Delta Air Lines brought in a record $58 billion in revenue in 2023, and posted a $4.6 billion profit for the year as millions of travelers took to the skies.
The strong financial results also mean the Atlanta-based airline will pay $1.4 billion in profit sharing payments to its employees in February. The payouts to employees on Valentine’s Day are estimated to amount to about 10% of their pay for last year.
At the end of last year, Delta saw its highest holiday travel volumes in history. It expects profits to grow this year as demand for flights continues to be strong.
Delta CEO Ed Bastian in an interview with The Atlanta Journal-Constitution likened last year’s strong rebound in international travel to “a jailbreak, is the best term I could use,” as people felt comfortable traveling internationally for the first time in three years.
The company’s full-year revenue for 2023 was up 15% from the previous year. Its operating expense of $52.5 billion was up 12% year-over-year.
“Consumers are still traveling,” Bastian said, adding that the company had its highest-ever cash sales day on Tuesday. “The demand will still be very strong this year” for international travel, he said. “But probably not at the really, really high prices” seen in the last year.
An American Express Global Business Travel report in December said the boom in leisure travel is expected to slow down due to high interest rates affecting consumers’ pocketbooks. Air fares “are set to stabilize, with prices falling on some routes,” the report said.
But Bastian said for domestic flights, fares already moderated last fall. Budget carriers including Spirit Airlines have since cut some flights, which could lead to higher fares. “I think the domestic marketplace will be an improved marketplace for the industry,” he said.
Delta’s $4.6 billion in net income for 2023 was up significantly from $1.3 billion in 2022, but was short of its record $4.8 billion profit in 2019.
For the fourth quarter, Delta reported $2 billion in net income on $14.2 billion in revenue.
The company has been facing headwinds, including higher costs for labor and maintenance. Some of the issues have affected Delta’s pace of adding flights back at its Atlanta hub, where it still has not yet fully restored flight capacity to pre-pandemic level.
“I think this summer we should be fully back,” Bastian said. It has taken longer than expected because of “some of the constraints that we continue to see in the industry,” including supply chain issues that slow maintenance work.
“The parts are harder to get, the cost obviously has increased,” Bastian said. New aircraft deliveries have also been slowed by those issues.
Looking forward, Delta plans to grow flight capacity 3-5% in 2024, which is lower than it previously planned.
“Industry growth is normalizing after several years of network restoration,” Bastian said during an investor conference call Friday.
Delta expects its unit revenue for the first quarter to be flat or down slightly compared with last year, and has lowered its expectations for earnings per share and free cash flow in 2024. That drove Delta’s stock price down by more than 8% in late morning trading Friday.
“Clearly the geopolitical front continues to be quite testy,” and energy prices are volatile, Bastian said. What’s more, “We’re not making nearly the progress on the supply chain improvements” as hoped, he said. The company expects its maintenance expense this year to be $350 million higher than last year.
Delta has also spent the last couple of years trying to staff up for the rebound in travel, after cutbacks due to the pandemic. After hiring more than 2,000 pilots a year for the last two years, the airline this year plans to hire about 1,000 pilots, which is closer to pre-pandemic levels.
“It’s hard to overstate just how hard it was to bring full business back up again over the last two and a half years, and the intensity of that has been phenomenal,” Bastian said. “It has taken every fiber of our being, and hiring and resources we have to try to get ahead of it.”
Meanwhile, Delta is also working to pay down some of the billions of dollars of debt it accumulated during the COVID-19 pandemic, which caused a sharp drop in demand for air travel and a years-long recovery period.
“2023 was another meaningful milestone in restoring our financial foundation,” said Delta chief financial officer Dan Janki.
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