Latest news with #AndrewNocella
Reuters
13 hours ago
- Business
- Reuters
US travel bookings rebound for August, boosting companies' revenue outlook
NEW YORK, July 29 - U.S. travel companies including air carriers United Airlines (UAL.O), opens new tab and Southwest Airlines (LUV.N), opens new tab and hotel operators Hilton Worldwide (HLT.N), opens new tab and Wyndham Hotels (WH.N), opens new tab have issued a collective sigh of relief as budget-conscious Americans have started booking travel again after many put vacation plans on pause earlier this year. U.S. consumer sentiment rebounded in July from a shaky June, dinged by inflation, a weakening U.S. dollar, and President Donald Trump's trade war. That translated to a rise in spending, with travel companies seeing an uptick in bookings and now expecting stronger fourth-quarter revenue growth. Companies that primarily service price-sensitive customers or the domestic U.S. market have higher expectations for August, with some seeing the end of the third quarter as an inflection point for what has otherwise been a rocky environment in 2025. "Just as quickly as demand stepped down in early February due to this uncertainty, it appears that demand is now stepping up," United Airlines Chief Commercial Officer Andrew Nocella said on a post-earnings call, saying uncertainty has dropped in recent weeks after five months of weak demand. Hotel operator Hilton echoed those sentiments, saying the freeze in corporate and business travel spending was finally "thawing." "Given our overweighting to the domestic market, we would expect to be an outsized beneficiary of any recovery in the domestic demand environment," said Southwest CEO Robert Jordan on an investor call. The company said demand stabilized in the second quarter, and its recent bookings showed clear signs of improvement. Most U.S. airline and hotel operators withdrew or cut their financial forecasts in April and May as President Trump's trade war threw the industry into its most uncertain time since the COVID-19 pandemic. Still, there is lingering uncertainty over how the economy will fare in an ever-evolving tariff landscape and with inflation still above the U.S. Federal Reserve's desired 2% rate. Super 8 motel operator Wyndham said that it was seeing more strength in revenue per available room, an important metric in the hospitality industry, in states like Wisconsin, Michigan, Minnesota, and Missouri, indicating steady demand from blue-collar everyday travelers. "In August, we'll see a stronger summer travel season," said CFO Michele Allen. American Airlines (AAL.O), opens new tab said it expects revenue to improve sequentially in August and September. Alaska Air Group (ALK.N), opens new tab Chief Commercial Officer Andrew Harrison said closer-in bookings are coming in stronger, with "very good" activity in August. However, the uptick in demand will be more evident for hotels and airlines in the fourth quarter. For airlines, "a continuation of these demand trends is needed as a catalyst for airline stocks" as weak demand for main cabin seats has forced airlines to offer sales to fill planes, Andrew G. Didora, Bank of America equity research analyst, said in a note.
