Delta Air Lines capped off 2023 with a robust financial showing, bagging a $2 billion profit in the fourth quarter and hitting a record in full-year revenue, the company has announced. In a move signaling a bullish stance on international travel, Delta plans to beef up its fleet with the purchase of 20 Airbus A350s, with options for 20 more, looking to cater to the premium-segment flyers when the new jets arrive in 2026, as reported by FOX 5 Atlanta.
In the face of these gains, Delta's shares took a hit, dropping 9% on Friday, sending a ripple effect through the market, which saw shares of other major airlines like American and United fall by as much as 11%. The decline came as the Atlanta-based carrier tempered its 2024 earnings forecast, scaling it back from over $7 a share to a range between $6 and $7, according to a statement obtained by U.S. News. Analysts, having adjusted their expectations to $6.50 per share, were taken aback by the airline's cautious stance.
Delta CEO Ed Bastian remains optimistic about the travel industry's trajectory, buoyed by a record-breaking day of cash sales, indicative of consumers' financial health and their eagerness to travel. "We actually saw the highest cash sales day in our history on Tuesday," Bastian told FOX 5 Atlanta. "So our consumer is healthy (financially), our consumer wants to travel. That tells us it’s going to be a very good year, 2024." However, despite this positivity, Bastian expressed concern over higher maintenance costs and delays in new plane arrivals, which he attributed to supply-chain disruptions affecting engine and aircraft makers.
The fourth quarter's doubling of profits over the prior year to $2.04 billion, and a 6% rise in revenue to $14.22 billion, contrasted sharply with a 51% plunge in revenue from Delta's Pennsylvania refinery. This dip, in the same period a year earlier, brought in $579 million less, as cited by U.S. News. Employee wage increases reflected in a 23% jump in labor costs, especially following a contract ratified by union pilots last March.
For the year, Delta's revenue surged by 15% to top $58 billion, with net income soaring to $4.61 billion, a significant leap from $1.32 billion in 2022. Despite falling short of the pre-pandemic earnings in 2019, these profits have empowered Delta to order more planes, expanding their mix of Airbus and Boeing aircraft within its expansive fleet. Bastian underscored the importance of Boeing's success to the industry, even amidst ongoing government investigations into its 737 Max 9 jet, "We need Boeing to do well," Bastian elucidated in an interview with U.S. News. "It's a great company. It's an important company to our country and our industry."
