Delta forecasts bumper 2025 profit on robust premium travel demand, better pricing

By Rajesh Kumar Singh

CHICAGO (Reuters) -Delta Air Lines forecast 2025 profit above Wall Street expectations on Friday, thanks to robust demand for premium travel and the industry’s improved pricing power, sending its shares up 8% in early trading.

Demand for high-end travel has been booming since the pandemic, with travelers more willing to pay extra dollars for more comfortable and swanky seats. Delta, which has positioned itself as the nation’s premium airline, has been one of the biggest beneficiaries.

“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,” CEO Ed Bastian said.

A sharp reduction in airline seats in the domestic market, which plagued carriers last summer, has driven up ticket prices and bolstered the industry’s earnings outlook.

The trend helped Delta post higher unit revenue, a proxy for pricing power, in the December quarter, despite a slowdown in travel spending around the time of the U.S. presidential election in November.

Bumper expectations from the Atlanta-based carrier led to shares of rivals United Airlines and American Airlines (NASDAQ:) rising 3.4% and 2.2%, respectively.

Delta said it expects earnings in excess of $7.35 a share this year, the highest in its 100-year history, compared with analysts’ expectation of $7.22 per share, according to LSEG data. The company reported an adjusted profit of $6.16 a share in 2024.

Delta’s 2025 outlook suggests that the market should expect more of the same, Citi analyst Stephen Trent (NS:) said in a note.

It also reported higher-than-expected fourth-quarter profit and forecast stronger earnings for the current quarter.

The Atlanta-based carrier is betting on an “increasingly constructive industry backdrop” as a contributing factor in its performance forecast for this year.

Delta is not alone. Industry analysts are sanguine about U.S. airlines, crediting their capacity discipline, with J.P.Morgan analysts calling it a “new golden age” for the industry.

The company’s overall revenue grew at a faster-than-expected pace in the fourth quarter from a year ago, driven by both leisure and corporate travel demand.

Delta said the trend is sustaining in the new year and is expected to result in revenue growth of 7% to 9% in the March quarter from a year ago.

Delta’s premium ticket revenue has been growing faster than main-cabin ticket revenue and is projected to exceed it by 2027. In the December quarter, premium revenue growth outperformed main cabin by 6 percentage points.

The airline forecast an adjusted profit in the range of between 70 cents and $1 a share for the quarter through March, compared with analysts’ expectation of 77 cents per share, according data compiled by LSEG.

It reported an adjusted profit of $1.85 per share in the December quarter, topping the $1.75 analysts estimated.