Q4 2024 Earnings Summary
- Delta is experiencing very strong demand with record sales days in early 2025, indicating a strong year ahead. As Glen Hauenstein noted, they had "2 of our top record sales days since the beginning of the year," and see "really, really strong demand" across all entities into April.
- There is robust demand across all customer segments, with premium demand driven by baby boomers and strong corporate sales growth. Corporate sales were up 10% in the fourth quarter, and 90% of corporate travel managers expect to exceed or meet last year's spend.
- Delta expects a record year in transatlantic travel, with favorable competitive dynamics and the absence of last year's negative impact from the Paris Olympics. Glen Hauenstein stated, "We're really, really excited about the way the spring and summer are shaping up in terms of competitive capacity in the transatlantic," anticipating "very, very robust returns."
- Delta's executives expressed uncertainty about demand beyond the first quarter of 2025, stating it's "too early to call the second and third and fourth quarters". This could indicate potential challenges in sustaining growth throughout the year.
- Corporate travel demand has not fully returned to pre-pandemic levels. While there is improvement, executives noted that it is "not back to where it was" before COVID-19, which may impact revenue from business travelers.
- Aircraft delivery delays could impact Delta's capacity growth plans. The company received "a few less deliveries... than we expected", and anticipates "right around 40-ish" deliveries in 2025, potentially limiting their ability to expand operations.
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Growth | Q1 2025 | no prior guidance | 7% to 9% year-over-year | no prior guidance |
Operating Margin | Q1 2025 | no prior guidance | 6% to 8% | no prior guidance |
EPS | Q1 2025 | no prior guidance | $0.70 to $1.00 | no prior guidance |
Nonfuel Unit Cost Growth | Q1 2025 | no prior guidance | Up low single digits year-over-year | no prior guidance |
EPS | FY 2025 | no prior guidance | Greater than $7.35 | no prior guidance |
Free Cash Flow | FY 2025 | no prior guidance | Greater than $4 billion | no prior guidance |
Leverage Ratio | FY 2025 | no prior guidance | 2x or less | no prior guidance |
Revenue Growth | FY 2025 | no prior guidance | Approximately 5% year-over-year | no prior guidance |
Nonfuel Unit Cost Growth | FY 2025 | no prior guidance | Up low single digits (consistent with 2024 performance) | no prior guidance |
Capacity Growth | FY 2025 | no prior guidance | Half of the expected capacity growth funded by existing fleet usage | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Operating Margin | Q4 2024 | 11% to 13% | 11% (1,717÷ 15,559) | Met |
Earnings Per Share (EPS) | Q4 2024 | $1.60 to $1.85 | $1.31 | Missed |
Total Revenue Growth (YoY) | Q4 2024 | 2% to 4% | 9.4% (14,223→ 15,559) | Beat |
Full-Year EPS | FY 2024 | $6 to $7, excluding $0.45 outage impact | $5.39 total (0.06+ 2.04+ 1.98+ 1.31); $5.84 with $0.45 added → below $6–$7 range | Missed |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Recurring strong demand across periods | Consistently noted in Q1-Q3 2024, including expanded travel seasons, record corporate revenues, and healthy demand across regions. | In Q4 2024, executives emphasized strong demand across all entities, with record sales days in January and robust consumer leisure and corporate segments. | Consistent mention with strong sentiment |
Premium cabin outperformance throughout the year | Strong outperformance Q1-Q3 2024, with premium revenue growing faster than main cabin every quarter. | Q4 remarks showed premium revenue up 8% YoY, continuing to outperform the main cabin, with further upside expected in 2025. | Continued outperformance |
Operational efficiency and capacity management focus | Emphasized across Q1-Q3 2024, featuring record on-time performance, reduced maintenance cancellations, and a disciplined capacity approach. | In Q4 2024, Delta cited industry-leading operational performance and plans for 3-4% capacity growth in 2025, primarily in high-margin areas. | Ongoing focus |
Airspace and ATC constraints in key markets | Discussed in Q3 and Q1 2024, particularly in New York and Florida due to ATC staffing shortages. | No mention of airspace or ATC constraints in the Q4 2024 call. | Not mentioned in Q4 |
Transatlantic region momentum from Q2 to Q4 | Q1-Q3 2024 consistently highlighted strong European travel demand, Olympic effects in Paris, and extended travel seasons. | Q4 2024 showed outstanding Transatlantic performance, strong bookings, and a favorable outlook for 2025. | Continued positive momentum |
Corporate travel demand recovery highlighted in Q4 | Q1-Q3 2024 showed progressive improvement, including 7% growth in Q3 corporate sales and robust survey results. | In Q4 2024, corporate sales grew 10% YoY, with 90% of respondents expecting to meet or exceed last year’s spend. | Sustained recovery |
Overcapacity concerns raised in Q2 | Initially noted in Q1 and Q2 2024, with Delta reacting quickly to oversupply; Q3 updates showed encouragement regarding capacity discipline. | Q4 2024 commentary indicated plans to adjust Q2 2025 capacity downward to maintain a 3-4% annual growth target. | Actively managed |
Cash tax obligations introduced in Q3 | Introduced in Q3 2024, with Delta expecting to start paying cash taxes next year as deferred assets are utilized. | No mention of cash tax obligations in Q4 2024. | No mention in Q4 |
Aircraft delivery delays in Q4 | Some Airbus delivery challenges in Q2 2024 but mostly short-duration delays. | Received fewer deliveries than expected (38 vs. 46) in 2024; expects ~40 deliveries in 2025. | Manageable delay persists |
Uncertainty beyond Q1 2025 mentioned in Q4 | No prior mention of this uncertainty in Q1-Q3. | Q4 2024 leaders see a very strong Q1 2025 but note it is too early to predict subsequent quarters. | New mention in Q4 |
High debt concerns only noted in Q1 | Raised in Q1 2024, with a plan to repay $4B in debt and reduce leverage; not repeated in Q2-Q3. | No specific mention in Q4 2024, though Delta did reference ongoing debt reduction efforts. | No longer highlighted |
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Revenue and Margin Outlook
Q: Is your full-year revenue guidance conservative?
