Rajesh Kumar Singh
CHICAGO (Reuters) – Delta Air Lines (NYSE: ) said on Friday it expects 2025 to be the most profitable year in the company’s 100-year history, thanks to strong demand for premium travel as well as improved industry pricing power.
The US carrier also reported better-than-expected fourth-quarter profit and is forecasting higher earnings in the current quarter.
Delta said it expects earnings of more than $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 in 2024.
“As we move into 2025, we expect strong demand for travel to continue and consumers will increasingly seek the premium products and experiences that Delta offers,” said CEO Ed Bastian.
Demand for luxury travel has been on the rise since the pandemic, with travelers willing to pay extra dollars for more comfortable and stylish seats. Delta, which has positioned itself as the nation’s premium airline, was one of the biggest winners.
Delta’s premium fare revenue is growing faster than main cabin ticket revenue and is projected to surpass it by 2027. In the December quarter, premium fare revenue growth outpaced main cabin revenue by 6 percentage points.
The company’s total revenue grew faster than expected in the fourth quarter from a year earlier, driven by demand for leisure and business travel.
Delta said the trend continues into the new year and is expected to result in revenue growth of 7%-9% in the March quarter compared to last year.
LESS PLACES, HIGHER PRICES
A sharp reduction in domestic airline seats, which plagued carriers last summer, has lifted fares and improved the industry’s earnings outlook.
That trend helped Delta post higher unit revenue, a proxy for pricing power, in the December quarter despite a slowdown in travel spending around the U.S. presidential election in November. The Atlanta-based carrier cited an “increasingly constructive industrial backdrop” as a contributing factor to its performance this year.
Delta is not alone. Industry analysts are bullish on US airlines, crediting their capacity discipline. Analysts at JP Morgan called it a “new golden age” for the industry.
Delta forecast adjusted earnings in the range of 70 cents to $1 per share for the quarter to March, compared with analysts’ expectations of 77 cents per share, according to LSEG data.
It reported adjusted earnings of $1.85 per share in the December quarter, beating analysts’ estimates of $1.75.
