Delta Air Lines (DAL) Q4 2023 earnings

Delta Air Lines closed out the yr by doubling its quarterly profit as travel demand, particularly for international trips, helped drive record revenue in 2023. CEO Ed Bastian said continued strong travel demand could boost earnings this yr.

Still, the corporate cut its full-year profit outlook from a previous forecast, and the stock fell 9% on Friday, with other major carriers’ shares also tumbling.

Delta on Friday forecast adjusted earnings per share of between $6 and $7 for 2024, below the greater than $7 a share the carrier predicted last yr. Delta posted adjusted earnings of $6.25 a share in 2023.

“Business goes great. Just go to any airport,” Bastian told CNBC in an interview.

Delta said it expects revenue in the primary quarter of 2024 to extend 3% to six% over the prior-year period. The carrier forecast earnings per share of between 25 cents and 50 cents, inside the range analysts are projecting, in response to LSEG, formerly often called Refinitiv.

The winter is usually one in all the slowest periods for air travel. Airlines have also been navigating cooling fares and better expenses comparable to fuel and labor.

Delta is the primary of the main U.S. carriers to report fourth-quarter results.

Here’s how the corporate performed within the three months ending Dec. 31, 2023, in comparison with Wall Street expectations based on consensus estimates from LSEG:

Adjusted earnings per share: $1.28 vs. $1.17 expected.
Adjusted revenue: $13.66 billion vs. $13.52 billion expected.

Delta reported $2.04 billion in net income for the last three months of 2023, up from $828 million a yr ago. Revenue rose 6% to $14.22 billion from a yr earlier.

Stripping out one-time items, Delta posted adjusted revenue of $13.66 billion, barely ahead of LSEG estimates. Adjusted earnings per share of $1.28 topped analysts’ estimates for $1.17 a share within the fourth quarter.

Delta’s president, Glen Hauenstein, said in a news release that the carrier has seen strong demand for international travel that has outpaced U.S. flight revenue, but there was “a positive inflection” for domestic travel of late. Some carriers have struggled with oversupply of domestic flights in recent months, forcing them to discount off-peak fares greater than usual.

Delta and other large U.S. carriers have benefited from offering sprawling international networks, where many high-priced tickets were sold last yr.

Overall, record numbers of individuals paid to take a seat in Delta’s higher-priced cabins comparable to firstclass or premium economy within the last quarter, driving revenue from premium cabins up 15% throughout the period, outpacing 10% revenue growth from standard coach seats.

Corporate travel demand can be improving, Delta’s CEO said, pointing to growth from the technology sector in addition to auto and entertainment industries, whose employees ended labor strikes after reaching recent contracts last yr. Delta has major hubs in Detroit and Los Angeles, and strikes had dented demand in 2023.

However the carrier still faces challenges with the aerospace supply chain for parts and repairs, Bastian said.

“It’s taking longer to repair planes and taking longer to place them back into service,” he said. Aircraft repairs and the parts supply chain are the largest parts of the business that have not returned to pre-pandemic levels, Bastian said.

“All of the suppliers in our industry lost an amazing amount of experience as a consequence of the pandemic, and it’s taking time to get that back,” Bastian said during an earnings call on Friday.

The airline industry was rocked in recent days when a door plug blew out of a Boeing 737 Max 9, an Alaska Airlines flight, when the plane was within the air at about 16,000 feet. The Federal Aviation Administration grounded those Boeing planes a day later, affecting some 170 planes, including those at United Airlines and Alaska Airlines, which have canceled lots of of flights in consequence.

Delta doesn’t have any Max 9s in its fleet, and Hauenstein said on the earnings call that the corporate is seeing a small increase in bookings within the Seattle area, where Alaska is predicated.

Delta does have dozens of 737 Max 10 aircraft, which the FAA hasn’t yet certified, on order. It is not yet clear whether the Alaska incident will mean further delays to the certification of the Max 10s.