Delta's outlook improves for rest of 2023

Delta Air Lines has a bullish view of business for the back half of 2023 and heading into 2024.

In conjunction with Delta’s Investor Day on Tuesday, the airline increased its year-over-year revenue outlook for the second quarter to 17%-18%, up from 15%-17%. 

Delta also revised upward its outlook for the full year. Revenue is expected to rise 17%-20% in 2023, up from previous guidance of 15%-20%. 

Lower fuel prices accompanied by the continued strength of premium product sales should drive profit margins to the high end of the 10%-12% range previously anticipated, Delta said. 

Delta continues to project a margin of 13%-15% next year. 

One metric driving Delta’s optimism is that seat capacity at the end of the year will still be 2% below 2019.

Meanwhile, GDP is 7% above 2019. So, if airfares resume a long-term pattern of accounting for 1.3% of GDP, there’s still plenty of room for growth, Delta executives said. 

“We think this is a fabulous setup for us as we head out the back end of ’23 and into beginning part of ’24,” Delta president Glen Hauenstein said. 

Throughout Investor Day, Delta stressed its growing emphasis on premium products. Premium revenue will account for an estimated 35% of Delta revenue this year, up from 24% in 2019. That large increase is driven by a growth in leisure travelers’ demand for premium products and a higher number of premium seats. Delta will offer premium seats, which it defines as Comfort Plus (extra legroom in coach) and higher, on all flights by October, when it retires the last of its 50-seat aircraft. 

Hauenstein said that 25% of Delta’s seat inventory is currently in premium cabins, and that number should grow by one percentage point annually. 

Growth in revenue from co-branded American Express credit cards is also a key element of Delta’s long-term strategy. Dwight James, Delta’s senior vice president of loyalty and engagement, said Delta expects to earn $6.5 billion in credit card remuneration this year. The carrier expects to take that figure to $10 billion by the end of its current contract with American Express in 2028. 

Delta hopes to fuel new credit card and loyalty program uptake through the free WiFi offered on more than 600 domestic aircraft to SkyMiles members. That program will expand across Delta’s international fleet through next year alongside the buildout of the personalized Delta Sync cross-promotional platform to be available inflight on seatback entertainment systems and WiFi-enabled personal devices.

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