Delta expects return to profit in ‘22, pre-pandemic flying in ‘23

Delta is reporting a return to profitability as travel recovers from the COVID-19 pandemic. ( John Spink / John.Spink@ajc.com)

Credit: JOHN SPINK / AJC

Combined ShapeCaption
Delta is reporting a return to profitability as travel recovers from the COVID-19 pandemic. ( John Spink / John.Spink@ajc.com)

Credit: JOHN SPINK / AJC

Delta Air Lines said Thursday it expects to return to profitability next year and pre-pandemic levels of flying by 2023.

The Atlanta-based airline has seen a steep rebound in domestic traffic this year. But international and business travel remain weak a year after the pandemic triggered a $12 billion loss and caused Delta to slash its fleet and cut its workforce through buyouts and early retirements.

Ahead of an event with investors in New York on Thursday, Delta raised its estimates for its fourth-quarter results. It expects an adjusted pre-tax quarterly profit of about $200 million, which may exclude some items such as one-time expenses.

Delta CEO Ed Bastian said during the event that the profitable fourth quarter is being boosted by “a really strong holiday period.” The December holidays are expected to bring the company’s best results over a 15-day period since the pandemic hit, with unit revenues up 10-12% — indicating higher fares paid by travelers.

Bastian said consumers are “flush with cash,” and the wealthiest 20% of the U.S. population, who make up more than half of Delta’s customers, has seen disposable wealth soar. That drives increased demand for premium leisure travel, while business travel is still down and may take until 2023 to near full recovery, he said.

The omicron variant is affecting international travel but hasn’t yet driven large-scale cancellations for the Christmas period, according to Bastian. However, he expects it will affect domestic demand in early 2022.

The airline plans to restore 85% of its pre-pandemic trans-Atlantic flying next summer, while trans-Pacific flying is still less than 50% of pre-pandemic levels. Travel is still heavily restricted to key markets including China and Japan.

Delta has hired 9,000 employees as domestic leisure travel demand recovered. Bastian said Delta’s hiring is now meeting the company’s needs.

But some regional carriers are facing a shortage of available pilots. As a result, Delta and other major airlines have cut some flights to small towns on small regional jets flown by contracted regional carriers.

“We aren’t able to serve every place that we’d like to,” acknowledged Delta operations chief John Laughter during a Senate commerce committee hearing Wednesday. He expects the situation to improve next year.

Delta also expects to have “meaningful profitability” in 2022. Delta’s results this year included a financial boost from federal CARES Act relief funding.

“As our profitability improves, we are focused on reducing debt and strategically investing to build on our leadership position,” Dan Janki, Delta’s chief financial officer, said in a written statement.

The airline will focus on paying down billions of dollars in debt it took on to survive the pandemic.

The company expects to have “improved earnings power beyond pre-pandemic levels” by 2024. By that year, Bastian hopes Delta will have a record $50 billion in revenue, along with record profitability.