Delta CEO Ed Bastian: 'We need those offices to get reopened’ for business travel to recover

Delta Air Lines CEO Ed Bastian joins Yahoo Finance Live’s Adam Shapiro to discuss the airline’s Q4 earnings, the demand for travel in 2022 despite the rise in Omicron cases, and a profit sharing plan for employees.

Video transcript

BRIAN SOZZI: Delta announced a relatively in-line fourth quarter this morning. Yahoo Finance's Adam Shapiro caught up with Delta CEO Ed Bastian to get his take on the quarter and the path forward.

ED BASTIAN: So we expect to have a meaningful profit number for the full year in 2022. And we expect to get back to profitability in the month of March, and hopefully every month thereafter over the course of the calendar as the business continues to recover and travel demand grows. We know there's a lot of demand out there, we just need a safe spot for customers to feel confident in traveling with us-- not just within the US, but around the world.

ADAM SHAPIRO: What's the business travel recovery looking like? You were very optimistic about that. Two reports ago, we were talking about that. There were different variants that reared their heads. Where do we stand on that?

ED BASTIAN: Well, we closed the year out at roughly 60% recovered on business travel. Small business is a bit higher than that, the large corporate business a little lower than that. But in aggregate, it's been about 60%. A lot of it's tied, particularly the big company travel, to offices reopening.

And maybe it's coincidence, maybe it's not, but, you know, our survey of our big corporate customers, only about 60% of their offices are open at this point. So we need those offices to get reopened so people have a place to travel, and congregate, and meet, and continue to grow their businesses. The Omicron variant is certainly going to delay the return to office for a number of companies.

A lot of companies have plans to reopen in January. Those will probably be pushed out to the spring. So we're looking at probably 60 to 90-day delay before we start to see further growth in business travel. But January and February, because of Omicron, travel will be reduced across all categories. But by the time we get to March, given our expectation that the virus will have receded well before then, we're looking for March to be very similar to what we saw in December and then start to grow from there over the balance of the year.

ADAM SHAPIRO: If it did catch you by surprise, even with the Omicron variant rearing its head during the holiday travel season, you look at the TSA numbers and visiting friends and relatives seemed to hold steady. Was that a surprise to you, or am I getting that wrong when I look at the TSA numbers?

ED BASTIAN: No, we knew it was going to be a busy travel period and it was a busy travel period. And we did a great job of taking care of customers despite having to deal with the virus and its impact on our staff. We did have cancelations-- you know, many more than we would have liked to have had across the industry.

You know, at Delta, our cancelations peaked somewhere between 5% and 10% of our schedule. Fortunately, we had some seats on other planes we were able to re-accommodate. So almost all of our customers were able to get eventually to their destination. But it did have a disruptive impact for about two or three weeks.

Today, I'm pleased to report that our schedule is pretty close to normal. And it's been that way for the last week, the last seven days. Only about 1% of our flights are being impacted due to Omicron. And over the last-- this week since Sunday, that number is even lower than that. It's only about 20 flights a day as compared to the 4,000 we operate.

So we hopefully believe the worst is behind us. And we know within Delta, our case rates are dropping. And we think that we're going to see that across our country here soon.

ADAM SHAPIRO: I was going to ask you about February 14, traditionally when Delta does its profit-sharing announcement. But I'm curious-- there's news about rewarding the employees of Delta's prior to the 14th. Can you tell us about that?

ED BASTIAN: Well, certainly. We are enormously grateful to the great work our team has delivered this year. As you know, we are the only major airline in the US that's profitable over the back half of the year and it's entirely due to their hard work and the great service they provide. And while we're not profitable for a full year, we did authorize-- our board authorized us to make a special profit-sharing payment of the profits for the second half of the year.

And 20% of those profits are going to our people. So we're going to pay out on Valentine's Day $100 million to our people. It will be a flat check of $1,250 per person. And we can't wait to get that to them to thank them for the job they do.

BRIAN SOZZI: And you can see Delta shares are reacting favorably to those comments from Delta CEO Ed Bastian to our very own Adam Shapiro, really striking an upbeat outlook for the bottom line in terms of this year.