Delta Air Lines to Increase 2023 Earnings Twofold

DALLAS — Yesterday, Delta Air Lines (DL) issued an announcement stating that it expected its revenue to increase by 15 to 20% next year thanks to the travel boom seen by the carrier.

This revenue growth will nearly double its projected 2022 earnings as the airline expects its free cash flow to rise from around US$2bn to over US$4bn in 2024.

This announcement comes as U.S. carriers face high fuel costs, supply chain problems, and a limited workforce. However, travelers' willingness to pay higher fares to travel has propelled the US aviation industry back to profitability during 2022.  

Although in recent months the price of jet fuel has dropped by over 20%, other costs are rising. In early December, the carrier offered its pilot union a 34% pay increase over three years in a new contract.

Analysts say this will cause a domino effect with contract negotiations for other US legacy carriers including American Airlines (AA), Southwest Airlines (WN), and United Airlines (UA), where deals with labor unions have been problematic. In particular, AA had previously commented that it wants its pilots to be the highest compensated in the industry.  

Delta's 2023 Revenue Growth

Delta’s Chief Executive Ed Bastian announced that the carrier expects its revenue to be over US$45bn. He also stated that consumers are expected to spend US$30bn on travel over the next year, with no signs of a slowdown.

U.S. airlines have had the best consumer demand in three years. This comes as countries have reopened borders and a strong U.S. dollar has incentives Americans to travel internationally, and an increase in corporate travel demand as officers are reopening. 

As the New Year approaches and many schools give off for winter break, the number of travelers is rising. According to online travel agency Hopper, domestic roundtrip airfare within the U.S. is up 7% in 2022 at $208 per ticket.

Tickets between February 2023 and April 2023 are up 13% compared to 2022. However, international travel has skyrocketed with 62% of flight searches being for international flights, in contrast with only 55% in 2022.

Featured image: N119DU Delta Airlines Airbus A220-100 BCS1 JFK KJFK. Photo: Francesco Checcetti/Airways