Delta Air Lines Doubles Fourth-Quarter Profit, Cuts Earnings Forecast
Delta Air Lines reported a doubling of its quarterly profit in the fourth quarter of 2023 due to strong travel demand. However, the airline trimmed its earnings forecast for 2024. Delta's CEO mentioned that business is going great, with high demand for travel.
Delta reports strong fourth-quarter profit
Delta Air Lines, one of the major U.S. carriers, reported a significant increase in its fourth-quarter profit compared to the previous year. The airline benefited from strong travel demand, particularly for international trips, which resulted in record revenue in 2023. CEO Ed Bastian mentioned that the continued strong travel demand could boost earnings this year. However, Delta's full-year profit outlook for 2024 fell short of its previous forecast, causing the stock to drop by 8% in morning trading. Other major carriers also experienced a decline in their share prices.
Delta's adjusted earnings per share for 2023 were $6.25, and the company forecasted adjusted earnings per share of $6 to $7 for 2024. This is below the more than $7 a share the carrier had predicted last year. Despite this, Delta expects its revenue in the first quarter of 2024 to increase by 3% to 6% compared to the prior-year period.
Challenges faced by Delta
While Delta's travel demand remains strong, the airline has experienced higher costs throughout 2023. It has had to navigate cooling fares and deal with higher expenses such as fuel and labor. Additionally, Delta faces challenges with the aerospace supply chain for parts and repairs, leading to delays in fixing planes and putting them back into service. These challenges are primarily due to the loss of experience in the industry caused by the pandemic.
However, despite these challenges, Delta has seen strong demand for international travel, outpacing U.S. flight revenue. The carrier expects this positive trend to continue. It has also witnessed an improvement in corporate travel demand, particularly from the technology sector and auto and entertainment industries.
Delta's future plans and recent developments
Delta is the first major U.S. carrier to report its fourth-quarter results. The airline reported $2.04 billion in net income for the last three months of 2023, up from $828 million in the previous year. Revenue also increased by 6% to $14.22 billion compared to the same period in the previous year.
In addition to its financial results, Delta announced an expected order for 20 wide-body Airbus A350-1000 aircraft, with deliveries starting in 2026. The company's CEO, Ed Bastian, mentioned that the airline does not have any Boeing 737 Max 9s in its fleet but does have dozens of 737 Max 10 aircraft on order. However, it is unclear whether the recent incident involving an Alaska Airlines flight will cause further delays in the certification of the Max 10s.
