DAL Delta Air Lines Inc

By Doug Cameron 

Delta Air Lines Inc. said it is buying a minority stake in Wheels Up, a private-jet operator, that will extend the Atlanta-based carrier's operations to more premium passengers.

Wheels Up and Delta's existing corporate aircraft unit will have 190 planes and a wider customer base, so planes will fly empty less often, Delta Chief Executive Ed Bastian said in an interview. He and Wheels Up wouldn't say how much Delta is investing in the New York-based company.

He said that will help cut down on emissions in the private-jet business--a focus for critics of the airline industry's efforts to tackle climate change because of the larger per-passenger carbon footprint. Mr. Bastian said he expects more pressure on the global airline industry to limit and mitigate emissions.

"This is an existential threat to the growth of our industry," he said.

Airlines, notably in Europe, are facing mounting consumer pressure to try to address these concerns by doing things such as selling carbon offsets that passengers can purchase with their tickets. Mr. Bastian said Delta hasn't done enough to publicize similar efforts. Like Delta, other U.S. and overseas airlines are focusing on reducing their carbon footprint through buying more fuel-efficient aircraft, expanding use of biofuels and cutting single-use plastics.

"We've got to get much more specific about the offsets, let the passengers see what we are doing," he said.

The investment in Wheels Up continues a diversification strategy at Delta that has included buying a jet-fuel refinery as well as investing in overseas airlines and more-ancillary businesses such as aircraft maintenance and credit cards.

The strategy has made it the most profitable of the three network carriers. Its shares are up 10% this year, outperforming American Airlines Group Inc. and United Airlines Holdings Inc.

Both those rivals have been hobbled by the grounding of their Boeing Co. 737 MAX fleets after two fatal crashes. Delta didn't operate any of the aircraft. Mr. Bastian said if global regulators recertify the MAX to fly next year, its return could add enough capacity across the industry to put downward pressure on ticket prices.

Delta said ahead of an investor meeting with analysts on Thursday that it expects capacity to grow by 4% and sales to grow by 4% to 6% next year, with targeted earnings per share of $6.75 to $7.75, in line with analysts expectations.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

December 12, 2019 07:14 ET (12:14 GMT)

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