Delta forecasts sales growth in 2025 thanks to ‘resilient economy’

Delta Airlines said Wednesday that sales will increase in 2025, citing a “resilient economy” due to strong demand for travel and credit card spending, particularly for high-end offerings. He also said he expects profit growth in the coming years.

Delta expects revenue growth of around 5 percentage points next year from 2024, matching the roughly 6% growth expected by analysts.

During an investor day presentation, the carrier said it would increase flights by 3% to 4% next year starting in 2024. Delta also reiterated its outlook for the fourth quarter. Longer term, it said it expects adjusted profit to grow 10% per year over the next three to five years.

Delta is the most profitable US airline and its executives tout its strong partnership with American Express and a strong demand for more expensive seats at the front of planes, which explains its success.

The carrier has focused heavily on high-spending travelers and, during an investor day presentation, said it had an advantage due to the strong growth in wealth among high-income households since 2019. He also said that millennials and generation Z are the fastest growing consumer segments.

Its optimistic tone on consumer spending differs from the picture some other companies paint. Target On Wednesday, it lowered its profit forecast. Its chief executive blamed a “deceleration in discretionary demand” and rising costs.

Delta Rival United Airlines has managed to increase profits and attract high-end travelers. Delta shares are up 60% year to date through Tuesday’s close, while United’s shares are up 128%. Both are outperforming the market as a whole and other carriers.

Delta said only 43% of its revenue this year came from main cabin tickets, with 57% generated by premium seats and its lucrative loyalty program. This represents a 60% share of main cabin revenue in 2010.

The carrier has spent years trying to get its customers to pay for first class, seats it had largely given up in years past.

Delta President Glen Hauenstein told reporters that about 15 years ago, about 12 percent of Delta’s domestic first-class seats were paid and the rest were upgrades aimed at frequent travelers. Now, more than 70% of these seats are purchased, including post-reservation redemptions. He said the change was initially “traumatic” for some travelers.

Hauenstein said Delta is looking for new ways to segment its cabins after the carrier – and its competitors – spent years dividing coach class into options such as premium economy, extra legroom seats and basic economics. Although he did not provide details, he is also considering more options for travelers seated in the front of the plane, Hauenstein said.

During their presentation, airline executives could face questions about future demand, cost control and steps the airline is taking to avoid another repeat of the massive impact of the Crowd strike breakdown last July.

-CNBC Melissa Repko contributed to this article.