Delta Air Lines has today revealed its full year financial results for 2024 (including some substantial profit sharing for employees), and has issued its forecast for 2025. The company seems to believe that 2025 will be its best year yet…
In this post:
Delta aiming for record 2025, with $6 billion profit
Before we talk about 2025, let’s briefly recap Delta’s performance in 2024. The airline had record revenue in 2024, but not quite record margins. In terms of full year, adjusted 2024 financial results:
- Delta had operating revenue of $57.0 billion; that’s 4.3% higher than in 2023
- Delta had operating income of $6.0 billion, with an operating margin of 10.6%; in 2023, Delta had operating income of $6.3 billion, with an operating margin of 11.6%
- Delta had pre-tax income of $5.2 billion, with a pre-tax margin of 9.1%; in 2023, Delta had pre-tax income of $5.2 billion, with a pre-tax margin of 9.5%
- Delta had earnings per share of $6.16; in 2023, Delta had earnings per share of $6.25
As you can see, Delta had record revenue for the year, though margins weren’t quite as good as they were in the previous year. Perhaps what’s most interesting is what Delta is predicting for 2025. The airline expects this year will be the strongest in the carrier’s history, with a pre-tax income greater than $6 billion, and earnings per share greater than $7.35.
For the first quarter of 2025, Delta is expecting 7-9% revenue growth compared to 2024, which is substantial. Delta believes this strength will come from “consumers increasingly seeking the premium products and experiences that Delta provides.”
Here’s what Delta CEO Ed Bastian had to say:
“2024 was a great year for Delta with our results reflecting differentiation from the industry and increased durability. Our people finished the year strong, delivering industry-leading operational and financial performance. Sharing Delta’s success is core to our culture, and I’m excited to recognize our people’s outstanding efforts with $1.4 billion in profit sharing payments next month.”
“As we move into 2025, we expect strong demand for travel to continue, with consumers increasingly seeking the premium products and experiences that Delta provides. Our differentiated strategy and best-in-class operations, combined with demand strength and an increasingly constructive industry backdrop, position us to deliver the best financial year in Delta’s 100-year history, with pre-tax income greater than $6 billion, earnings per share greater than $7.35 and free cash flow of more than $4 billion.”
Delta’s goals for 2025 don’t seem unrealistic, but…
I have a few thoughts on Delta expecting 2025 to be a blockbuster year for the airline, and the best in the company’s history.
If 2025 goes off without a hitch, then I think Delta’s goals are realistic. The problem, as I see it, is that the airline industry is just about the most volatile industry out there, and there’s so much that can go wrong. From the economy weakening (including the stock market going down), to unrest or terrorism in regions that are important to the airline, to technological meltdowns, there’s a lot that can impact the performance of an airline.
I don’t envy the job of being an airline executive, and I realize that they have to make predictions, and that investors expect updates. But I’d argue that there’s no case to be made for investing in airlines long term, short of taking advantage of the huge swings in the industry.
It’s also why airline CEOs seem to often suffer from amnesia. Like, in 2017, American’s former CEO, Doug Parker, said the airline would never lose money again. Well, it didn’t take long for him to be proven wrong. And the irony is that this is the same guy who was leading an airline during 9/11, and during subsequent financial downturns.
Next, I think it’s going to be interesting to see how the battle between Delta and United continues to evolve. There’s simply no denying that United has been on a massive upward trajectory, while Delta has sort of been the airline to beat, and has been maintaining the status quo. United certainly has more momentum than Delta does, but that’s also because Delta is starting from a better position.
Delta’s new buzzwords seem to be “durability” and “differentiated,” as we’ve now seen these used by the airline several times. What’s the airline getting at, exactly?
If you hear United executives talk, they’ll often mention Delta by name, and say positive things. Meanwhile Delta executives rarely even acknowledge United’s existence, even when they’re trying to suggest that United is their only competitor.
Am I the only one who feels like the frequent use of those two words in recent times is sort of a United defense mechanism of sorts?
- I feel like “differentiated” is intended to somehow shade United, and put it into a lower category; however, it’s not clear to me how exactly Delta is differentiated from United, for these purposes
- “Durability” is a clear shot at United, basically suggesting that while United might be rising, Delta is already at the top, and will maintain its position
Bottom line
Delta expects 2025 to be a record year, with the airline anticipating a profit of at least $6 billion. The year is off to a good start, as Delta is seeing a revenue increase of 7-9% for the first quarter, compared to 2024.
While Delta may achieve its goals, the reality is that the airline industry is so volatile, and I think these projections assume a best case scenario of all kinds of macroeconomic factors. So we’ll see how that plays out. Equally interesting will be to see how the competition between Delta and United evolves, given how United is increasingly catching up to Delta.
What do you make of Delta’s projections for financial performance in 2025?
