Strong earnings report signals mainly clear skies for Delta

There are too many airplane puns to choose from: Delta is taking off? Delta stuck a smooth landing?

The point is: Delta Air Lines posted record revenue, thanks to strong summer travel. After some tricky years for the airline industry, Delta’s latest financial results mark a 30% YoY earnings increase.

The Atlanta-based company reported profits of $1.11 billion, a 59% jump from the same period last year, when it posted net income of $695 million. This quarter’s adjusted revenue was $14.6 billion, 13% higher than the same quarter last year.

But it may not be all clear skies ahead. Delta’s strong earnings were buoyed by two things, both of which could falter in the year ahead.

The first is international travel. Solid demand has boosted Delta’s revenue, particularly in the transatlantic region. Revenue for transatlantic flights climbed 34% year over year. That marked record passenger unit revenue, or how much revenue the airline makes per paying customer, on Delta’s largest schedule to date, the company said in its earnings report.

There are some signs, however, that domestic travel might not be as resilient, though Delta anticipates soliddemand through the end of the year.

“There’s a diminution in fares’ yields—they’re down 5% in the US domestic—and that probably concerns us the most going forward,” George Ferguson, senior aerospace defense and airlines analyst at Bloomberg Intelligence, told Yahoo Finance. “It feels like the US consumer could be running out of gas.”

And then there’s premium seating and the company’s beleaguered but beloved loyalty program, SkyMiles. The carrier tracked a notable increase in premium seat demand in the latest quarter: Revenue from main cabin ticket revenue grew 12% YoY to $6.62 billion, and premium sales were up 17%, while SkyMiles’ revenue jumped 21%.

But it turned out to be too much of a good thing. The surge in elite travelers has led to overcrowding at airport lounges. Last month, as a result of overcrowding and long lines, Delta announced it would cut back on airport lounge access and make it more difficult to obtain elite frequent flyer status.

Unsurprisingly, given the popularity of its loyalty program, customer pushback was swift and passionate. Within weeks, CEO Ed Bastian said Delta “went too far” with its changes, and said the company would adjust its new policies.

Bastian didn’t provide additional details, but he told CNBC that changes could be announced in the “coming days.”

To Yahoo Finance, he explained that he’s received “a lot of feedback—everyone had their own ideas as to how we might restructure the program. Almost universally, people acknowledged that we needed to do something.”