NEW YORK (AP) – Delta Air Lines earned USD2 billion in the fourth quarter, posted record full-year revenue, and says it is buying more planes to boost its international flying.
The airline’s shares fell 9 per cent Friday, however, as the company pulled back on its profit forecast for 2024.
Delta said full-year earnings will be USD6 to USD7 a share — down from an earlier prediction of more than USD7 a share. Analysts had already trimmed their expectations to USD6.50 a year, but the update from Delta was enough to spook investors.
Delta is the first US airline to post fourth-quarter results, and its report sent shares of American, United, Southwest, Alaska and JetBlue down between 4 and 11 per cent.
Delta said Friday that it will buy 20 Airbus A350s and take options to buy 20 more of the long-range jetliners. Delta expects to get the first ones in 2026.
The A350s will have more premium seating than the planes they replace, which will play into Delta’s strategy of pursuing high-end travellers who are more insulated from ups and downs in the economy.
Airlines were helped in 2023 by strong demand for travel from people who had spent most of the pandemic cooped up at home. Delta passengers flew 19 per cent more miles last year than they did in 2022.
CEO Ed Bastian said he expects that trend to continue.
“We actually saw the highest cash sales day in our history on Tuesday,” Bastian said in an interview. “So our consumer is healthy (financially), our consumer wants to travel. That tells us it’s going to be a very good year, 2024.”
Bastian said, however, he was concerned about higher maintenance costs, which he blamed on supply-chain disruptions, and an inability to receive new planes on schedule because of disruptions at engine and aircraft makers.
Delta posted fourth-quarter net income of USD2.04 billion, more than doubling the profit of USD828 million in the same period the year before.
Excluding special items, its adjusted earnings were USD1.28 per share. That beat analysts’ average forecast of USD1.16 per share, according to a survey by FactSet.
Revenue rose 6 per cent to USD14.22 billion. Passenger revenue increased 12 per cent, and spending on premium services — like sitting in business class instead of the main cabin — surged 15 per cent.
However, Delta’s refinery in Pennsylvania brought in USD579 million less revenue than a year earlier, a 51 per cent drop.
On the cost side, spending for labour soared 23 per cent — a reflection of higher wages, especially from a contract that union pilots ratified in March of last year.
For the full year, Delta’s revenue rose 15 per cent to more than USD58 billion. Net income more than tripled, to USD4.61 billion, up from USD1.32 billion in 2022.
The full-year profit fell short of pre-pandemic 2019, when Atlanta-based Delta earned USD4.77 billion, but it was enough to buy more planes.
Delta has a mix of Airbus and Boeing planes in its fleet of more than 900 planes, not counting its regional affiliates. It already had 28 A350s at the end of September with commitments to buy another 16. Friday’s order could push the total of A350s to more than 80 if the options are used.
The A350 competes with Boeing’s 787. Both have fuselages and wings made of carbon-fibre-reinforced composites. Delta doesn’t use the 787, although it has other Boeing jets.
Bastian said Boeing’s current problems, including a government investigation into parts on its 737 Max 9 jet, were not a factor in Friday’s order. He said the company wanted continuity with the A350.
Delta doesn’t have any Max jets, but it has committed to buy 100 of the larger Boeing 737 Max 10, a plane that has not yet been certified by the Federal Aviation Administration.
“We need Boeing to do well,” he said. “It’s a great company. It’s an important company to our country and our industry.”
