Holiday payoff: Delta Air Lines posts $828M profit in 4Q

Jan 12, 2023, 1:42 PM | Updated: Jan 13, 2023, 1:51 pm
FILE - A Delta Air Lines plane takes off from Hartsfield-Jackson Atlanta International Airport in A...

FILE - A Delta Air Lines plane takes off from Hartsfield-Jackson Atlanta International Airport in Atlanta, Nov. 22, 2022. Delta announced Thursday, Jan. 5, 2023, that it will provide free Wi-Fi service on most of its U.S. flights starting in February. (AP Photo/Brynn Anderson, File)

(AP Photo/Brynn Anderson, File)

Delta Air Lines said Friday that it earned $828 million in the fourth quarter and that consumers are still snapping up flights and making purchases with their airline-branded credit cards.

The Atlanta-based airline said momentum has carried over into the new year, as the travel industry continues to recover from the worst of the pandemic.

Delta shares closed down 3.5% Friday, however, after the airline gave a disappointing outlook for first-quarter earnings. CEO Ed Bastian said the forecast included the estimated cost of a new contract for pilots, which is awaiting a ratification vote, while many analysts did not consider that expense in their predictions.

Delta’s report came a day after American Airlines delivered a rosy update on its fourth quarter, saying that rising revenue would push earnings per share to nearly double the amount that Wall Street expected.

Both carriers and other U.S. airlines have been helped by strong demand for travel and a limited number of flights — a combination that has pushed fares higher.

Airlines say that a shortage of pilots, especially at regional feeder airlines, has curtailed their ability to operate more flights. However, Delta expects to be operating at around full pre-pandemic levels by this summer.

Investors are starting to worry that as airlines become convinced that the travel recovery is permanent, they will add flights in a bid to grab a bigger share of the market and wind up driving fares lower. That is good for travelers but bad for airline investors, and it has happened many times in the industry.

However, it is unclear whether consumers will continue to spend freely on travel while facing higher prices for food, housing and other essentials. Even though inflation eased in December for the sixth straight month, it remained a staggering 6.5% compared with a year earlier.

For many people eager to resume traveling, 2022 was a difficult year. Airlines struggled to rebuild from deep job cuts they made early in the pandemic, leading to stretches of widespread flight cancellations in the summer. In December, a winter storm caused more disruptions.

Delta officials said they saw an uptick in bookings when Southwest Airlines canceled thousands of flights late last month, but they don’t expect the gains to last.

Bastian said the industry’s biggest challenge this year is to restore people’s confidence in the travel system.

“We know the public wants to travel an outsized amount,” he said. “We have to do our very best not to disappoint them.”

For now, though, most airline executives remain upbeat, as do analysts who track the industry.

“Demand remains strong, pricing is likely to remain favorable due to industry capacity constraints,” and Delta is boosting revenue from sources other than main-cabin customers, Cowen airline analyst Helane Becker said.

Bank of America analyst Andrew Didora said he expects Delta to boost free cash flow generation in 2023, allowing it to pay down debt more effectively than American or United. He said Delta is likely to increase its share of the U.S. air-travel market as it increases flights at its most important airports: Atlanta, Detroit, Minneapolis and Salt Lake City.

Delta’s fourth-quarter profit compared with $1.1 billion in the same quarter of 2019, the last one before the pandemic devastated the U.S. airline business.

Excluding some items, Delta said its adjusted profit worked out to $1.48 per share, 16 cents better than Wall Street predicted, according to a FactSet survey of analysts.

Revenue rose to more than $13.4 billion, again beating expectations.

Delta took in $1.5 billion from spending by customers using their airline-branded American Express credit cards. That was up 40% from three years ago. Another $1.1 billion came from from Delta’s refinery near Philadelphia.

The company earned $1.3 billion for the year, its best since 2019, when it made more than $4.7 billion.

