Delta Air Lines expects revenue growth in 2025 to be in the mid-single digits, it revealed during its investor day on November 20, 2024. In addition, non-fuel unit cost growth is set to be up in the low-single digits for 2025. The airline also guided capacity growth for next year to be up around 3-4% over this year.
The company's CEO Ed Bastian said at the event that its premium products were driving the growth. He noted that younger generations were its fastest growth customer segment with the presentation stating two-thirds of Millennials willing to spend on luxury travel. It has been well-documented that post-pandemic, consumers have been more willing to spend on more luxury products and experiences.
Bastian spoke of the shifting strategies amongst competing airlines, but said the company remained committed to its tried and tested strategy.
The company reaffirmed its fourth quarter guidance. Delta introduced its three-to-five year financial framework, stating that it expects a 10% increase in earnings per share (EPS) over the period. In addition, the airline also expects operating margin to be in the mid-teens during the period and to generate a free cash flow of $3-5bn. The margin expansion is set to be driven by high-margin revenue growth, leveraging investments, normalising maintenance, and accelerating technologies. The company said it will reduce its fleet families from 13 family fleets down to seven, and is on the path to its greatest widebody scale.
Delta said operating margins will also improve with continued growth in premium seat mix. The airline is introducing the A350-1000 with around 50% premium mix. The company expects premium ticket revenue to exceed main cabin revenue by 2027.
The company also expects 15% return on invested capital throughout the next three to five years as well as have over $40bn in unencumbered assets. Delta aims to also strengthen its balance sheet to 1.0x gross leverage in the period.
Delta's loyalty programme, SkyMiles, is also a key driver to the company's revenue boost. For this year, main cabin revenue is expected to be around 43% of total revenue, while premium, loyalty, and other revenues are set to make up the remaining 57% of its revenues. The company's long-term aspirations see the latter making up over 60% of total revenues.