Delta Air Lines Says It’s Seeing More Business From Corporate Travelers

The post-pandemic pop that airlines were enjoying through last year is largely over. Still, Delta Air Lines said Friday that demand has not withered among the middle-class and affluent travelers that the carrier targets.

In fact, the airline's executives touted steady improvements among the corporate traveler sector, with auto and entertainment executives returning to their regular patterns after major strikes last year. Many large technology firms are also beginning to resume travel, President Glen Hauenstein said during an earnings call.

“We’re finally starting to see tech companies traveling and largely I think a lot of the return to office is driving some of that,” he said. Corporate travel was particularly hard hit during the pandemic and remained very sluggish to return to earlier levels.

More broadly, Delta Air Lines said it will tinker with its route network and fleet in 2024 after those two years of torrid growth that restored flying from the pandemic lull, and will seek greater productivity from its workforce.

The airline, like rival Southwest Airlines and others, has largely restored the amount of flying it wants to do after the deep contractions of 2020 and 2021, and plans this year as a period to optimize their schedules for greater profits.

“Industry growth is normalizing after several years of network restoration,” Delta CEO Ed Bastian said. At Delta, that means no more than 5% capacity growth this year after two years of seat mile growth of 10%-15%. “Domestically, supply and demand are coming into better balance.”

Delta forecast income of $6-$7 per share in 2024, slightly below its prior guide of more than $7. The carrier earned $6.25 per share in 2023. Bastian said the company revised its 2024 outlook to be “prudent” given the amount of geopolitical volatility around the world and the abundance of national elections around the world, including the U.S.

The reduced forecast for 2024 sent Delta shares down more than 8% on Friday, dragging along the rest of the industry. Shares of United Airlines declined nearly 9%, while American was down 8.5%; Alaska nearly 6%; Frontier, 6.8%; Southwest 4.5% and JetBlue off 4%.

The Atlanta-based carrier earned $2.3 billion pretax in the fourth quarter, and $5.6 billion for 2023, on full-year revenue of $58 billion. Delta predicted record revenue for the first quarter.

The airline continues to experience supply chain constraints and higher costs that show no signs of easing, executives said. “Every news we get seems to be a bit worse and not better,” Bastian said of supply chain pressures.

Delta will spend $350 million more this year for aircraft and engine maintenance than last year, with suppliers from Airbus to Boeing to Pratt & Whitney and others grappling with higher costs, parts shortages and labor constraints.

The airline also sees “a tremendous amount of opportunity to get more efficient” with its labor productivity rates, given that its worker base of 100,000 is 10% larger than in 2019 with the same level of operations, Bastian said.

Also Friday, Delta announced that it would purchase 20 wide-body Airbus A350-1000 aircraft, the largest of the A350 family, with options for 20 more. Deliveries are to begin in 2026.

Delta expects to make $1.4 billion in annual employee profit-sharing payments on Feb. 14, equivalent to about 10% of each worker’s annual salary.