Delta Airlines It closed the year by doubling its quarterly profit as travel demand, particularly for international travel, helped drive record revenue in 2023. Chief Executive Ed Bastian said continued strong travel demand could boost profits this year .
Still, the company cut its full-year profit outlook from an earlier forecast, and shares fell 9% on Friday, with shares of other big companies also falling.
Delta on Friday forecast adjusted earnings per share of between $6 and $7 by 2024, down from the more than $7 per share the airline predicted last year. Delta posted adjusted earnings of $6.25 per share in 2023.
“Business is great. Just go to any airport,” Bastian told CNBC in an interview.
Delta said it expects revenue in the first quarter of 2024 to increase between 3% and 6% from the prior-year period. The airline forecasts earnings per share of between 25 cents and 50 cents, within the range analysts project, according to LSEG, formerly known as Refinitiv.
Winter is typically one of the slowest periods for air travel. Airlines have also been grappling with cooling fees and higher expenses such as fuel and labor.
Delta is the first of the major U.S. airlines to report fourth-quarter results.
Here's how the company performed in the three months ending December 31, 2023, compared to Wall Street expectations based on LSEG consensus estimates:
- Adjusted earnings per share: $1.28 vs. $1.17 expected.
- Adjusted income: 13.66 billion dollars compared to the expected 13.52 billion dollars.
Delta reported $2.04 billion in net income for the final three months of 2023, up from $828 million a year ago. Revenue rose 6% to $14.22 billion from a year earlier.
Excluding one-time items, Delta posted adjusted revenue of $13.66 billion, slightly above LSEG estimates. Adjusted earnings per share of $1.28 beat analyst estimates of $1.17 per share in the fourth quarter.
Delta President Glen Hauenstein said in a news release that the airline has seen strong demand for international travel that has outpaced revenue from U.S. flights, but that there has been “a positive inflection” for domestic travel lately. Some airlines have struggled with oversupply of domestic flights in recent months, forcing them to discount off-peak fares more than usual.
Delta and other major U.S. airlines have benefited by offering expanding international networks, where many expensive tickets were sold last year.
Overall, a record number of people paid to sit in Delta's highest-priced cabins, such as first class or premium economy, in the latest quarter, boosting premium cabin revenue up 15% during the period, surpassing 10% revenue growth from standard economy seats.
Demand for corporate travel is also improving, Delta's chief executive said, pointing to growth in the technology sector as well as the automotive and entertainment industries, whose workers ended strikes after reaching new contracts last year. Delta has major hubs in Detroit and Los Angeles, and strikes had hit demand in 2023.
But the airline still faces challenges with the aerospace supply chain for parts and repairs, Bastian said.
“It's taking longer to repair planes and get them back into service,” he said. Aircraft repairs and the parts supply chain are the most important parts of the business that have not returned to pre-pandemic levels, Bastian said.
“All of our industry suppliers lost a tremendous amount of experience due to the pandemic, and it's taking time to get it back,” Bastian said during an earnings call Friday.
The airline industry was shaken in recent days when the door stopper of a boeing 737 Max 9, an Alaska Airlines flight, when the plane was in the air at about 16,000 feet. The Federal Aviation Administration grounded those Boeing planes a day later, affecting about 170 planes, including those in united airlines and Alaska Airlineswhich as a result have canceled hundreds of flights.
Delta does not have any Max 9s in its fleet, and Hauenstein said on the earnings call that the company is seeing a small increase in bookings in the Seattle area, where Alaska is based.
Delta has dozens of 737 Max 10 aircraft on order, which the FAA has not yet certified. It is not yet clear whether the Alaska incident will mean further delays in the certification of the Max 10.
Delta also announced Friday a planned order for 20 Airbus A350-1000 widebody aircraft, with deliveries beginning in 2026.
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