Delta Air Lines Surpasses Q4 Expectations, Projects Strong 2025 Growth Led by Premium Travel Demand

Delta Air Lines Inc. (DAL) released its Q4 2024 earnings report today before market open, with shares rising 6% in premarket trading as results exceeded analyst expectations, driven by robust international and corporate travel demand. The stock's performance reflects investor confidence in the carrier's growth outlook, particularly in premium travel segments. The implied earnings surprise was positive with EPS beating estimates by 5.1%.

Delta delivered strong Q4 results with notable strength in international and corporate travel segments, while its premium product strategy continues to show momentum. The company benefited from increased corporate travel sales and significant growth in credit card partnership revenue.

Delta Q4 2024 results:

• Revenue: $14.44 billion vs $14.16 billion expected (+5.7% YoY)

• Adjusted EPS: $1.85 vs $1.76 expected ($1.28 YoY)

• Passenger revenue: $12.82 billion (+5.3% YoY)

• Cargo revenue: $249 million (+32% YoY)

• Adjusted net income: $1.20 billion (+46% YoY)

• Load factor: 84% (flat YoY)

Earnings vs Estimates. Source: Bloomberg

Segment Performance:

• Corporate travel sales: +10% YoY (led by technology and financial services)

• International travel revenue: +6% YoY

• Premium cabin revenue: Outpaced main cabin by 6 percentage points

• American Express partnership revenue: $2 billion (+14% YoY)

• Available seat miles: 72.04 billion (+5.2% YoY)

Updated Q1 and Full-Year 2025 Outlook:

• Q1 Revenue growth: Expected 7% to 9% YoY

• Q1 EPS guidance: $0.70 to $1.00

• Q1 Operating margin: Expected 6% to 8%

• Full-year 2025 EPS: Expected to exceed $7.35

• Free cash flow: Projected above $4 billion for 2025

• Employee profit sharing: $1.4 billion to be distributed in February

The airline, which is the first major U.S. carrier to report earnings this season, faces favorable industry conditions entering 2025. CEO Ed Bastian noted that the supply-demand balance is "as good as I can ever recall it being." The company's strategic focus on premium products appears well-timed, with approximately 85% of new seats planned for 2025 being premium offerings, targeting particularly millennial travelers who are showing increased spending on air travel.

Despite early-year seasonal fare adjustments, domestic ticket prices remain approximately 12% higher than the previous year, according to Hopper Inc., suggesting continued pricing strength through at least mid-2025.

Delta's stock has demonstrated remarkable performance over the past year, rising 46% compared to the S&P 500's 24% gain. This outperformance reflects investor confidence in the airline's premium-focused strategy and its ability to capitalize on strong travel demand trends.

The stock price in premarket trading is approaching November's high of $65.87, a key level that also coincides with a gap-up point in December, when the price spiked 2% at the open. The RSI is indicating bullish divergence, while the MACD is on the verge of a bullish crossover, suggesting potential upward momentum if the resistance is breached. Source: xStation