A Delta plane in an airline hangar in Atlanta
Leslie Josephs/CNBC
Delta Air Lines Wednesday said sales are expected to grow in 2025, citing a “resilient economy” for strong travel demand and credit card spending, particularly for higher-end offerings. He also said that he expects to grow his earnings in the coming years.
Delta forecasts revenue growth in the mid-digit percentage points next year compared to 2024, in line with approximately 6% expected growth analysts. Delta said in a release that costs will continue to rise, rising in the low single digits next year, excluding fuel.
In today’s investor presentation, the operator said it will expand flying by 3% to 4% next year from 2024. Delta also reiterated its fourth quarter outlook. Longer term, it said it expects to grow adjusted earnings by 10% a year over the next three to five years.
Delta is the most profitable U.S. airline, and its leaders tout a strong partnership American Express and high demand for pricier seats to the front of the plane as driving success. It expects $7 billion in revenue from AmEx this year and has a long-term goal of $10 billion.
The operator has focused heavily on travelers who spend money, and in a presentation today investors said it has an advantage due to the sharp growth of wealth in high-income households since 2019. It also said that millennials and Gen Z are the fastest growing consumer segments.
The upbeat tone about consumer spending contrasts with the picture painted by other companies. Target there was cut its profit forecast. The chief operating officer blamed “discretionary demand slowdowns” and higher costs.
Delta competes United Airlines has made inroads in many profit and take high-end travel. Delta shares are up 60% year to date as of late Tuesday, while United is up 128%. Both extend beyond the broader market and other carriers.
Delta said only 43% of its revenue this year came from main cabin tickets, with 57% of that generated by premium seats and its lucrative loyalty program. That’s up from 60% share of revenue from the main cabin in 2010.
The carrier said it expects sales from premium seats alone to exceed revenue from coach seats by 2027. Delta, AmericanUnited and JetBlue has raced to add roomier premium seats to their planes, like lie-flat suites.
The carrier has been working for years to get customers to pay for first class, a seat that was largely reserved last year.
Delta President Glen Hauenstein told reporters that 15 years ago, about 12% of Delta’s domestic first class seats were paid and the rest were upgrades for frequent flyers. Currently, more than 70% of these seats are purchased, including post-order purchases. He said the change was “traumatic” for some travelers.
Hauenstein said Delta is looking for new ways to segment the cabin after the carrier — and its competitors — spent years breaking down coach class into options like premium economy, extra-legroom seats and basic economy. While not giving details, it is also considering more options for travelers sitting at the front of the plane, Hauenstein said.
— CNBC’s Melissa Repko contributed to this article.
