By Rajesh Kumar Singh
CHICAGO (Reuters) – Delta Air Lines (NYSE:DAL) said on Friday it expects 2025 to be the most profitable year in the company’s 100-year history, thanks to robust demand for premium travel as well as the industry’s improved pricing power.
The U.S. carrier also reported a higher-than-expected fourth quarter profit and forecast stronger earnings in the current quarter.
Delta said it expects earnings in excess of $7.35 a share this year compared with analysts’ expectations of $7.22 per share, according to LSEG data. The company reported an adjusted profit of $6.16 a share in 2024.
“As we move into 2025, we expect strong demand for travel to continue, with consumers increasingly seeking the premium products and experiences that Delta provides,” CEO Ed Bastian said.
Demand for high-end travel has been booming since the pandemic, with travelers more willing to pay extra dollars for more comfortable and swanky seats. Delta, which has positioned itself as the nation’s premium airline, has been one of the biggest beneficiaries.
Delta’s premium ticket revenue has been growing faster than main-cabin ticket revenue and is projected to exceed it by 2027. In the December quarter, premium revenue growth outperformed main cabin by 6 percentage points.
The company’s overall revenue grew at a faster-than-expected pace in the fourth quarter from a year ago, driven by both leisure and corporate travel demand.
Delta said the trend is sustaining in the new year and is expected to result in revenue growth of 7%-9% in the March quarter from a year ago.
FEWER SEATS, HIGHER PRICES
A sharp reduction in airline seats in the domestic market, which plagued carriers last summer, has driven up ticket prices and bolstered the industry’s earnings outlook.
The trend helped Delta post higher unit revenue, a proxy for pricing power, in the December quarter despite a slowdown in travel spending around the U.S. presidential election in November. The Atlanta-based carrier cited an “increasingly constructive industry backdrop” as a contributing factor in its performance this year.
Delta is not alone. Industry analysts are sanguine about U.S. airlines, crediting their capacity discipline. JP Morgan analysts have called it a “new golden age” for the industry.
Delta forecast an adjusted profit in the range of 70 cents to $1 a share for the quarter through March, compared with analysts’ expectations of 77 cents per share, according to LSEG data.
It reported an adjusted profit of $1.85 per share in the December quarter, topping the $1.75 estimated by analysts.