Japan Times
21-07-2025
- Business
- Japan Times
U.S. airlines reap rewards from premium travel strategy amid demand slump
U.S. airlines doubled down on high-end travel after the COVID-19 pandemic to drive up profits and reduce their vulnerability to economic swings. The strategy is paying off as the margins of carriers selling premium seats have held up despite a slump in overall travel demand. Strong demand from affluent travelers is helping airlines offset a pullback in spending by price-sensitive customers. Delta Air Lines last week reported a 5% year-on-year jump in its second-quarter premium ticket revenue, compared to a 5% decline in main cabin revenue. The 10-percentage-point gap was the widest since the pandemic, helping it post a double-digit margin in the April-June quarter. Similarly, premium cabin revenue helped United Airlines mitigate the financial hit from operational constraints at Newark airport near New York City — one of its largest hubs — and increase its earnings in the latest quarter. United's premium revenue rose 5.6% in the June quarter from a year ago. Its overall passenger revenue grew just 1.1%. The industry saw a similar trend in the first quarter when President Donald Trump's sweeping tariffs raised the specter of an economic recession, hammering airline bookings. "Premium capacity remains resilient," said United's Chief Commercial Officer Andrew Nocella. Airline executives have attributed the resilient demand for premium travel to the healthy financial conditions of U.S. households with earnings of $100,000, which account for 75% of air travel spending. While an April selloff in financial markets after Trump announced tariffs raised the risk of undermining that demand, a sharp rebound in U.S. stocks since then has eased those concerns. "Our core consumer is in good shape and continues to prioritize travel," Delta CEO Ed Bastian said last week. Trouble in the main cabin In contrast, lingering uncertainty about the broader economy and rising living costs have taken a toll on demand from less-affluent customers. Bank of America data shows, while spending by middle- and higher-income households held up in June, lower-income household spending turned negative. Low-fare carrier JetBlue Airways last month told staff that it was planning new cost-cutting measures as soft demand made achieving a breakeven operating margin in 2025 "unlikely," according to an internal memo. Summer travel season tends to be the most profitable for carriers. But weak demand for main cabin seats has forced airlines to offer sales to fill planes. Discount carriers such as Frontier and Spirit Airlines are aggressively slashing flights to prevent more discounting pressure. Airline executives say premium cabins have become "the profit differentiator" in the industry. Since premium travelers tend to be less price-sensitive, carriers expect them to be less affected by economic shifts, making their spending more stable and offering a buffer in a downturn. At Delta, premium revenue accounted for 43% of passenger revenue in the June quarter, up from 35% in 2019. It has helped the Atlanta-based carrier become a pre-tax margin leader post-pandemic. The company expects its revenue from premium cabins to surpass that from main cabins in 2027. Diversified revenues, including from premium cabins, have helped shares of Delta and United outperform the broader industry in the past two years. Encouraged by the payoff, carriers are further ramping up investments to make their premium offerings more attractive. United has unveiled new premium suites with privacy doors on its new Boeing 787-9 planes. The suites will have 27-inch screens, luxury skincare amenities, and caviar and wine pairings. Alaska Airlines is on track to increase the share of premium seats on its flights to 29% by next summer from 26% currently. Risk of supply glut Faced with weak margins, budget airlines are now also trying to tap into the high-end market. JetBlue, which has reported a profit in just two of its last nine quarters, is putting first-class seats on domestic flights and opening its first airport lounges in New York and Boston. Frontier is retrofitting the first two rows of its aircraft with first-class seats. Spirit, long known for its no-frills service, is seeking to rebrand itself as a premium airline to turn around its business. The number of premium seats in the U.S. domestic market has increased by 14% since 2019, more than three times the growth in main cabin seats, according to data from Visual Approach Analytics. The rush to add premium seats is hampering aircraft deliveries. It also risks causing a supply glut, hurting pricing power. But Alaska CEO Ben Minicucci downplayed those concerns, saying premium travel is more about an experience than a seat. "We see it as an end-to-end premium experience that people will pay for and people expect," Minicucci said in an interview.
