During its Investor Day meeting on Tuesday, Delta Air Lines
announced that its second-quarter profit outlook and full-year earnings projections
would reach the high end of previous estimates due to sustained travel demand.
According to Delta CEO Ed Bastian, travel demand remains high
as consumer spending moves away from goods and towards services. He added that
the airline’s customers are in a favorable position due to the “wealth accumulation during the pandemic.”
“Travel demand is strong and will continue to be strong because
we still have a significant amount of demand ahead of us,” Bastian stated. “Our
customers are in great shape.”
Although Bastian and other Delta executives anticipate “years”
of favorable travel demand, they downplayed concerns about high inflation,
rising interest rates, and staff shortages affecting the company.
Data from the meeting indicated that high-income travelers accounted
for 75 percent of air travel spending in 2021, which contributed to the expected
increase in free cash flow from $2 billion to $3 billion.
Delta expects a return on invested capital of over 13 percent,
compared to the previous guidance of low double-digit growth. For 2024, the airline
maintains its projection of free cash flow surpassing $4 billion, an operating
margin of 13-15 percent, and a Return on Invested Capital in the mid-teens.
The company also adjusted its revenue outlook for the June
quarter, raising it to 17-18 percent from the previous estimate of 15-17
percent. For the entire year of 2023, Delta anticipates revenue growth of 17-20
percent, compared to the earlier forecast of 15-20 percent.
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