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Delta reports higher-than-expected Q4 profit, forecasts

strong

Q1 earnings

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Premium travel demand boosts Delta's revenue growth

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Reduced airline seats drive up ticket prices, benefiting

Delta's

earnings

By Rajesh Kumar Singh

CHICAGO, Jan 10 (Reuters) - Delta Air Lines ( DAL ) said

on Friday it expects 2025 to be the most profitable year in the

company's 100-year history, thanks to robust demand for premium

travel as well as the industry's improved pricing power.

The U.S. carrier also reported a higher-than-expected fourth

quarter profit and forecast stronger earnings in the current

quarter.

Delta said it expects earnings in excess of $7.35 a share

this year compared with analysts' expectations of $7.22 per

share, according to LSEG data. The company reported an adjusted

profit of $6.16 a share in 2024.

"As we move into 2025, we expect strong demand for travel to

continue, with consumers increasingly seeking the premium

products and experiences that Delta provides," CEO Ed Bastian

said.

Demand for high-end travel has been booming since the pandemic,

with travelers more willing to pay extra dollars for more

comfortable and swanky seats. Delta, which has positioned itself

as the nation's premium airline, has been one of the biggest

beneficiaries.

Delta's premium ticket revenue has been growing faster than

main-cabin ticket revenue and is projected to exceed it by 2027.

In the December quarter, premium revenue growth outperformed

main cabin by 6 percentage points.

The company's overall revenue grew at a faster-than-expected

pace in the fourth quarter from a year ago, driven by both

leisure and corporate travel demand.

Delta said the trend is sustaining in the new year and is

expected to result in revenue growth of 7%-9% in the March

quarter from a year ago.

FEWER SEATS, HIGHER PRICES

A sharp reduction in airline seats in the domestic market, which

plagued carriers last summer, has driven up ticket prices and

bolstered the industry's earnings outlook.

The trend helped Delta post higher unit revenue, a proxy for

pricing power, in the December quarter despite a slowdown in

travel spending around the U.S. presidential election in

November. The Atlanta-based carrier cited an "increasingly

constructive industry backdrop" as a contributing factor in its

performance this year.

Delta is not alone. Industry analysts are sanguine about

U.S. airlines, crediting their capacity discipline. JP Morgan

analysts have called it a "new golden age" for the industry.

Delta forecast an adjusted profit in the range of 70 cents

to $1 a share for the quarter through March, compared with

analysts' expectations of 77 cents per share, according to LSEG

data.

It reported an adjusted profit of $1.85 per share in the

December quarter, topping the $1.75 estimated by analysts.