Rajesh Kumar Singh
CHICAGO (Reuters) – Delta Air Lines (NYSE:) said on Friday it expects 2025 to be its most profitable year in the company’s 100-year history, thanks to strong demand for premium travel as well as improved industry pricing.
The US carrier also reported better-than-expected profit in the fourth quarter and forecast higher revenues in the current quarter.
Delta said it expects earnings to exceed $7.35 per share this year, compared with analysts’ expectations of $7.22 per share, according to LSEG data. The company reported adjusted earnings of $6.16 per share for 2024.
“As we move toward 2025, we expect strong demand for travel to continue as consumers increasingly seek the premium products and experiences that Delta offers,” said CEO Ed Bastian.
Demand for luxury travel has skyrocketed since the pandemic, with travelers increasingly willing to pay extra for more comfortable and luxurious accommodations. Delta, which positions itself as the country’s premium airline, has been one of the biggest beneficiaries.
Delta’s award revenue has grown faster than its main cabin revenue and is projected to surpass it by 2027. In the December quarter, premium ticket revenue growth outpaced main cabin revenue growth by 6 percentage points.
The company’s overall revenue grew at a faster-than-expected pace in the fourth quarter compared with last year, driven by demand for both leisure and corporate travel.
Delta said the trend will continue into the new year and is expected to result in revenue growth of 7-9% in the March quarter compared with last year.
LESS SEATS, HIGHER PRICES
The sharp decline in domestic airline seat capacity that hit carriers last summer has pushed up ticket prices and strengthened the industry’s profit outlook.
The trend helped Delta post higher unit revenue, a measure of pricing power, in the December quarter despite a slowdown in travel spending ahead of the U.S. presidential election in November. The Atlanta-based airline cited an “increasingly positive industry environment” as a contributing factor to its performance this year.
Delta is not alone. Industry analysts are optimistic about U.S. airlines, praising their capacity discipline. JP Morgan analysts called it a “new golden age” for the industry.
Delta forecast adjusted earnings of 70 cents to $1 per share for the quarter through March, compared with analysts’ expectations of 77 cents per share, according to LSEG.
The company reported adjusted earnings of $1.85 per share in the December quarter, beating analysts’ estimates of $1.75.