Delta prospects will improve when they dump passengers on a snowy Atlanta runway. . .
It will be interesting to see how close - if not tied even with Delta - United's earnings come in. But remember, DL has been paying its flight attendants at a much higher rate than UA for a few years; and then there's that $1.4 billion profit sharing line item. So when the AFA/UA contract is finally resolved, I predict hearing a 'giant sucking sound' out of UA's earnings ... or should we say ... adjusted earnings. It apples and oranges at this point.
that is correct... and UA's contract with its 10,000 mechanics just became amendable (airline labor contracts don't expire) so two major workgroups are not at top of current industry levels.
UA's winter earnings are typically not as strong as other airlines because UA is fairly weak in Florida; international revenues to Europe and Asia are generally weaker in the winter.
and the biggest factor for DL's higher earnings is its much richer credit card...
that is correct... and UA's contract with its 10,000 mechanics just became amendable (airline labor contracts don't expire) so two major workgroups are not at top of current industry levels.
UA's winter earnings are typically not as strong as other airlines because UA is fairly weak in Florida; international revenues to Europe and Asia are generally weaker in the winter.
and the biggest factor for DL's higher earnings is its much richer credit card cobrand contract. Notably, AA just signed a new contract with Citi but UA is still years out.
For all the grief that AA gets, they do understand, like DL that it is the domestic system, not sexy international routes that generate bigger credit card cobrand revenues.
so, it is not likely that UA will be able to match DL's revenue and earnings growth esp. if it decides to settle with its labor groups.
Durable is a fair and accurate statement to reflect DL's position at the top of the global airline industry in terms of revenue and profits at least among US airlines.
And, no, it isn't a shot at UA, Ben. It has more to say about DL's performance relative to the rest of the industry. If anyone is being targeted, it is WN. You are aware that WN was the highest market cap and most...
Durable is a fair and accurate statement to reflect DL's position at the top of the global airline industry in terms of revenue and profits at least among US airlines.
And, no, it isn't a shot at UA, Ben. It has more to say about DL's performance relative to the rest of the industry. If anyone is being targeted, it is WN. You are aware that WN was the highest market cap and most consistently profitable airline for decades?
as for the DL/UA comparison which you so desperately want to play up because it generates page clicks for you, do you realize that AA and UA significantly underperformed DL's financial performance for years. DL came out of the NW merger achieving financial results which no global airline has seen. Because Scott Kirby listens to every airline earnings call and reads every 10Q, the light bulb finally went on that something wasn't right at AA and UA even though everyone else outside of the industry could see that DL was in a completely different class - more like pre-covid WN financially than AA or UA.
UA is simply BEGINNNG to address its earnings underperformance relative to DAL. UA's earnings and market cap are about 80% of DAL's. They have made huge progress - but the fact that they have improved faster than DL does not mean that UA will overtake DL; it just means that UA is coming closer to generate earnings COMPARABLE to DL - but they aren't there yet.
"""They have made huge progress - but the fact that they have improved faster than DL does not mean that UA will overtake DL; it just means that UA is coming closer to generate earnings COMPARABLE to DL - but they aren't there yet."""
Ben acknowledged this point when differentiating between momentum and position.
Yes - but why not take some pride in serving proper food? How often do you sample the Skylounge buffet, Tim?
The upcoming recession will hit airlines hard by July-August
Don't forget all the extra volatility introduced by the upcoming administration.
Excellent. Now put some money into your food - on air and on land
And I expect 2025 will be the worst year yet for the value of SkyMiles status and of the miles for the average Delta SkyMiles customer and most of the Delta elites.
did you miss that 8% of DL's revenue comes from loyalty awards? There clearly are people that see value in the awards THEY redeem. over $1 billion in loyalty award travel is not a rounding error.
Meanwhile, I will happily continue to redeem 6-12k for Delta SkyWest flights.
Not all of us hate SkyMiles, you just have to learn to use it properly and accept that, no, you are not going to get a great business class deal. Use VS with transfer bonuses for that, and move on.
It's becoming more and more a double economy and economic class. The laptop/Zoom class that is being better paid with better benefits and an option to work remote. They are traveling and on the upper end buying premium seats or taking advantage of cash upgrade offers. My salary (IT work) has risen by 225% since 2018.
Then there is the "working class" that is getting hosed by rising living costs and stagnant wages. Your Publix...
It's becoming more and more a double economy and economic class. The laptop/Zoom class that is being better paid with better benefits and an option to work remote. They are traveling and on the upper end buying premium seats or taking advantage of cash upgrade offers. My salary (IT work) has risen by 225% since 2018.
Then there is the "working class" that is getting hosed by rising living costs and stagnant wages. Your Publix cashier is not getting a 30% raise and hefty bonuses. That class is not traveling as much.
