Expect record March quarter revenue on improving domestic environment and continued strength in international demand, with solid profitability.
Delta Air Lines reported financial results for the December quarter and full year 2023 and provided its outlook for the March quarter and full year 2024.
“2023 was a great year for Delta with industry-leading operational and financial performance. Our people and their commitment to deliver unmatched service excellence for our customers is at the foundation of Delta’s success. We are thrilled to recognize their outstanding work with $1.4 billion in profit sharing payments next month,” said Ed Bastian, Delta’s chief executive officer. “In 2024, demand for air travel remains strong and our customer base is in a healthy financial position with travel a top priority. We expect to grow full year earnings to $6 to $7 per share and generate free cash flow of $3 to $4 billion, further strengthening our financial foundation.”
December Quarter 2023 GAAP Financial Results
- Operating revenue of $14.2 billion
- Operating income of $1.3 billion with an operating margin of 9.3 percent
- Pre-tax income of $2.3 billion with a pre-tax margin of 16.0 percent
- Earnings per share of $3.16
- Operating cash flow of $545 million
- Payments on debt and finance lease obligations of $361 million
December Quarter 2023 Adhusted Financial Results
- Operating revenue of $13.7 billion, 11 percent higher than the December quarter 2022
- Operating income of $1.3 billion with an operating margin of 9.7 percent
- Pre-tax income of $1.1 billion with a pre-tax margin of 7.8 percent
- Earnings per share of $1.28
- Operating cash flow of $499 million
Full Year 2023 GAAP Financial Results
- Operating revenue of $58.0 billion
- Operating income of $5.5 billion with an operating margin of 9.5 percent
- Pre-tax income of $5.6 billion with a pre-tax margin of 9.7 percent
- Earnings per share of $7.17
- Operating cash flow of $6.5 billion
- Payments on debt and finance lease obligations of $4.1 billion
- Total debt and finance lease obligations of $20.1 billion at year end
Full Year 2023 Adhusted Financial Results
- Operating revenue of $54.7 billion, 20 percent higher than the full year 2022
- Operating income of $6.3 billion with an operating margin of 11.6 percent
- Pre-tax income of $5.2 billion with a pre-tax margin of 9.5 percent
- Earnings per share of $6.25
- Operating cash flow of $7.2 billion
- Free cash flow of $2.0 billion
- Adjusted debt to EBITDAR of 3.0x, down from 5.0x at the end of 2022
- Return on invested capital of 13.4 percent, up 5 points over 2022
Revenue Environment and Outlook
“With industry-leading operational performance and best-in-class service delivered by our people, more customers than ever are choosing Delta. In 2023 we delivered a record $54.7 billion in revenue, 20 percent higher than 2022. Premium and non-ticket revenue has reached 55 percent of total revenue, supporting Delta’s differentiated financial results from the industry,” said Glen Hauenstein, Delta’s president. “With strong demand for international travel and a positive inflection in the domestic environment, we expect March quarter adjusted revenue to be 3 to 6 percent higher than the prior year.”
“With our outlook for continued revenue growth, we expect March quarter unit revenues to be flat to down 3 percent over 2023,” Glen said. “The midpoint of this outlook implies a two-point sequential improvement in unit revenues on a year-over-year basis. The March quarter includes a headwind from higher international mix, the normalization of travel credit utilization and lapping a competitor’s operational challenges in the year ago period.”
- Industry-leading operational results with strong leisure and business demand continuing: Delta delivered record December quarter revenue with the highest holiday travel volumes in its history. Operational performance was best-in-class with leading system-wide completion factor and on-time performance. Corporate sales accelerated into year end, including double-digit year-over-year growth in the month of December. Technology and Financial Services led momentum for the December quarter, with Media and Auto sectors seeing notable traction following strike resolutions. Recent corporate survey results indicate that 93 percent of companies surveyed expect their travel volumes to increase sequentially or stay the same in the March quarter and into 2024.
- International demand remains strong: International passenger revenue was 25 percent higher versus the December quarter 2022 with double-digit revenue and capacity growth in the Transatlantic, Pacific and Latin entities. Transatlantic performance led with passenger unit revenues up 9 percent versus the December quarter 2022. Full year results generated record margins across all three international regions.
- Premium and Loyalty driving revenue diversification: Premium revenue grew 15 percent versus the December quarter 2022 on record paid load factors, outperforming Main Cabin. Loyalty revenue improved 11 percent, driven by strong co-brand spend growth. Remuneration from American Express for the December quarter was $1.7 billion, approximately 11 percent higher than the December quarter 2022, and full year remuneration of $6.8 billion grew 22 percent year-over-year. For the full year, diversified revenue streams, including Loyalty, Premium, Cargo, and MRO comprised 55 percent of total revenues.
Fleet Update
Today, Delta announced it reached an agreement with Airbus to purchase twenty A350-1000s, with options for twenty additional widebody aircraft. Deliveries of the aircraft are scheduled to begin in 2026. In addition to improved fuel efficiency, these aircraft will add higher gauge, more premium seating and greater cargo capabilities to the international widebody fleet. The company also announced a service agreement with Rolls Royce to service its Trent XWB-97 engines. The order for the aircraft is within Delta’s previously announced capital expenditure and capacity targets.
Order for 20 Airbus A350-1000 aircraft
Delta Air Lines has chosen Airbus to meet its needs for modern efficient widebodies having placed a first order for 20 A350-1000 aircraft. The A350-1000 will be a new aircraft type in Delta’s fleet.
“We are thankful for Delta’s continued confidence in Airbus’ solutions to meet its fleet needs,” said Christian Scherer, Chief Executive Officer of the Commercial Aircraft business, Airbus. “Delta was the first U.S. airline to operate the A350-900, and is doing so with great success. Delta now welcomes the A350-1000, which will open even more opportunities for the airline and its customers. We are proud that our aircraft serve the entirety of Delta’s impressive global network as this stellar airline takes fleet efficiency to the next level.”
“The A350-1000 will be the largest, most capable aircraft in Delta’s fleet and is an important step forward for our international expansion,” said Ed Bastian, Delta’s chief executive officer. “The aircraft complements our fleet and offers an elevated customer experience, with more premium seats and best-in-class amenities, as well as expanded cargo capabilities.”
Delta Air Lines currently operates more than 450 Airbus aircraft from all of the Airbus product families from the A220 to the A350-900, with more than 200 additional on order.
Once added to the fleet, Delta will benefit from the A350-1000’s operational efficiency, which results in reduced fuel burn and emissions and lower operating and maintenance costs, while passengers will enjoy the comfort of the Airbus Airspace cabin with its spacious and quiet cabin, wide seats, high ceilings and customizable ambient lighting designed to reduce fatigue and jet-lag on long flights.
The A350 is the world’s most modern and efficient widebody aircraft and the long range leader in the 300-410 seater category, flying efficiently on any sector from short-haul to ultra-long-haul routes up to 9,700nm. Its clean sheet design includes state-of-the-art technologies, aerodynamics, lightweight materials and latest generation engines that together deliver 25% advantage in fuel burn, operating costs and CO₂ emissions, as well as 50% noise footprint reduction compared to previous generation competitor aircraft.
Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.
