Delta more than doubled fourth-quarter profit, but profit forecast for the 2024 quarter

Delta Air Lines closed the year by doubling its quarterly profit as demand for travel, especially international travel, helped drive record revenue in 2023. CEO Ed Bastian said continued strong travel demand could boost earnings this year.

Still, the company cut its full-year profit outlook from a previous forecast, and shares fell 9% on Friday, with shares of other major carriers also falling.

Delta on Friday forecast adjusted earnings per share for 2024 between $6 and $7, below the more than $7 per share the carrier forecast last year. Delta reported 2023 adjusted earnings of $6.25 per share.

“Business is great. You just go to any airport,” Bastian said in an interview with CNBC.

Delta said it expects first-quarter 2024 revenue to grow 3% to 6% from the year-ago period. The operator is forecasting earnings per share of between 25 cents and 50 cents, in the range analysts forecast according to LSEG, formerly known as Refinitiv.

Winter is usually one of the slowest times for air travel. Airlines also navigated cooling prices and higher costs such as fuel and labor.

Delta is the first major U.S. carrier to report fourth-quarter results.

Here’s a breakdown of how the company performed in the three months ending December 31, 2023, compared to Wall Street expectations based on consensus estimates from LSEG:

  • Adjusted earnings per share: $1.28 vs. $1.17 is expected.
  • Adjusted Income: $13.66 billion vs. $13.52 billion is expected.

Delta reported net income of $2.04 billion 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.

Stripping out one-time items, Delta reported adjusted revenue of $13.66 billion, slightly ahead of LSEG estimates. Adjusted earnings per share of $1.28 beat analysts’ estimates of $1.17 per share in the fourth quarter.

Delta President Glen Hauenstein said in a news release that the carrier has seen strong demand for international travel outpacing revenue from U.S. flights, but recently there has been a “positive shift” for domestic travel. Some carriers have been dealing with an oversupply of domestic flights in recent months, forcing them to discount off-peak fares more than usual.

Delta and other major U.S. carriers benefited from offering vast international networks that sold many high-priced tickets last year.

Overall, the record number of people who paid to sit in Delta’s higher-priced cabins, such as first class or premium economy, boosted premium cabin revenue by 15% last quarter, outpacing the 10% growth in standard-class revenue seats for buses.

Demand for corporate travel is also improving, Delta’s CEO said, pointing to growth in the technology sector as well as the auto and entertainment industries, whose workers ended strikes after winning new contracts last year. Delta has major hubs in Detroit and Los Angeles, and the strikes have disrupted demand in 2023.

But the carrier still faces challenges with the aviation supply chain for parts and repairs, Bastian said.

“Aircraft take longer to repair and it takes longer to get them back into service,” he said. Aircraft repair and the parts supply chain are the biggest parts of the business that have not returned to pre-pandemic levels, Bastian said.

“All suppliers in our industry have lost a huge amount of experience because of the pandemic, and it’s taking time to get that back,” Bastian said during Friday’s earnings call.

The airline industry has been rocked in recent days as a door stopper burst Boeing 737 Max 9, an Alaska Airlines flight, when the plane was in the air at about 16,000 feet. The FAA grounded those Boeing planes a day later, affecting about 170 planes, including those United Airlines and Alaska Airlineswhich canceled hundreds of flights because of it.

Delta has no 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 10s on order that have not yet been certified by the FAA. It is not yet clear whether the incident in Alaska will mean further delays in Max 10s certification.

Delta also announced Friday an expected order for 20 Airbus A350-1000 wide-body aircraft, with deliveries starting in 2026.

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