Delta Air Lines (DAL) expects strong travel demand in 2025 alongside demand in premium

Shares of Delta Air Lines (NYSE: DAL) soared over 10% on Friday after the company delivered better-than-expected earnings results for the fourth quarter of 2024 and provided an encouraging outlook for the coming quarter and fiscal year. The airline expects demand for travel to remain strong in 2025, supported by demand for its premium products.

Results beat estimates

Delta’s operating revenues increased 9% year-over-year to $15.6 billion in the fourth quarter of 2024, beating estimates of $14.6 billion. Adjusted earnings per share jumped 44% to $1.85, surpassing projections of $1.74.

Strong travel demand

Delta saw strong travel demand through the December quarter, driven by both leisure and corporate travel. Passenger revenue grew 5% to $12.8 billion, with domestic revenue also up 5%. International passenger revenues grew 6% YoY, with all three geographies performing better than expected.

Corporate sales grew 10% YoY in Q4. In its earnings report, Delta said that as per corporate survey results, 90% of companies expect their travel volumes to increase sequentially or stay the same in the March quarter and further into 2025.

Unit revenues increased 4% YoY, with the Transatlantic region delivering a 6% growth in unit revenue for the quarter. Capacity was up 5% while passenger load factor remained flat at 84%. Passenger revenue per available seat mile also remained flat. Cost per available seat mile, excluding fuel (CASM-Ex) rose 3.3%.

Delta’s diversified revenue streams continued to yield gains. In Q4, premium revenue grew 8% while main cabin was up 2%. Loyalty witnessed double-digit growth. American Express remuneration grew 14% YoY to around $2 billion, helped by a pickup in card spend and acquisitions. Cargo revenue grew 32% in the quarter.

Upbeat outlook

Delta expects to see strong travel demand in 2025, along with rising demand for its premium services. For the first quarter of 2025, the company expects adjusted revenue to be up 7-9% YoY on growth in capacity and unit revenue. Adjusted EPS is expected to be $0.70-1.00 in Q1.

The airline forecasts earnings for fiscal year 2025 to be greater than $7.35 per share, representing a growth of 10% YoY. This excludes the $0.45 impact from the CrowdStrike outage.