Delta Airlines has reported a substantial quarterly profit of $2 billion, showcasing a robust recovery from the challenges posed by the COVID-19 pandemic. CEO Ed Bastian remains optimistic about the future, citing a healthy consumer base and strong travel demand as key drivers for the airline’s success.
While the full-year earnings projection was adjusted to be between $6 and $7 per share, slightly lower than the initial estimate of over $7 per share, Delta is poised for growth. The airline’s strategic move involves purchasing 20 Airbus A350s, accompanied by options for an additional 20 of these long-range jetliners. Delta anticipates receiving the first batch of A350s in 2026.
The decision to add A350s to the fleet aligns with Delta’s focus on enhancing premium seating options, catering to high-end travelers who are more resilient to economic fluctuations. The new A350s are expected to feature more premium seating than their predecessors, aligning with Delta’s strategy to attract travelers seeking elevated experiences.
The positive financial outlook is attributed to a surge in travel demand throughout 2023, fueled by individuals eager to explore after enduring extended periods of pandemic-induced restrictions. Delta reported a 19% increase in passenger miles flown last year compared to 2022, reflecting a substantial rebound in the aviation sector.
CEO Ed Bastian anticipates this trend to persist, stating, “We actually saw the highest cash sales day in our history on Tuesday. So our consumer is healthy (financially), our consumer wants to travel. That tells us it’s going to be a very good year, 2024.”
In the fourth quarter of 2023, Delta recorded a net income of $2.04 billion, more than doubling the profit achieved during the same period in the previous year ($828 million). Adjusted earnings per share stood at $1.28, surpassing analysts’ average forecast of $1.16. The overall revenue for the quarter reached $14.22 billion, indicating a 6% increase. Passenger revenue experienced a notable 12% rise, while spending on premium services surged by 15%.
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However, challenges were noted in other areas, including a significant drop in revenue from Delta’s refinery in Pennsylvania, which decreased by 51%, bringing in $579 million less than the previous year. Additionally, labor costs soared by 23%, primarily due to increased wages following a union pilot contract ratified in March 2023.
For the entire fiscal year, Delta reported a 15% rise in revenue, exceeding $58 billion, with a remarkable net income of $4.61 billion, triple the figure reported in 2022.
The airline’s fleet, comprising over 900 planes, will soon welcome the addition of 20 Airbus A350s. Delta’s existing fleet includes a mix of Airbus and Boeing aircraft, with 28 A350s already in service as of September 2023. With the latest order and options for additional A350s, Delta’s A350 fleet may surpass 80 aircraft.
The decision to choose Airbus over Boeing was clarified by Bastian, emphasizing the desire for continuity with the A350 rather than being influenced by Boeing’s current challenges, including a government investigation into parts on its 737 Max 9 jet. Delta’s commitment to Boeing is evident through its order of 100 of the larger Boeing 737 Max 10, despite awaiting certification from the Federal Aviation Administration.
Bastian expressed support for Boeing, stating, “We need Boeing to do well. It’s a great company. It’s an important company to our country and our industry.”
In summary, Delta’s impressive quarterly profits, strategic aircraft acquisitions, and positive outlook for the future position the airline as a key player in the aviation industry’s ongoing recovery.