulatory scrutiny and operational issues, maintaining its competitive edge in a rapidly evolving industry.
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