Delta surges as strong demand lifts profit above estimates

Delta Air Lines Inc. shares jumped the most in more than two years after the carrier’s profit beat Wall Street’s estimates for the final months of 2024, buoyed by gains in both the US market and overseas. The company doesn’t expect the momentum to slow in the new year.

Adjusted profit will be 70 cents to $1 a share this quarter, the airline said in a statement Friday that also included fourth-quarter 2024 financial results. That compares with a 76-cent average from analyst estimates compiled by Bloomberg. Revenue will increase as much as 9% from a year ago, the carrier said, while analysts expected a 5.75% jump.

“The supply-demand balance is as good as I can ever recall it being as we look into 2025,” Chief Executive Officer Ed Bastian said in an interview. “We have pretty good visibility through the first quarter and into the spring.”

Delta shares surged 7.7% after the markets opened in New York, the biggest intraday gain since October 2022. The results pulled other carriers higher: United Airlines Holdings Inc. climbed 3.4% at 9:33 a.m. and American Airlines Group Inc. was up 2.4%.

The upbeat outlook from Delta, the first major U.S. carrier to release results, reflects an upturn in fares after airlines slowed expansion in the domestic market and healthy demand for international flights even during the winter. These factors, along with new premium products sold by discount carriers, should produce a US industry profit in the historically weak first quarter for the first time since 2019, according to Deutsche Bank.

“Delta reported another strong quarter,” Tom Fitzgerald, a TD Cowen analyst, said in a report. “Demand accelerated throughout the quarter with the company’s diversified revenue streams showing great momentum.”

While fares dipped in January as usual from 2024’s fourth quarter, domestic ticket prices were about 12% higher than the same month a year ago, according to booking app Hopper Inc. US fares are expected to remain above 2023 and 2024 levels at least through mid-year, Hopper said.

Delta plans to continue its aggressive investment in premium products and services, in part to appeal to millennials who the airline says are spending more on air travel than all other generations. About 85% of the seats the carrier plans to add in 2025 will be premium.

The airline said full-year adjusted earnings will be “greater than” $7.35 a share, compared with an average $7.45 from analysts’ estimates.

Profit, sales beat

Delta’s fourth-quarter adjusted profit was $1.85 a share, compared with the average $1.76 from analyst estimates. Revenue was $14.44 billion, while Wall Street expected $14.16 billion.

The “health of the demand environment was largely responsible” for the results, Bastian said. He pointed to a 10% jump in corporate travel sales led by technology and financial services companies.

“We saw a healthy bounce particularly with corporate spending post the election, once there was clarity to the outcome,” he said of the November presidential vote.

Revenue from international travel increased 6% year over year, while premium revenue rose 6 percentage points more than that from the coach cabin. Payments from credit card partner American Express Co. for loyalty points climbed 14% to nearly $2 billion.

The carrier also said it would split $1.4 billion in profit sharing among employees next month.