Delta said it delivered “the most profitable December quarter” in its history with the publication of its fourth quarter results on January 10, 2025. The company generated a pre-tax income of $1.2bn, up $500 million over the prior year with a pre-tax margin of 7.7%.
During the quarter, the company generated operating revenues of $15.6bn and operating income of $1.7bn, with an operating margin of 11%. In addition, the company’s net income for the quarter totalled $843 million, down from $2bn a year prior. However, adjusted net profits were $1.2bn, up from $826 million in fourth quarter 2023. Earnings per share (EPS) was $1.29 and adjusted EPS was $1.85.
The company said its diversified revenue base, led by premium and loyalty, contributed 57% of total revenue last year. For the December quarter, premium revenue growth outperformed main cabin by 6 points. American Express remuneration for the year was nearly $2bn, up 14% over 2023.
During the company's earnings call, Delta CEO Ed Bastian said the ‘baby boomer’ generation was leading the charge in premium cabin spending, but set a positive outlook for younger and “wealthier” generations likely to soon spend more on experiences such as premium.
Management said that transatlantic performance had been “outstanding” along with forward summer bookings for transatlantic flights being “strong”, particularly in business travel.
“We're really, really excited about the way the spring and summer are shaping up in terms of competitive capacity in the transatlantic,” said Delta executive vice president and chief financial officer Dan Janki. “All the basis points are in there for another record year in the transatlantic again.”
However, the company said Latin America capacity growth was the normalising, with it set to have the lowest growth in 2025. “We're toning down our investment in Latam,” said Bastian. “We've got most of the corridors in place that we need to feed each other, and we've worked on that coming out of COVID. So I wouldn't say we're moving into harvest, but we're definitely moving into a more mature position.”
Delta’s operating expense climbed to $13.8bn in the fourth quarter, up from $12.9bn a year prior. Fuel expenses were down from $2.9bn to $2.4bn.
Total revenue per available seat mile (TRASM) was 21.60 cents, up from 20.78 cents in 2023 in the quarter. Cost per available seat mile (CASM) for the quarter was up from 18.84 cents to 19.22 cents in the December quarter. Delta generated an operating cash flow of $1.9bn during the period.
Cargo revenue for the quarter was up 32% to $249 million and was up 14% in the full year to $822 million.
On the back of the strong results, Delta posted its full year 2025 outlook, anticipating earnings of over $7.35 per share, marking a 10% growth year-over-year compared to 2024, excluding the 45-cent impact of the CrowdStrike IT outage during the September quarter that cost the carrier over $500 million. The company announced previously it is seeking damages in court for the outage.
In addition, the company has forecast a free cash flow of over $4bn for 2025 and a gross leverage of 2x or less. For the first quarter of 2025 the company said it expects total revenues to climb 7-9% over the first quarter of 2024, with an operating margin of around 6-8%, and an EPS of $0.70-$1.00.
“As we move into 2025, we expect strong demand for travel to continue, with consumers increasingly seeking the premium products and experiences that Delta provides,” said Bastian.
TD Cowen analysts Tom Fitzgerald and Helane Becker said: “Cirium schedules show [capacity] growing 4.7% in 4.7% in first quarter 2025. This implies first quarter RASM [revenue per available seat mile] growth of over 2% at the low end, over 3% at the midpoint, and over 4% at the high end.”
Bastian said in the call the company expects to increase capacity 3-4% in 2025 full year with “more than 85% of incremental seats in premium cabins”.
The company took delivery of 11 aircraft in the December quarter, bringing its full year deliveries to 38.
Delta’s full year results were impressive, pulling in operating revenues of $61.6bn, up from $58bn a year prior. Full year operating income totalled $6bn, up from $5.5bn in 2023, with an operating margin of 9.7%. Operating expenses for the year totalled $55.6bn, up from $52.5bn in 2023. Net income for the year was $4.7bn, down from $5.6bn in 2023, or an EPS of $5.33 down from $7.17 Adjusted net income was flat at $5.2bn.
TRASM for the year was 21.37 cents, up slightly from 21.34 cents; while CASM was 19.30 cents, down marginally from 19.31 cents in 2023.
For its three to five year target, it is anticipating an average 10% annual growth for its EPS, as well as a free cash flow of $3-5bn and a gross leverage of 1x.
“With continued prioritisation of the balance sheet, leverage improved to 2.6x and Delta returned to investment grade at all three credit rating agencies, accomplishing a key milestone and reflecting our financial durability,” said Janki.
During the December quarter, Delta paid $1.5bn towards its debt and finance lease obligations, ending the year with a total debt and finance lease obligations of $16.2bn. Adjusted net debt at the end of 2024 totalled $18bn – down from $21.6bn at the end of 2023.