Watch: Delta CEO says travel spending surge to last 'several years'

Delta Air Lines second quarter results topped analyst estimates. Delta Air Lines CEO Ed Bastian spoke to Yahoo Finance Live about the company's results and why he thinks the surge in travel spending is going to last for quite a while.

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- Switching gears here. Delta Airlines stock surging today as increased travel drove record-high revenue and profit for the company. I spoke to Delta CEO, Ed Bastian, about the longevity of the travel surge, corporate travel, SkyMiles, and much, much more.

ED BASTIAN: I think it's going to persist for quite some time. When we look at the health of our consumers, which is principally a premium consumer, we look at their top priority for spend is in premium travel experience. When you look at on an economic level, the flip that we've seen for goods is overtaking services in our economy, and services are coming back. And actually, the reductions in goods purchases are funding that service spend returning.

We think there's easily several years of this continuing because the pandemic was a three-year phenomenon. I expect on the other side of it, we're going to see just as long a recovery back to the norms where we were previously. And Brad, I'd say there's one other thing on top of that, we all look back to 19, but our economy is also over 20% larger than it was in 19 as well. So that's also helping fuel the larger gains that we're seeing.

- Even within the several years out timeline that you're tracking within the rest of this year, how are even early September quarter bookings tracking against either year over year trends that we've seen or even some of the higher pre-pandemic comps?

ED BASTIAN: What we see in our call bookings is really more of the same that we've been seeing all year. Our international bookings and demand look really strong. We do see seasonality returning post-Labor Day as we would typically see with some of the domestic travel behaviors changing a bit as schools reopen. But we also know hybrid work has changed how people travel, and I think that's offsetting any kind of reduction that we might see with back to school.

And corporate travel is still below where we were previously, but we think there's going to continue to be a slow but steady improvement as companies continue to encourage a return to office environment. So I think we're looking at a very, very strong Q3 as indicated by our guidance. And I think we'll have a strong Q4 as well.

- Do you believe that corporate travel will ever get back to some of its pre-pandemic levels? And does it need to?

ED BASTIAN: I don't think it needs to. Candidly, one of the reasons why corporates are not all the way back or people aren't in the office and people are out traveling on their own is through hybrid activity. So in a certain sort of way, I think we're actually seeing the travelers, potentially even greater travel coming out of corporate space as compared to our normal post-- oh, excuse me, pre-pandemic behaviors.

- We've been tracking coverage from retail analysts who believe that the resumption of student loan payments would dampen spending towards goods. Is there any anticipation that some of that reallocated spending would also impact services and thus also impact Delta's business?

ED BASTIAN: I don't think so. We see no indication of that. Again, Brad, our consumer is a premium consumer or largely. We showed a slide at our recent investor day, where 75% of our industry's revenues come from households with net worth of $100,000 of income or greater on a per annum basis. That cohort represents the bulk of our revenue base accumulated over $27 trillion of wealth just since 2019. So our consumers have the means, they have the interest, and we're doing the very best job to provide them a reliable service so we can get them to where they need to be.

- Just kind of a follow up. I was looking at that SkyMiles number and the growth that you're seeing there, when you think about those households and what the typical make up income-wise is of those households, is that more millennial-driven? What type of customer acquisition are you seeing in terms of the SkyMiles add-ons and the generation of new demand for customers that are entering into that particular part of the membership?

ED BASTIAN: One thing that we have done I think you know is we've introduced this year of free Wi-Fi. And all you need to do is be a member in order to get free Wi-Fi on the planes. And we have seen a significant pop in our membership ranks principally coming from younger consumers.

The individuals that we are signing on the planes themselves as well as people signing up before the plane, that is on average 10 years younger than the previous age of our pre-existing SkyMiles customer mix. Prior to going free where our SkyMiles average age was around 40, and we're finding the average age of our new customer signing up to be approximately 30. So we're creating product and value that they want. We know that the demographic values experience and with the great service Delta people are providing, we're building a new generation of loyalty.

- And our thanks to Delta CEO, Ed Bastian, for taking some time here with us post-Q2 earnings.