It's why DL will potentially see it's best year ever in 2025 and Spirit if it can't successfully change it's business model from strictly ULCC won't survive much past 2025. It might emerge from Chapter 11 but that means nothing for long term survival.
Is your real name George Romey? I doubt it and there needs to be more moderation. This site has become clickbait, but I will submit the following: The economy’s splitting more each day, with two classes now in clear display. There’s the laptop class, thriving with perks, high pay, and benefits that work—remote options, premium seats, and trips galore. Meanwhile, the working class is stuck at the store, with wages frozen while costs soar, no...
Is your real name George Romey? I doubt it and there needs to be more moderation. This site has become clickbait, but I will submit the following: The economy’s splitting more each day, with two classes now in clear display. There’s the laptop class, thriving with perks, high pay, and benefits that work—remote options, premium seats, and trips galore. Meanwhile, the working class is stuck at the store, with wages frozen while costs soar, no bonuses or breaks in sight, struggling just to make ends meet right. My IT salary’s jumped by 225% since 2018, but those in retail can’t afford the same dream. That’s why 2025 could be Delta’s best year yet, while Spirit might falter, unable to reset. If it doesn’t evolve, it won’t last long, even if it survives—something’s gone wrong.
Well in fact that's my real name. What's your point? Do you dispute what I say because stats would back it up? I'm sorry I didn't realize that you were the moderator. Claude.
I didn't realize that Spirit wasn't making record profits.
Oh man. Comments gonna be so 2024.
I agree, comments should be short and to the point, I don’t want to read an essay !
Singapore Airlines is still better, and treats their employees better.
thank you for sharing
lol
Singapore Airlines is super useful when I need to travel from Atlanta to Minneapolis, or Tampa to Amsterdam.
Not just a Delta comment - it is interesting to me that many people have been predicting a real drop off in travel (and leisure spending in general) since at least fall 2022 (and maybe even earlier). Despite record inflation, economic uncertainty and all the rest, people are still traveling, going on cruises, staying in hotels, spending in restaurants. Obviously a broad macro downturn would hurt travel, but I don't think there is any reason...
Not just a Delta comment - it is interesting to me that many people have been predicting a real drop off in travel (and leisure spending in general) since at least fall 2022 (and maybe even earlier). Despite record inflation, economic uncertainty and all the rest, people are still traveling, going on cruises, staying in hotels, spending in restaurants. Obviously a broad macro downturn would hurt travel, but I don't think there is any reason to expect travel specifically to have any kind of downturn anytime soon. Delta's goals seem realistic.
It's not even that people are traveling and spending money. It feels like people are traveling MORE and spending MORE money than before. Many travel destinations (ski slopes, amusement parks, natural landmarks) are far more crowded than, say, a decade ago despite many of these places raising prices far beyond what the average person would reasonably want to spend.
A lot of people with money who bought homes on the relative cheap and have 30-year 3% mortgage rates feel like it’s ok to pay more to travel more or to pay more to travel better since their housing costs are a drop in the bucket compared to earnings. And then if they rent out a cheaply acquired home at current market rates or as an AirBNB, they have more cash flow to pay more...
A lot of people with money who bought homes on the relative cheap and have 30-year 3% mortgage rates feel like it’s ok to pay more to travel more or to pay more to travel better since their housing costs are a drop in the bucket compared to earnings. And then if they rent out a cheaply acquired home at current market rates or as an AirBNB, they have more cash flow to pay more for travel. And with mortgage rates headed higher, this dynamic may even become more extreme for the benefit of the already well-off.
Pandemic forced people to realize literally anything can happen in life at a blink of an eye and it's better to start yoloing it.
Fwiw, travel numbers had always been steadily increasing pre-pandemic and were constantly hitting new records, if anything the pandemic did actually cut into the baseline numbers, even if we're seeing super strong recovery. Massive hubs like SFO/LAX are still down a sizeable amount of traffic from before.
SFO is down due to less travel from Asia, more remote work in the tech industry, all of the concerns (founded and unfounded) about safety in San Francisco, etc
LAX is also down due to less Asia travel, Hollywood strikes, more content production moving out of the state (including to Delta hub ATL), etc.
Everyone talks up corporate travel, but it is still likely below 2019 trend line. Though 2025 should be a bigger year...
SFO is down due to less travel from Asia, more remote work in the tech industry, all of the concerns (founded and unfounded) about safety in San Francisco, etc
LAX is also down due to less Asia travel, Hollywood strikes, more content production moving out of the state (including to Delta hub ATL), etc.
Everyone talks up corporate travel, but it is still likely below 2019 trend line. Though 2025 should be a bigger year due to more M&A and potential corporate tax cuts (if Trump doesn't screw it up elsewhere)
What is and remains way above trend is discretionary leisure travel, plus small business travel.