A Delta aircraft on the airline’s hangar in Atlanta
Leslie Josephs/CNBC
Delta Air Lines on Wednesday said sales would grow in 2025, citing a “resilient economy” for strong travel demand and bank card spending, especially for higher-end offerings. It also said it expects to grow earnings in the approaching years.
Delta forecast revenue growth within the mid-single-digit percentage points next yr compared with 2024, in step with the roughly 6% growth analysts were expecting. Delta said in a release that costs would proceed to rise, up within the low single digits next yr, excluding fuel.
In an investor day presentation, the carrier said it might expand flying by 3% to 4% next yr from 2024. Delta also reiterated its fourth-quarter outlook. Long term, it said it expects to grow adjusted earnings by 10% a yr over the following three to 5 years.
Delta is probably the most profitable U.S. airline, and its leaders tout its strong partnership with American Express and high demand for pricier seats toward the front of aircraft as driving its success. It expects $7 billion in renumeration from AmEx this yr and has a long-term goal of $10 billion.
The carrier has focused heavily on high-spending travelers, and in an investor day presentation said it has a bonus due to sharp wealth growth in high-earning households since 2019. It also said millennials and Gen Z are the fastest-growing consumer segments.
Its upbeat tone on consumer spending has differed from the image another firms are painting. Goal on Wednesday cut its profit forecast. Its chief operating officer blamed a “deceleration in discretionary demand” and better costs.
Delta rival United Airlines has made inroads in growing profit and capturing high-end travelers. Delta’s shares are up 60% to date this yr through Tuesday’s close, while United’s are up 128%. Each are outpacing the broader market and other carriers.
Delta said just 43% of its revenue this yr comes from principal cabin tickets, with 57% of it generated by premium seats and its lucrative loyalty program. That is up from a 60% share of revenue from the principal cabin in 2010.
The carrier said it expects sales from premium seats alone to exceed revenue from coach seats by 2027. Delta, American, United and JetBlue have raced so as to add roomier premium seats to their planes, like lie-flat suites.
The carrier has spent years working to get customers to pay up for top quality, seats it largely gave away in years past.
Delta’s president, Glen Hauenstein, told reporters that about 15 years ago, about 12% of Delta’s domestic first-class seats were paid for and the remaining were upgrades for frequent flyers. Now, greater than 70% of those seats are purchased, including buy-ups after booking. He said the change at first was “traumatic” to some travelers.
Hauenstein said Delta is on the lookout for latest ways to segment its cabins after the carrier — and rivals — spent years breaking coach class into options like premium economy, extra-legroom seats and basic economy. While it didn’t provide detail, it is also considering more options for travelers sitting within the front of the plane too, Hauenstein said.
Delta’s experiments with further segmentation will start within the coach cabin, not within the front of aircraft, Hauenstein said.
“Over the following couple of years you will see us attempting and really testing with what consumers want of their bundles and what they’re willing to pay for,” Hauenstein said.
— CNBC’s Melissa Repko contributed to this text.