Fast Company
18-07-2025
- Business
- Fast Company
Delta and United are using this strategy to survive the overall slump in travel demand
U.S. airlines doubled down on high-end travel after the pandemic to drive up profits and reduce their vulnerability to economic swings. The strategy is paying off as the margins of carriers selling premium seats have held up despite a slump in overall travel demand. Strong demand from affluent travelers is helping airlines offset a pullback in spending by price-sensitive customers. Delta Air Lines last week reported a 5% year-on-year jump in its second-quarter premium ticket revenue, compared to a 5% decline in main cabin revenue. The 10-percentage-point gap was the widest since the pandemic, helping it post a double-digit margin in the April-June quarter. Similarly, premium cabin revenue helped United Airlines mitigate the financial hit from operational constraints at Newark airport near New York City — one of its largest hubs — and increase its earnings in the latest quarter. United's premium revenue rose 5.6% in the June quarter from a year ago. Its overall passenger revenue grew just 1.1%. The industry saw a similar trend in the first quarter when President Donald Trump's sweeping tariffs raised the specter of an economic recession, hammering airline bookings. 'Premium capacity remains resilient,' said United's Chief Commercial Officer Andrew Nocella. Airline executives have attributed the resilient demand for premium travel to the healthy financial conditions of U.S. households with earnings of $100,000, which account for 75% of air travel spending. While an April selloff in financial markets after Trump announced tariffs raised the risk of undermining that demand, a sharp rebound in U.S. stocks since then has eased those concerns. 'Our core consumer is in good shape and continues to prioritize travel,' Delta CEO Ed Bastian said last week. TROUBLE IN MAIN CABIN In contrast, lingering uncertainty about the broader economy and rising living costs have taken a toll on demand from less-affluent customers. Bank of America data shows, while spending by middle- and higher-income households held up in June, lower-income household spending turned negative. Low-fare carrier JetBlue Airways last month told staff that it was planning new cost-cutting measures as soft demand made achieving a breakeven operating margin in 2025 'unlikely,' according to an internal memo seen by Reuters. Summer travel season tends to be the most profitable for carriers. But weak demand for main cabin seats has forced airlines to offer sales to fill planes. Discount carriers such as Frontier and Spirit Airlines are aggressively slashing flights to prevent more discounting pressure. Airline executives say premium cabins have become 'the profit differentiator' in the industry. Since premium travelers tend to be less price-sensitive, carriers expect them to be less affected by economic shifts, making their spending more stable and offering a buffer in a downturn. At Delta, premium revenue accounted for 43% of passenger revenue in the June quarter, up from 35% in 2019. It has helped the Atlanta-based carrier become a pre-tax margin leader post-pandemic. The company expects its revenue from premium cabins to surpass that from main cabins in 2027. Diversified revenues, including from premium cabins, have helped shares of Delta and United outperform the broader industry in the past two years. Encouraged by the payoff, carriers are further ramping up investments to make their premium offerings more attractive. United has unveiled new premium suites with privacy doors on its new Boeing 787-9 planes. The suites will have 27-inch screens, luxury skincare amenities, and caviar and wine pairings. Alaska Airlines is on track to increase the share of premium seats on its flights to 29% by next summer from 26% currently. RISK OF SUPPLY GLUT Faced with weak margins, budget airlines are now also trying to tap into the high-end market. JetBlue, which has reported a profit in just two of its last nine quarters, is putting first-class seats on domestic flights and opening its first airport lounges in New York and Boston. Frontier is retrofitting the first two rows of its aircraft with first-class seats. Spirit, long known for its no-frills service, is seeking to rebrand itself as a premium airline to turn around its business. The number of premium seats in the U.S. domestic market has increased by 14% since 2019, more than three times the growth in main cabin seats, according to data from Visual Approach Analytics. The rush to add premium seats is hampering aircraft deliveries. It also risks causing a supply glut, hurting pricing power. But Alaska CEO Ben Minicucci downplayed those concerns, saying premium travel is more about an experience than a seat. 'We see it as an end-to-end premium experience that people will pay for and people expect,' Minicucci said in an interview.
