Wed | Jan 22, 2020

Delta sees strong 2020 profit, revenue

Published:Friday | December 13, 2019 | 12:31 AM
In this Feb 5, 2019, file photo a ramp worker guides a Delta Air Lines plane at Seattle-Tacoma International Airport in Seattle. Delta says earnings and revenue will rise in 2020 because of continuing solid demand for air travel and no increase in spending on jet fuel. CEO Ed Bastian says Delta is getting a boost from strong spending by consumers, which he expects to spill into 2020.
In this Feb 5, 2019, file photo a ramp worker guides a Delta Air Lines plane at Seattle-Tacoma International Airport in Seattle. Delta says earnings and revenue will rise in 2020 because of continuing solid demand for air travel and no increase in spending on jet fuel. CEO Ed Bastian says Delta is getting a boost from strong spending by consumers, which he expects to spill into 2020.

Delta Air Lines, the most profitable American carrier, expects profits and revenue to increase next year on sustained demand for air travel and stable prices for jet fuel.

The airline’s top executive, however, warns that concern about the environmental impact of flying — including flight-shaming and the potential for higher taxes on emissions — is “the existential threat” to Delta’s ability to keep growing.

“You see it happening in Europe, it’s increasingly coming here to the US, you’ll see it on a global scale,” CEO Ed Bastian said Thursday. “We are seen in the world’s eyes as somewhat of a dirty industry.”

During a meeting with analysts in Atlanta, Bastian said the airline industry has done a “terrible” job explaining how it is reducing emissions through the use of more fuel-efficient planes, and needs to more forcefully argue for the economic and other benefits of travel.

The Atlanta-based airline said that 2020 adjusted earnings will be between US$6.75 and US$7.75 per share. The midpoint of that range is modestly higher than the US$7.05 projected by industry analysts, according to a survey by FactSet.

Strong spending

Delta expects revenue to grow four per cent to six per cent over this year, above the 3.6 per cent increase predicted by the analysts. Bastian said strong spending by travellers boosting the airline now should spill into 2020.

Delta expects to increase its passenger-carrying capacity by three per cent to four per cent next year — unchanged from earlier plans — with a chunk of that related to resuming flights to India.

The airline said this week that it plans to hire 1,300 pilots in 2020, although Bastian said most will replace those who are retiring or leaving the airline.

Delta has reported net income of more than US$33 billion since the start of 2010 after losing US$26 billion in the previous decade, which was marked by terror attacks using US planes, two recessions and an oil-price shock.