Delta predicted that first-quarter earnings will be 15 to 40 cents per share, below the 59 cents forecast by analysts in the FactSet survey. Delta stood by a recent forecast of full-year earnings between $5 and $6 per share.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Activists momentarily surround an MPD cruiser during a march for Tyre Nichols, who died after being...
Associated Press

Memphis police disband unit that beat Tyre Nichols

MEMPHIS, Tenn. (AP) — The Memphis police chief on Saturday disbanded the city’s so-called Scorpion unit, citing a “cloud of dishonor” from newly released video that showed some of its officers beating Tyre Nichols to death after stopping the Black motorist. Police Director Cerelyn “CJ” Davis acted a day after the harrowing video emerged, saying […]
18 hours ago
Rep. Ruben Gallego, D-Ariz., is seen in the U.S. Capitol, July 14, 2022, in Washington.  Gallego sa...
Associated Press

Gallego holds first events of Arizona Senate campaign

PHOENIX (AP) — Democrat Ruben Gallego held the first public events of his U.S. Senate campaign Saturday, taking aim at independent incumbent Kyrsten Sinema and casting his candidacy in a patriotic appeal to the American dream. The fifth-term congressman recounted his journey from a poor family in Chicago to cleaning toilets as a Harvard student […]
18 hours ago
Associated Press

Saturday’s Scores

GIRLS PREP BASKETBALL= Bothell 44, Glacier Peak 40 Burlington-Edison 47, Squalicum 33 Columbia River 53, R.A. Long 28 Entiat 60, Cascade (Leavenworth) 9 Evergreen Lutheran 48, Three Rivers Christian School 26 Hermiston, Ore. 66, Pasco 36 Kamiakin 61, Kennewick 35 Kennedy 49, Bainbridge 42 La Conner 81, Skyview 77 Lakeside (Seattle) 71, Seattle Prep 37 […]
18 hours ago
Associated Press

Saturday’s Scores

BOYS PREP BASKETBALL= Bothell 64, Glacier Peak 49 Cedarcrest 60, Marysville-Pilchuck 57 Inchelium 71, Springdale 70 Kellogg, Idaho 50, Newport 27 Lynden 69, Lakewood 50 Naselle 63, Winlock 59 Sound Christian 69, Pope John Paul II 34 ___ Some high school basketball scores provided by Scorestream.com, https://scorestream.com/ Copyright © The Associated Press. All rights reserved. […]
18 hours ago
Associated Press

Arizona Republicans pick former Trump official to lead party

PHOENIX (AP) — Arizona Republicans on Saturday selected former state treasurer and Donald Trump aide Jeff DeWit to be the party’s next chairman, turning to a familiar face with relationships across the fractured party after its worst election in decades. DeWit replaces firebrand Trump ally Kelli Ward, who helped the former president in his efforts […]
18 hours ago
Former President Donald Trump speaks at a campaign event at the South Carolina Statehouse, Saturday...
Associated Press

Trump says beating of Nichols ‘never should have happened’

COLUMBIA, S.C. (AP) — Former President Donald Trump on Saturday said the footage of the brutal beating of Tyre Nichols by five Memphis police officers is “horrible” and that the attack “never should have happened.” “I thought it was terrible. He was in such trouble. He was just being pummeled. Now that should never have […]
18 hours ago

Sponsored Articles

safety from crime...

As crime increases, our safety measures must too

It's easy to be accused of fearmongering regarding crime, but Seattle residents might have good reason to be concerned for their safety.
Comcast Ready for Business Fund...
Ilona Lohrey | President and CEO, GSBA

GSBA is closing the disparity gap with Ready for Business Fund

GSBA, Comcast, and other partners are working to address disparities in access to financial resources with the Ready for Business fund.
SHIBA WA...

Medicare open enrollment is here and SHIBA can help!

The SHIBA program – part of the Office of the Insurance Commissioner – is ready to help with your Medicare open enrollment decisions.
Lake Washington Windows...

Choosing Best Windows for Your Home

Lake Washington Windows and Doors is a local window dealer offering the exclusive Leak Armor installation.
Anacortes Christmas Tree...

Come one, come all! Food, Drink, and Coastal Christmas – Anacortes has it all!

Come celebrate Anacortes’ 11th annual Bier on the Pier! Bier on the Pier takes place on October 7th and 8th and features local ciders, food trucks and live music - not to mention the beautiful views of the Guemes Channel and backdrop of downtown Anacortes.
Swedish Cyberknife Treatment...

The revolutionary treatment of Swedish CyberKnife provides better quality of life for majority of patients

There are a wide variety of treatments options available for men with prostate cancer. One of the most technologically advanced treatment options in the Pacific Northwest is Stereotactic Body Radiation Therapy using the CyberKnife platform at Swedish Medical Center.
Holiday payoff: Delta Air Lines posts $828M profit in 4Q