Delta Air Lines, one of the major players in the airline industry, had a successful fourth quarter in 2023, earning a net income of $2.04 billion. This exceptional performance contributed to the airline's record-breaking full-year revenue, exceeding $58 billion. In light of their achievements, Delta has announced its plans to purchase 20 Airbus A350s, with options for an additional 20. The delivery of these long-range jetliners is expected to commence in 2026.
The decision to acquire the A350s aligns with Delta's strategy of catering to high-end travelers. These new aircraft will offer more premium seating options, attracting customers who seek exceptional comfort and service. Delta believes that this approach will help insulate its revenue from fluctuations in the economy, as these travelers tend to be less affected by economic uncertainties.
The airline's positive financial outlook resonates with the overall strong demand for travel witnessed in 2023. After spending most of the pandemic confined to their homes, people have been eager to explore new destinations. Delta's passengers flew approximately 19% more miles in 2023 compared to the previous year, reflecting this surge in demand for air travel. CEO Ed Bastian anticipates that this trend will continue, predicting a promising year ahead for the airline.
Delta's fourth-quarter net income of $2.04 billion exceeded the previous year's profit of $828 million for the same period. Adjusted earnings, excluding special items, amounted to $1.28 per share, surpassing analysts' expectations of $1.16 per share. Revenue also saw a notable increase of 6%, reaching $14.22 billion. Notably, passenger revenue witnessed a 12% growth, and spending on premium services, such as business class, soared by 15%.
Nevertheless, Delta faced challenges in other areas. Its refinery in Pennsylvania experienced a significant decline in revenue, dropping by 51% or $579 million compared to the previous year. On the cost front, labor expenses surged by 23%, attributable to increased wages primarily resulting from a pilot contract ratified by the union in March 2023.
Despite these challenges, Delta's financial performance for the full year signals recovery and growth. With a revenue increase of 15% to over $58 billion, the airline's net income more than tripled, soaring to $4.61 billion compared to $1.32 billion in 2022. Although the full-year profit did not reach pre-pandemic levels seen in 2019, when Delta earned $4.77 billion, it was still enough to fuel the decision to expand the fleet.
Delta's current fleet comprises more than 900 planes, excluding regional affiliates, with a mix of Airbus and Boeing aircraft. By the end of September 2023, the airline already possessed 28 A350s, and their recent order, subject to options being exercised, could potentially increase the total to over 80 A350s. The Airbus A350 is a formidable competitor to Boeing's 787, both featuring cutting-edge carbon-fiber-reinforced composite materials for their fuselages and wings. While Delta does not operate the 787, the airline maintains a fleet of other Boeing jets.
When questioned about Boeing's ongoing issues, including a government investigation into parts on its 737 Max 9 jet, CEO Ed Bastian asserted that these concerns did not influence Delta's decision to opt for Airbus A350s. He emphasized the importance of continuity in the fleet and expressed support for Boeing, stating that the company's success is crucial for both the country and the aviation industry. Delta has committed to purchasing 100 of Boeing's larger 737 Max 10 aircraft, pending certification by the Federal Aviation Administration.
With its strong financial standing and ambitious fleet expansion plans, Delta Air Lines is poised for continued success in the aviation industry. The acquisition of Airbus A350s demonstrates Delta's commitment to providing premium services to attract high-end travelers. As the demand for air travel remains robust, the airline anticipates a positive year ahead, reflecting a sense of optimism within the industry.