A: Management believes the full-year guidance focuses on controllable factors like capacity growth in the low single digits, revenue growth of 5%, and margin expansion of 50 basis points, leading to about 10% earnings growth. They have good visibility into the first half of the year and note that industry dynamics could provide additional upside to margins as the year progresses. -
Demand Strength and Transatlantic Outlook
Q: How is demand shaping up, particularly for the transatlantic market?
A: The company is experiencing very strong demand, with record sales days since the year's start. The transatlantic market showed outstanding performance, driven by strong advanced bookings and close-in business travel. Factors include robust U.S. point-of-origin demand and favorable exchange rates, with the euro down to EUR 1.02, making Europe an attractive destination. Management expects another record year in the transatlantic market. , , -
Premium Revenue Growth
Q: Is premium revenue growth sustainable and outpacing main cabin?
A: Premium revenue growth continues to outpace main cabin, largely driven by baby boomers. Management plans to maintain this growth trajectory, with potential upside if main cabin accelerates as industry capacity has significantly decreased. They aim to drive premium revenue through higher loads rather than higher yields. , , -
Cost Control and CASM Outlook
Q: How will you keep CASM low single digits?
A: The company plans to enhance efficiencies across the fleet and network, focusing on higher-margin areas like premium seats. Improved utilization of assets, fully restoring regional flying, and better workforce utilization will contribute to cost control. They expect maintenance costs to start normalizing and anticipate technology will unlock further efficiencies over the long term. -
Corporate Travel Recovery
Q: How is corporate demand recovering?
A: Corporate demand is very strong, with corporate sales up 10% in the fourth quarter. Trends are continuing into the first quarter, with both yields and traffic positive. Booking curves have shortened, and midweek travel is picking up, indicating a gradual return to pre-COVID behavior. Management notes their corporate market share is at record highs every month. , , -
Capacity Growth Plans
Q: What are your capacity growth expectations?
A: First-quarter capacity growth is expected between 4.5% and 5%. For the second quarter and beyond, they plan to adjust capacity, anticipating the lowest year-over-year growth in June, July, and August. International capacity will be slightly higher than domestic, with the Atlantic slightly above system average and domestic slightly below. , , -
Fuel Cost Recapture
Q: Can you recapture higher fuel costs with current yields?
A: Management believes fuel cost recapture has never been faster, given industry dynamics and the need to improve results. They emphasize the industry's necessity to recapture fuel costs quickly and improve margins overall. -
Capital Expenditure and Fleet Plans
Q: What are your CapEx and fleet retirement plans?
A: The company expects capital expenditures of around $5 billion in 2025, with approximately 40 aircraft deliveries, including 12-13 widebodies. They plan to retire about 30 aircraft in 2025, up from 20 in 2024, allowing for better utilization and efficiency in operations. , -
Competitive Dynamics in Core Hubs
Q: What are you seeing in your core hubs amid competition?
A: Management is encouraged by competitive dynamics in all hubs heading into spring and summer, with the possible exception of Boston due to elevated capacity levels. Overall, they feel positive about their position and performance in core hubs. -
Impact of Los Angeles Wildfires
Q: How are Los Angeles wildfires affecting your operations?
A: There has been a decline in sales in Los Angeles during the wildfire period, but management does not expect it to significantly impact the quarter. Historically, after natural disasters, there's often an uptick in demand as people go in to rebuild, which can offset initial impacts. ,