Delta Air Lines (NYSE: DAL) has reported financial results for the December quarter and full year 2023 and provided its outlook for the March quarter and full year 2024.
Reviewing the US carrier’s 2023 progress, a combination of strong operational performance, robust international demand, and diversified revenue streams has set the stage for continued success in 2024.
Delta Air Lines 2023 Highlights
Led by Ed Bastian, Delta’s chief executive officer, the company not only showcased industry-leading operational and financial performance but also distributed a remarkable $1.4 billion in profit sharing payments, a testament to the dedication of its workforce.
2023 proved to be a banner year for Delta, marked by exceptional operational excellence and financial achievements.
Ed Bastian expressed his enthusiasm, attributing Delta’s success to the unwavering commitment of its people to deliver unparalleled service.
The company is set to distribute $1.4 billion in profit sharing payments, acknowledging the outstanding contributions of its workforce.
Delta achieved record revenue during the December quarter, fueled by the highest holiday travel volumes in its history.
The airline’s operational performance stood out with a leading system-wide completion factor and on-time performance. Corporate sales surged at the year-end, showcasing double-digit year-over-year growth in December.
Notably, sectors such as Technology and Financial Services thrived, while Media and Auto experienced traction following strike resolutions.
Robust Demand Signals Growth
As Delta navigates into 2024, the demand for air travel remains robust. The customer base is financially healthy, prioritizing travel, and the company anticipates a full-year earnings growth to $6 to $7 per share.
A substantial free cash flow of $3 to $4 billion is expected, further fortifying Delta’s financial foundation.
Delta’s success wasn’t just confined to the US domestic market; it resonated globally. International passenger revenue soared by 25 percent compared to the December quarter of 2022, with double-digit growth in the Transatlantic, Pacific, and Latin entities.
Transatlantic performance led the way, with a 9 percent increase in passenger unit revenues compared to the same quarter in 2022.
Record margins were achieved across all three international regions, emphasizing Delta’s prowess on the global stage.
Premium and Loyalty
Premium revenue witnessed an impressive 15 percent growth compared to the December quarter of 2022, outperforming Main Cabin with record paid load factors.
Loyalty revenue also experienced an 11 percent improvement, driven by robust co-brand spend growth.
American Express contributed significantly, with remuneration of $1.7 billion for the December quarter, marking an 11 percent increase from the same period in 2022.
Diversified revenue streams, including Loyalty, Premium, Cargo, and MRO, comprised 55 percent of total revenues for the full year.
Revenue Growth and Future Outlook
Glen Hauenstein, Delta’s president, highlighted the company’s impressive revenue growth, reaching a record $54.7 billion in 2023, a substantial 20 percent increase from the previous year.
Premium and non-ticket revenue now constitute 55 percent of the total revenue, setting Delta apart from industry peers.
March Quarter Projections
With a positive inflection in the domestic environment and strong demand for international travel, Delta anticipates adjusted revenue for the March quarter to be 3 to 6 percent higher than the previous year.
Despite a forecast flat to a 3 percent decrease in unit revenues over 2023, the midpoint of this outlook implies a two-point sequential improvement in unit revenues on a year-over-year basis.
Challenges such as a higher international mix, the normalization of travel credit utilization, and operational challenges faced by a competitor in the previous year are considered in the forecast.
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