Delta Air Lines (DAL) looks set to reach cruising altitude following the travel industry’s post-pandemic ascension — even after pilot contract negotiations and a calculated capacity restoration effort.
Here’s how the airline operator performed during the holiday travel quarter:
Adjusted net income: $828 million vs. $758 million expected (according to consensus estimates compiled by Bloomberg)
Adjusted earnings per share: $1.28 vs. $1.16 expected
Revenue: $13.7 billion vs. $13.5 billion expected
"We have finished the busiest holiday travel period in our history for the 15-day period around Christmas- New Year's break," Delta CEO Ed Bastian told Yahoo Finance.
He later added: "We also close figures out with revenues at an all-time high, which are 20% higher than our pre-pandemic levels — which is quite a statement from where we sat just three years ago. And '24 is off to a flying start as well."
The company saw the highest cash sales day in its history on Jan. 9, contributing to a very optimistic outlook among the company leadership during the current quarter.
However, Delta stock fell more than 5% in early trading on Friday.
View from the flight deck
Closing the books on a year where its stock outperformed the largest US airline competitors, Delta is the first airline service to report its fourth quarter financials and 2024 guidance this earnings season.
The forecast features traces of travel trends cementing a new normal among its booking trends as well as corporate expenses.
"We're looking for the year to come in at between $6 and $7 a share. … You know, my bias is to try to hopefully get closer to the 7," Bastian said. "That's what we have communicated and been communicating [since] our three-year plan back in 2021 to the Street."
"We've had some delays over the course of the last couple of years in the supply chain. Maintenance costs are higher as well," he said. "The term-time performance is also slower, and salaries and inflation have also been much higher than was anticipated a couple of years ago."
Every operator will have the challenge of showcasing sustained margin growth to investors — which historically has induced turbulence in share prices.
During the quarter, Delta posted adjusted operating margin growth of 9.7%, a slowing in growth compared with the 11.6% reported during the comparable period in 2024.
Looking forward, Delta President Glen Hauenstein said in a statement that March quarter unit revenues are expected to be “flat to down 3 percent over 2023," adding "The March quarter includes a headwind from higher international mix, the normalization of travel credit utilization and lapping a competitor's operational challenges in the year ago period."
Delta stock fell during the trading session in reaction to the outlook and decelerating margin growth.
An economic view from the industry that invented the soft landing
Airfare prices slid by 9.4% year over year in December, according to the Consumer Price Index published by the Bureau of Labor Statistics. The fall comes as consumers turn more price-conscious, and in tandem, continue to value experiences over goods.
After monitoring Delta's customer booking trends, CEO Bastian said today’s traveler on its sky service is "in a good spot," but acknowledged there may be varying views on the health of the consumer.
Read more: How travel credit cards can help you save on your next vacation
“We live in the experience economy, and we are a premium provider of service to customers in that marketplace. Our consumers are financially very, very healthy. [They] continue to have a significant wealth that they accumulated — not just cash, but overall household wealth,” Bastian said.
More perspectives on the health of experience economy consumers will be provided when United Airlines (UAL) reports earnings on Jan. 23 and American Airlines (AAL) posts quarterly results on Jan. 25.
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