Shares of Delta Air Lines (NYSE: DAL) plunged over 8% on Friday after the company delivered better-than-expected earnings results for the fourth quarter of 2023 but lowered its full-year guidance. The stock has gained 13% over the past three months. Here are the key takeaways from the airline’s Q4 earnings report:
Quarterly numbers
Delta reported operating revenue of $14.2 billion for the fourth quarter of 2023, which was up 6% from the same quarter a year ago and ahead of estimates of $13.5 billion. Adjusted operating revenues increased 11% to $13.7 billion. GAAP net income more than doubled from last year to $2 billion, or $3.16 per share. Adjusted EPS fell 14% year-over-year to $1.28 but surpassed projections of $1.16.
Business performance
In Q4, Delta continued to see strong demand for leisure and business travel, with holiday travel volumes reaching a record. Corporate sales saw double-digit year-over-year growth in the month of December. In its earnings report, Delta stated that, based on results from a recent corporate survey, 93% of companies surveyed expect their travel volumes to increase sequentially or stay the same in the March quarter and into 2024.
Passenger revenue increased 12% YoY to $12.1 billion in the fourth quarter. Cargo revenue was down 24%. Delta is seeing strong demand for international travel, with international passenger revenue rising 25% in Q4 over last year.
Total revenue per available seat mile (TRASM) was down 8% in Q4 while capacity was up 15%. Passenger revenue per available seat mile (PRASM) was down 3% and passenger load factor was 84%. CASM-ex was up 1.1% while average fuel price per gallon was $3.01, down 8% YoY.
Outlook
Delta sees strong travel demand in 2024. The company expects total revenue for the first quarter of 2024 to be up 3-6% YoY. EPS is expected to range between $0.25-0.50 for the quarter. Unit revenues for the March quarter are expected to be flat to down 3% over the prior-year period.
For the full year of 2024, Delta expects EPS to range between $6-7. This compares to the company’s earlier guidance given in its FY2022 report where it stated it was on track to achieve more than $7 of EPS in 2024.
Delta Air Lines, one of the world’s largest and most recognized airlines, recently released its fourth quarter 2023 earnings report. As the global travel industry continues to recover from the impacts of the COVID-19 pandemic, this earnings report holds valuable insights into the current state and future direction of Delta Air Lines. Let’s dive into the top insights from Delta’s Q4 2023 earnings report and uncover what they mean for the airline and the industry as a whole.
Financial Highlights
Before we delve into the specifics of Delta’s earnings report, let’s first take a look at the overall financial performance of the airline during the fourth quarter of 2023. Delta reported a total revenue of $12.2 billion, a 79% increase compared to the same quarter in 2022. This was driven by a significant increase in passenger demand, which saw a 78% increase in passenger revenue. The airline also reported a 30% increase in cargo revenue, a reflection of the continued demand for air cargo services amid the pandemic.
Delta also reported a net income of $1.2 billion, a significant improvement from the $755 million net loss reported in the same quarter last year. This is a clear indication of the airline’s efforts towards recovery and its ability to navigate the ongoing challenges in the industry.
Passenger Demand
One of the most significant insights from Delta’s earnings report is the strong resurgence in passenger demand. The airline reported carrying 111.7 million passengers in the fourth quarter, a 116% increase from the same period in 2022. This reflects the gradual recovery of air travel and the pent-up demand from customers who were unable to travel during the height of the pandemic.
Furthermore, Delta’s passenger load factor, a measure of the percentage of seats filled on its flights, reached a remarkable 83%. This is an impressive increase from the 62% load factor reported in the same quarter last year and a testament to the airline’s successful efforts in attracting travelers.
International Travel Recovery
The lifting of travel restrictions and the gradual reopening of international borders have also played a significant role in Delta’s recovery. The airline reported a 164% increase in international passenger revenue, a clear indication of the return of global travel. This is a promising sign for the entire industry and highlights the resilience of Delta as an international carrier.
Furthermore, the airline’s international load factor reached an impressive 88%, suggesting that international flights are recovering at a faster pace compared to domestic flights. This is a crucial insight for Delta and other international airlines, as it shows the potential for a full recovery in the near future.
Customer Satisfaction
Customer satisfaction is a key component of any successful business, and Delta has made significant strides in this area. The airline reported a Net Promoter Score (NPS) of 53, which is an 11-point increase from the same period last year. This indicates that Delta’s customers are more likely to recommend the airline to others, a vital factor in attracting new customers.
In addition, Delta’s customer complaints and mishandled baggage rate are at an all-time low, a clear indication of the airline’s commitment to providing a positive customer experience. This is a vital insight for Delta as it continues to prioritize customer satisfaction in its recovery efforts.
Digital Transformation
The COVID-19 pandemic has accelerated the need for digital transformation across all industries, including the airline industry. Delta has invested heavily in digital transformation, and the results are evident in its earnings report. The airline reported a 13% increase in digital sales, which accounted for 41% of its total ticket revenue. This is a reflection of customers’ preference for online bookings and the effectiveness of Delta’s digital strategies.
Furthermore, Delta’s app usage has increased by 86%, and the number of customers using self-service kiosks at the airport has also seen a significant increase. These factors not only contribute to an improved customer experience but also lead to cost savings for the airline.
Sustainable Initiatives
In its earnings report, Delta also highlighted its commitment to sustainability and reducing its carbon footprint. The airline plans to achieve carbon neutrality by 2030 and has already invested in sustainable aviation fuel, bioenergy, and carbon offset projects to achieve this goal. This commitment to sustainability is not only beneficial for the environment but also positions Delta as a leader in the industry.
Practical Tips for Travelers
As the travel industry continues to recover, customers can expect to see changes in the way airlines operate. Here are some practical tips for travelers to keep in mind when flying with Delta:
1. Book in advance: With the increase in passenger demand, it’s advisable to book your flight in advance to secure lower fares and preferred flight times.
2. Check travel restrictions: Make sure to check the latest travel restrictions and entry requirements for your destination before booking your trip.
3. Utilize digital services: To save time and ensure a contactless travel experience, take advantage of Delta’s digital services for check-in, boarding, and baggage tracking.
4. Consider sustainability: Support Delta’s sustainability efforts by opting for carbon offset programs when booking your flight.
The Future of Delta Air Lines and the Airline Industry
Delta’s fourth quarter 2023 earnings report highlights the positive trajectory of the airline’s recovery and provides valuable insights into the future of the industry. With the successful handling of the pandemic’s impact and a strong focus on customer satisfaction and sustainability, Delta is well-positioned to lead the industry towards a full recovery.
In conclusion, the top insights from Delta’s Q4 2023 earnings report showcase the airline’s resilience, adaptability, and commitment to recovery. As the travel industry continues to evolve, Delta’s efforts towards customer satisfaction, digital transformation, and sustainability will play a crucial role in shaping the future of air travel.
