RE:RE:DAL CEO Delta Air Lines Inc. posted record revenue in 2023 and expects “solid growth” in corporate travel demand this year, the airline's executives said Friday, Jan. 12.
Delta president Glen Hauenstein said during an earnings call that the Atlanta-based airline saw "double-digit growth" for corporate travel in December and it's now at about 90% of pre-pandemic levels.
Delta expects that growth to continue in 2024, citing a recent corporate survey where nearly 93% of respondents said they plan to spend as much or more on travel in the first quarter.
“Technology and financial services led this momentum for the December quarter, with media and auto sectors seeing notable traction following the strike resolutions,” Hauenstein said, referring to last year’s historic Hollywood writers and actors strikes, as well as the United Auto Worker strike. Both impacted the airline's business because Delta has major hubs in Los Angeles and Detroit.
Corporate travel is an important driver of business for airlines and has been slower to recover from the pandemic compared to leisure travel. One reason is many employees are still working from home at least part time, which has impacted travel patterns.
In December, 21.9% of workers ages 16 and older said they were working from home some or all of the time, according to data from the U.S. Bureau of Labor Statistics.
The workplace continues to evolve, though. UPS Inc. this month said it will require most workers to be back in the office five days a week, beginning in March. Genuine Parts Co. and BlackRock Inc. have also updated their hybrid work policies in recent months. Around 90% of 1,000 surveyed companies intend to return to the office in some capacity by the end of 2024, according to an August report from ResumeBuilder.
Delta CEO Ed Bastian said tech companies have lagged the most in returning to travel, along with consultant firms.
“We’re finally starting to see the tech companies traveling again,” he said. “I think a lot of it is the return to the office."
Record revenue
Delta's outlook followed a Friday earnings announcement that the airline grew its revenue to $58 billion in 2023, up 15% from the previous year. Its net income increased to $4.6 billion in 2023, up from $1.3 billion in 2022.
It's a significant turnaround from 2020 when Delta reported a $15.6 billion loss.
“It’s hard to overstate just how hard it was to bring full business back up again over the last two and a half years,” Bastian said Friday. “It’s taken every fiber of our being. … We’re there now.”
Bastian said the airline carried a record 9 million customers on 60,000 mainline flights during the 15-day period over Christmas and New Year's.
“Delta carried more travelers this holiday season than any other time in our history,” he said.
Due to its financial performance, Delta said it will dole out $1.4 billion in profit sharing payments to employees on Valentine’s Day, about 10% of their 2023 pay.
Airbus order
Delta also announced Friday it reached an agreement to buy 20 Airbus A350-1000 wide-body planes, with an option to purchase 20 more. Deliveries of the aircraft are expected to begin in 2026.
The A3350-100 can seat 350 to 400 passengers and burns less fuel than other aircraft, according to Airbus. The planes will support Delta's international expansion, according to an announcement.
“These planes complement our fleet strategy and will offer a world-class customer experience for international travelers,” Bastian said during the earnings call.
The Airbus planes will replace Boeing 767s, Bastian said.
This month, the FAA grounded more than 170 Boeing 737 Max 9s, after a door plug blew out on an Alaska Airlines flight. But Bastian told CNBC he has not lost confidence in the company. Delta doesn't fly the 737 Max 9.
"Boeing is a great company," he told CNBC. "They will figure this thing out. ... I think the incident is certainly isolated to the Max. We fly over 500 Boeing airplanes every single day."