CTV News
18-07-2025
- Business
- CTV News
U.S. airlines reap rewards from premium travel strategy amid demand slump
United Airlines jets are parked on the tarmac at Newark Liberty International Airport, Tuesday, July 22, 2014, in Newark, N.J. (AP / Julio Cortez) CHICAGO — U.S. airlines doubled down on high-end travel after the pandemic to drive up profits and reduce their vulnerability to economic swings. The strategy is paying off as the margins of carriers selling premium seats have held up despite a slump in overall travel demand. Strong demand from affluent travelers is helping airlines offset a pullback in spending by price-sensitive customers. Delta Air Lines last week reported a five per cent year-on-year jump in its second-quarter premium ticket revenue, compared to a five per cent decline in main cabin revenue. The 10-percentage-point gap was the widest since the pandemic, helping it post a double-digit margin in the April-June quarter. Similarly, premium cabin revenue helped United Airlines mitigate the financial hit from operational constraints at Newark airport near New York City - one of its largest hubs - and increase its earnings in the latest quarter. United's premium revenue rose 5.6 per cent in the June quarter from a year ago. Its overall passenger revenue grew just 1.1 per cent. The industry saw a similar trend in the first quarter when President Donald Trump's sweeping tariffs raised the specter of an economic recession, hammering airline bookings. 'Premium capacity remains resilient,' said United's Chief Commercial Officer Andrew Nocella. Airline executives have attributed the resilient demand for premium travel to the healthy financial conditions of U.S. households with earnings of US$100,000, which account for 75 per cent of air travel spending. While an April selloff in financial markets after Trump announced tariffs raised the risk of undermining that demand, a sharp rebound in U.S. stocks since then has eased those concerns. 'Our core consumer is in good shape and continues to prioritize travel,' Delta CEO Ed Bastian said last week. Trouble in main cabin In contrast, lingering uncertainty about the broader economy and rising living costs have taken a toll on demand from less-affluent customers. Bank of America data shows, while spending by middle- and higher-income households held up in June, lower-income household spending turned negative. Low-fare carrier JetBlue Airways last month told staff that it was planning new cost-cutting measures as soft demand made achieving a breakeven operating margin in 2025 'unlikely,' according to an internal memo seen by Reuters. Summer travel season tends to be the most profitable for carriers. But weak demand for main cabin seats has forced airlines to offer sales to fill planes. Discount carriers such as Frontier and Spirit Airlines are aggressively slashing flights to prevent more discounting pressure. Airline executives say premium cabins have become 'the profit differentiator' in the industry. Since premium travelers tend to be less price-sensitive, carriers expect them to be less affected by economic shifts, making their spending more stable and offering a buffer in a downturn. At Delta, premium revenue accounted for 43 per cent of passenger revenue in the June quarter, up from 35 per cent in 2019. It has helped the Atlanta-based carrier become a pre-tax margin leader post-pandemic. The company expects its revenue from premium cabins to surpass that from main cabins in 2027. Diversified revenues, including from premium cabins, have helped shares of Delta and United outperform the broader industry in the past two years. Encouraged by the payoff, carriers are further ramping up investments to make their premium offerings more attractive. United has unveiled new premium suites with privacy doors on its new Boeing 787-9 planes. The suites will have 27-inch screens, luxury skincare amenities, and caviar and wine pairings. Alaska Airlines is on track to increase the share of premium seats on its flights to 29 per cent by next summer from 26 per cent currently. Risk of supply glut Faced with weak margins, budget airlines are now also trying to tap into the high-end market. JetBlue, which has reported a profit in just two of its last nine quarters, is putting first-class seats on domestic flights and opening its first airport lounges in New York and Boston. Frontier is retrofitting the first two rows of its aircraft with first-class seats. Spirit, long known for its no-frills service, is seeking to rebrand itself as a premium airline to turn around its business. The number of premium seats in the U.S. domestic market has increased by 14 per cent since 2019, more than three times the growth in main cabin seats, according to data from Visual Approach Analytics. The rush to add premium seats is hampering aircraft deliveries. It also risks causing a supply glut, hurting pricing power. But Alaska CEO Ben Minicucci downplayed those concerns, saying premium travel is more about an experience than a seat. 'We see it as an end-to-end premium experience that people will pay for and people expect,' Minicucci said in an interview. --- Reporting by Rajesh Kumar Singh; Editing by Rod Nickel
