Delta more than doubles fourth-quarter profit, but trims 2024 earnings forecast

Delta
Air
Lines
closed
out
the
year
by
doubling
its
quarterly
profit
as
travel
demand,
particularly
for
international
trips,
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
the
stock
fell
9%
on
Friday,
with
other
major
carriers’
shares
also
tumbling.

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

“Business
is
going
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
3%
to
6%
over
the
prior-year
period.
The
carrier
forecast
earnings
per
share
of
between
25
cents
and
50
cents,
within
the
range
analysts
are
projecting,
according
to
LSEG,
formerly
known
as
Refinitiv.

The
winter
is
typically
one
of
the
slowest
periods
for
air
travel.
Airlines
have
also
been
navigating
cooling
fares
and
higher
expenses
such
as
fuel
and
labor.

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

Here’s
how
the
company
performed
in
the

three
months
ending
Dec.
31,
2023,
compared
to
Wall
Street
expectations
based
on
consensus
estimates
from
LSEG:

Adjusted
earnings
per
share: $1.28
vs.
$1.17
expected.
Adjusted
revenue: $13.66
billion
vs.
$13.52
billion
expected.

Delta
reported
$2.04
billion
in
net
income
for
the
last
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
posted
adjusted
revenue
of
$13.66
billion,
slightly
ahead
of
LSEG
estimates.
Adjusted
earnings
per
share
of
$1.28
topped
analysts’
estimates
for
$1.17
a
share
in
the
fourth
quarter.

Delta’s
president,
Glen
Hauenstein,
said
in
a
news
release
that
the
carrier
has
seen
strong
demand
for
international
travel
that
has
outpaced
U.S.
flight
revenue,
but
there
has
been
“a
positive
inflection”
for
domestic
travel
of
late.
Some
carriers
have
struggled
with
oversupply
of
domestic
flights
in
recent
months,
forcing
them
to

discount
off-peak
fares
more
than
usual.

Delta
and
other
large
U.S.
carriers
have
benefited
from
offering
sprawling
international
networks,
where
many
high-priced
tickets
were
sold
last
year.

Overall,
record
numbers
of
people
paid
to
sit
in
Delta’s
higher-priced
cabins
such
as
first
class
or
premium
economy
in
the
last
quarter,
driving
revenue
from
premium
cabins
up
15%
during
the
period,
outpacing
10%
revenue
growth
from
standard
coach
seats.

Corporate
travel
demand
is
also
improving,
Delta’s
CEO
said,
pointing
to
growth
from
the
technology
sector
as
well
as
auto
and
entertainment
industries,
whose
workers

ended
labor
strikes
after
reaching

new
contracts
last
year.
Delta
has
major
hubs
in
Detroit
and
Los
Angeles,
and
strikes
had

dented
demand
in
2023.

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

“It’s
taking
longer
to
fix
planes
and
taking
longer
to
put
them
back
into
service,”
he
said.
Aircraft
repairs
and
the
parts
supply
chain
are
the
biggest
parts
of
the
business
that
haven’t
returned
to
pre-pandemic
levels,
Bastian
said.

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

The
airline
industry
was
rocked
in
recent
days
when
a

door
plug
blew
out
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
some
170
planes,
including
those
at

United
Airlines
and

Alaska
Airlines,
which
have
canceled
hundreds
of
flights
as
a
result.

Delta
doesn’t
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
does
have
dozens
of
737
Max
10
aircraft,
which
the
FAA
hasn’t
yet
certified,
on
order.
It
isn’t
yet
clear
whether
the
Alaska
incident
will
mean
further
delays
to
the
certification
of
the
Max
10s.