Delta results boosted by US strength and business flyers


Delta Air Lines reported the highest operating revenue in its history in 2019 driven by business passengers and strength in the domestic market as its rivals continue to face cancellations of Boeing’s 737 Max flights.

The Atlanta-based carrier said operating revenue rose to $47bn, a more than $3bn increase from the previous year, and net income rose 21 per cent from $3.9bn a year earlier. Adjusted earnings per share rose 30 per cent to $7.31.

Chief executive Ed Bastian said the Atlanta-based airline achieved strong results by pursuing corporate customers and charging all flyers a premium for improved operations, like on-time reliability and the elimination of involuntary bumping, while sinking funds into better airport infrastructure.

The company carried 204m passengers last year, a 6 per cent increase over 2018.

“If pricing was going to be a commodity . . . we were never going to be able to afford to generate the type of revenues we need to operate Delta at scale,” Bastian said. “We’ve generated considerable revenue by giving our customers premium products and allowing them to pay for it.”

Delta has enjoyed “some marginal benefit” following the grounding of Boeing’s 737 Max, which is absent from Delta’s fleet. The grounding, ordered by regulators worldwide after two fatal crashes, forced competitors to cancel flights. Still, Bastian said, “I don’t think it’s been a major source of our revenue strength.”

The company opted for the Airbus321neo in December 2017 because it was more comfortable for passengers, Bastian said. At the same time it inked a deal with engine-maker Pratt & Whitney allowing Delta TechOps, the airline’s mechanic corps, to repair Pratt & Whitney engines, on their own planes and others.

Indeed, in the fourth quarter ended Dec. 31, the company reported strong domestic demand as revenues in the region climbed 7.7 per cent to $7.6bn.

For the quarter, Delta reported a 6.5 per cent increase in operating revenue to $11.4bn and a 7.9 increase in net income to $1.1bn. Adjusted earnings of $1.70 a share, easily topped Wall Street’s estimates.

2020 already is shaping up to be a good year, Bastian said, with top-line growth of 5 to 7 per cent driven by US consumers who want to fly. Delta’s guidance for earnings per share for the year is $6.75 to $7.75.

Delta shares, which are up roughly 1.7 per cent year-to-date, climbed 5 per cent in pre-market trade. The results also helped boost shares in other US carriers, with Southwest shares up 1.2 per cent, United up 1.6 per cent and American Airlines rising 1.5 per cent.

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