Delta Air Lifts Profit Outlook on Robust Travel Demand

Delta Air Lines is raising its profit outlook for the current quarter and 2023 as strong travel demand and lower fuel expenses buoy earnings. 

Delta forecast adjusted earnings per share of $2.25 to $2.50 for the second quarter, up from a previous range of $2 to $2.25 a share. For the full year, Delta expects to earn $6 per share, the top end of a prior $5-$6 guide the company issued in April. The airline also said it would generate $3 billion in free cash flow, $1 billion more than it projected two months ago.

“What you’re seeing is a really, really exciting revenue environment,” Delta President Glen Hauenstein said Tuesday at an investor presentation from the company’s Atlanta headquarters.

Beyond strong demand, Delta and other U.S. airlines are benefiting from constrained capacity with less overall flying today than in 2019 owing to a shortage of pilots and choppy aircraft deliveries from Boeing and Airbus.

Spending on air travel is expected to return to its historical average of 1.3% of U.S. gross domestic product in 2023, Delta said in its investor presentation. Households with income above $100,000 annually have accumulated $27 trillion in wealth since 2019, which is driving the torrid demand for leisure travel, according to the airline. This demographic accounts for 75 percent of U.S. air travel spending, Delta Chief Executive Ed Bastian said. 

“When we talk about the health of the consumer, yep, our consumer is in very good shape,” he said.