Delta Air Lines Raises Projections for 2023

Delta Air Lines announced during its Investor Day meeting on Tuesday that the second-quarter profit outlook and full-year earnings projections would reach the high end of previous estimates due to sustained travel demand.

Delta CEO Ed Bastian said travel demand remains high as consumer spending shifts away from goods to services, with the airline’s customers being well positioned due to “wealth accumulation during the pandemic.”

“Travel is going gangbusters, and it’s going to continue to go gangbusters because we still have a tremendous amount of demand coming,” Bastian said. “Our consumer is in really good shape.”

While Bastian and other Delta executives believe they will experience “years” of favorable travel demand, officials played down concerns about high inflation, rising interest rates and staffing shortages impacting the company.

Data from the meeting showed that high-income travelers accounted for 75 percent of spending on air travel in 2021, which aided in expected free cash flow rising to $3 billion, up from $2 billion.

The airline expects a return on invested capital of more than 13 percent, compared with earlier guidance of low double-digit growth. For 2024, Delta still expects a free cash flow of more than $4 billion, an operating margin of 13-15 percent and a Return on Invested Capital in the mid-teens.

The company also revealed the revenue outlook for the June quarter rose to 17-18 percent from the previous guidance of 15-17 percent. For all of 2023, it expects revenue to climb 17-20 percent, compared with earlier guidance of 15-20 percent.