By Rajesh Kumar Singh
CHICAGO (Reuters) – Delta Air Lines Inc on Friday offered an upbeat outlook for this year after quarterly profit topped Wall Street estimates on the back of robust travel demand.
U.S. carriers are enjoying the strongest travel demand since the start of the pandemic, boosted by reopening of closed borders, a strong U.S. dollar and rising corporate travel demand.
A worsening economic outlook and rising financial fragility of U.S. households have sparked concerns about consumer spending, but travel demand remains strong and exceeds the pace of flight capacity growth, keeping ticket prices high.
“As we move into 2023, the industry backdrop for air travel remains favorable and Delta is well positioned to deliver significant earnings and free cash flow growth,” Chief Executive Ed Bastian said in a statement.
The company expected March quarter revenue would be 14%-17% higher than 2019 on capacity that is 1% lower.
It expects earnings of 15 cents to 40 cents a share, below a profit of 55 cents a share expected by analysts in a Refinitiv survey, as it forecasts a rise in non-fuel operating cost including higher labor costs.
The carrier has offered a 34% pay hike to its pilots in a new contract, which is expected to become a new “benchmark” for the industry.
For the full-year, Delta reiterated the profit forecast issued last month.
For the December quarter, adjusted profit came in at $1.48 a share, above analysts’ expectations of $1.33 per share. The company reported $12.3 billion in adjusted revenue.
Its earnings came a day after rival American Airlines lifted its profit outlook for the December quarter. The Texas-based carrier is due to report its quarterly result on Jan. 26.
Airlines don’t expect the demand to slowdown anytime soon. Delta has said it expects consumers to spend $30 billion on travel this year.
(Reporting by Rajesh Kumar Singh; Editing by Miyoung Kim and Kim Coghill)
