Delta Air Lines announced at its Investor Day meeting on Tuesday that the second-quarter earnings outlook and full-year earnings forecast will hit the upper bound of previous estimates due to sustained travel demand.
Delta CEO Ed Bastian said travel demand remains high as consumer spending shifts from goods to services, with the airline’s customers well positioned due to “the accumulation of wealth during the pandemic”.
“Travel is booming, and it’s going to continue to boom because we still have huge demand coming our way,” Bastian said. “Our consumer is in really good shape. »
While Bastian and other Delta executives believe they will experience “years” of favorable travel demand, officials have played down concerns about high inflation, rising interest rates and staff shortages affecting the ‘business.
Data from the meeting showed high-income travelers accounted for 75% of air travel spending in 2021, contributing to an increase in expected free cash flow to $3 billion from $2 billion.
The airline expects a return on invested capital of more than 13 percent, compared to earlier forecasts of low double-digit growth. For 2024, Delta still expects free cash flow of more than $4 billion, an operating margin of 13-15%, and a return on invested capital of approximately 15%.
The company also disclosed that the revenue outlook for the June quarter fell 17 to 18 percent from the previous forecast of 15 to 17 percent. For 2023 as a whole, the company expects revenue to rise 17-20%, up from an earlier forecast of 15-20%.
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