Reuters
18-07-2025
- Business
- Reuters
US airlines reap rewards from premium travel strategy amid demand slump
CHICAGO, July 18 (Reuters) - U.S. airlines doubled down on high-end travel after the pandemic to drive up profits and reduce their vulnerability to economic swings. The strategy is paying off as the margins of carriers selling premium seats have held up despite a slump in overall travel demand. Strong demand from affluent travelers is helping airlines offset a pullback in spending by price-sensitive customers. Delta Air Lines (DAL.N), opens new tab last week reported a 5% year-on-year jump in its second-quarter premium ticket revenue, compared to a 5% decline in main cabin revenue. The 10-percentage-point gap was the widest since the pandemic, helping it post a double-digit margin in the April-June quarter. Similarly, premium cabin revenue helped United Airlines (UAL.O), opens new tab mitigate the financial hit from operational constraints at Newark airport near New York City - one of its largest hubs - and increase its earnings in the latest quarter. United's premium revenue rose 5.6% in the June quarter from a year ago. Its overall passenger revenue grew just 1.1%. The industry saw a similar trend in the first quarter when President Donald Trump's sweeping tariffs raised the specter of an economic recession, hammering airline bookings. "Premium capacity remains resilient," said United's Chief Commercial Officer Andrew Nocella. Airline executives have attributed the resilient demand for premium travel to the healthy financial conditions of U.S. households with earnings of $100,000, which account for 75% of air travel spending. While an April selloff in financial markets after Trump announced tariffs raised the risk of undermining that demand, a sharp rebound in U.S. stocks since then has eased those concerns. "Our core consumer is in good shape and continues to prioritize travel," Delta CEO Ed Bastian said last week. In contrast, lingering uncertainty about the broader economy and rising living costs have taken a toll on demand from less-affluent customers. Bank of America data shows, while spending by middle- and higher-income households held up in June, lower-income household spending turned negative. Low-fare carrier JetBlue Airways (JBLU.O), opens new tab last month told staff that it was planning new cost-cutting measures as soft demand made achieving a breakeven operating margin in 2025 "unlikely," according to an internal memo seen by Reuters. Summer travel season tends to be the most profitable for carriers. But weak demand for main cabin seats has forced airlines to offer sales to fill planes. Discount carriers such as Frontier (ULCC.O), opens new tab and Spirit Airlines are aggressively slashing flights to prevent more discounting pressure. Airline executives say premium cabins have become "the profit differentiator" in the industry. Since premium travelers tend to be less price-sensitive, carriers expect them to be less affected by economic shifts, making their spending more stable and offering a buffer in a downturn. At Delta, premium revenue accounted for 43% of passenger revenue in the June quarter, up from 35% in 2019. It has helped the Atlanta-based carrier become a pre-tax margin leader post-pandemic. The company expects its revenue from premium cabins to surpass that from main cabins in 2027. Diversified revenues, including from premium cabins, have helped shares of Delta and United outperform the broader industry in the past two years. Encouraged by the payoff, carriers are further ramping up investments to make their premium offerings more attractive. United has unveiled new premium suites with privacy doors on its new Boeing 787-9 planes. The suites will have 27-inch screens, luxury skincare amenities, and caviar and wine pairings. Alaska Airlines (ALK.N), opens new tab is on track to increase the share of premium seats on its flights to 29% by next summer from 26% currently. Faced with weak margins, budget airlines are now also trying to tap into the high-end market. JetBlue, which has reported a profit in just two of its last nine quarters, is putting first-class seats on domestic flights and opening its first airport lounges in New York and Boston. Frontier is retrofitting the first two rows of its aircraft with first-class seats. Spirit, long known for its no-frills service, is seeking to rebrand itself as a premium airline to turn around its business. The number of premium seats in the U.S. domestic market has increased by 14% since 2019, more than three times the growth in main cabin seats, according to data from Visual Approach Analytics. The rush to add premium seats is hampering aircraft deliveries. It also risks causing a supply glut, hurting pricing power. But Alaska CEO Ben Minicucci downplayed those concerns, saying premium travel is more about an experience than a seat. "We see it as an end-to-end premium experience that people will pay for and people expect," Minicucci said in an interview.
