Delta Air Lines kicked off earnings season earlier this week and despite rising fuel costs, the carrier reported a strong first quarter, fueled by high premium demand. CEO Ed Bastian said demand was still strong, especially among those who sit at the top of the K-shaped economy.

As airlines start to raise baggage fees and airfares to offset surging fuel prices, Delta’s gamble on purchasing an oil refinery in 2012 seems to be paying off. The carrier is expecting to get a $300 million lift on fuel expenses due to the refinery in the second quarter. The carrier is also not changing its guidance for the year, with Bastian describing such a move as “premature.”

“Until we have a better sense for where structurally we see oil landing, which we do believe will be higher for longer, not to say at the levels we modeled, we’ll be in a better opportunity to guide,” Bastian said.

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Delta’s latest results are in and the fuel price challenge is front and center. For this week’s Airline Weekly Lounge, I joined my colleagues Gordon and Jay to dive into what the numbers say about the airline’s strategy and resilience. In part two, the conversation turns to Southwest and the next chapter of its transformation story.

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