Delta cargo revenue up 32% in Q4

Delta Air Lines reported financial results for the December quarter and full-year 2024, highlighting a 32% in cargo revenue in the December quarter year-over-year, sequentially improving throughout the year, with full-year revenue growth of 14% over the prior year.

Other highlights include:

• Delivered record December quarter revenue and operating profit with industry-leading operational performance
• Reported record full year 2024 revenue, $5 billion of pre-tax income, $8 billion of operating cash flow and $3.4 billion of free cash flow
• Guiding to 2025 earnings of greater than $7.35 per share and free cash flow of greater than $4 billion
• Expect March quarter revenue growth of 7 to 9 percent with earnings of $0.70 to $1.00 per share 

"2024 was a great year for Delta with our results reflecting differentiation from the industry and increased durability. Our people finished the year strong, delivering industry-leading operational and financial performance. Sharing Delta's success is core to our culture, and I'm excited to recognize our people's outstanding efforts with $1.4 billion in profit sharing payments next month," said Ed Bastian, Delta's chief executive officer. 

"As we move into 2025, we expect strong demand for travel to continue, with consumers increasingly seeking the premium products and experiences that Delta provides.  Our differentiated strategy and best-in-class operations, combined with demand strength and an increasingly constructive industry backdrop, position us to deliver the best financial year in Delta's 100-year history, with pre-tax income greater than $6 billion, earnings per share greater than $7.35 and free cash flow of more than $4 billion."

December Quarter 2024 GAAP Financial Results

• Operating revenue of $15.6 billion
• Operating income of $1.7 billion with an operating margin of 11.0 percent
• Pre-tax income of $1.2 billion with a pre-tax margin of 7.7 percent
• Earnings per share of $1.29
• Operating cash flow of $1.9 billion
• Payments on debt and finance lease obligations of $1.5 billion
• Total debt and finance lease obligations of $16.2 billion at quarter end

December Quarter 2024 Non-GAAP Financial Results

• Operating revenue of $14.4 billion
• Operating income of $1.7 billion with an operating margin of 12.0 percent
• Pre-tax income of $1.6 billion with a pre-tax margin of 10.8 percent
• Earnings per share of $1.85
• Operating cash flow of $1.8 billion

Full Year 2024 GAAP Financial Results

• Operating revenue of $61.6 billion
• Operating income of $6.0 billion with an operating margin of 9.7 percent
• Pre-tax income of $4.7 billion with a pre-tax margin of 7.6 percent
• Earnings per share of $5.33
• Operating cash flow of $8.0 billion
• Payments on debt and finance lease obligations of $4.0 billion

Full Year 2024 Adjusted Financial Results

• Operating revenue of $57.0 billion, 4.3 percent higher than the full year 2023
• Operating income of $6.0 billion with an operating margin of 10.6 percent
• Pre-tax income of $5.2 billion with a pre-tax margin of 9.1 percent
• Earnings per share of $6.16
• Operating cash flow of $8.0 billion
• Free cash flow of $3.4 billion
• Adjusted debt to EBITDAR of 2.6x, down from 3.0x at the end of 2023
• Return on invested capital of 12.9 percent

Revenue Environment and Outlook

"Delta built momentum as we closed out 2024, with December quarter total revenue growth of 5.7 percent coming in ahead of guidance as our team delivered industry-leading operational performance and demand trends accelerated through the quarter," said Glen Hauenstein, Delta's president.  "With strength continuing into the new year, we expect March quarter adjusted revenue to be 7 to 9 percent higher than 2024 on growth in capacity and unit revenue."

• Demand accelerated through the quarter: Delta delivered December quarter revenue growth of 5.7 percent over the prior year, ahead of guidance of 2 to 4 percent growth on strong operational performance and an acceleration in demand through the quarter.  During the months of November and December, Delta saw four of the top ten revenue days in the company's history and double-digit growth in cash bookings driven by both leisure and corporate travelers.  Adjusted total unit revenue (TRASM) improved several points sequentially to up 0.4 percent year-over-year, including a 1 point expected impact from the election in November.
• Diversified revenue streams differentiate Delta's performance: Delta's diversified revenue base, led by premium and loyalty, contributed 57 percent of total revenue in 2024.  In the December quarter, premium revenue growth outperformed main cabin by 6 points.  American Express remuneration of nearly $2 billion grew 14 percent year-over-year, supported by an acceleration in card spend and acquisitions.  Cargo revenue was up 32 percent in the December quarter year-over-year, sequentially improving throughout the year, with full year revenue growth of 14 percent over prior year.
• Continued strength in international, led by Transatlantic: All three international geographies improved sequentially and relative to initial expectations, with international passenger revenue growth of 6 percent year-over-year in the December quarter.  The largest international entity, Transatlantic, delivered 6 percent growth year-over-year in unit revenue in the quarter, marking the strongest improvement of any entity this year.
• Corporate sales up double-digits with positive outlook: Managed corporate sales* were up 10 percent year-over-year during the quarter, with growth led by the technology and financial services sectors.  Recent corporate survey results indicate that 90 percent of companies surveyed expect their travel volumes to increase sequentially or stay the same in the March quarter and further into 2025.

Cost Performance and Outlook

"Delta delivered the most profitable December quarter in our history with pre-tax income of $1.6 billion, up $500 million over prior year.  Through the year, our teams delivered industry-leading operational performance and maintained a focus on driving efficiency that supported low-single digit non-fuel unit cost growth, consistent with our outlook at the start of the year and among the best in the industry," said Dan Janki, Delta's chief financial officer.  "As efficiency gains continue, we expect non-fuel unit cost growth to continue in the low-single digits for the full year 2025 as efficiencies offset the impact of slower capacity growth and continued investments in our people and the customer experience."

December Quarter 2024 Cost Performance

• Operating expense of $13.8 billion and adjusted operating expense of $12.7 billion
• Adjusted non-fuel costs of $9.9 billion
• Non-fuel CASM was 13.72¢, an increase of 3.3 percent year-over-year
• Adjusted fuel expense of $2.4 billion was down 18 percent year-over-year
• Adjusted fuel price of $2.34 per gallon decreased 22 percent year-over-year with a refinery loss of 4¢ per gallon
• Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.2, a 0.9 percent improvement year-over-year

Full Year 2024 Cost Performance

• Operating expense of $55.6 billion and adjusted operating expense of $51.0 billion
• Adjusted non-fuel costs of $39.1 billion
• Non-fuel CASM was 2.8 percent higher year-over-year
• Adjusted fuel expense of $10.5 billion was down 5 percent year-over-year
• Adjusted fuel price of $2.56 per gallon declined 10 percent year-over-year and includes a refinery benefit of 1¢ per gallon
• Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.3, a 1.1 percent improvement year-over-year

Balance Sheet, Cash and Liquidity

"In 2024, Delta delivered $3.4 billion of free cash flow while reinvesting nearly $5 billion into the business.  With continued prioritization of the balance sheet, leverage improved to 2.6x and Delta returned to investment grade at all three credit rating agencies, accomplishing a key milestone and reflecting our financial durability," Janki said.  "In 2025, we expect to grow free cash flow to over $4 billion, supporting meaningful debt repayment and further leverage improvement to 2x or less as we progress towards our long-term gross leverage target of 1x."

• Adjusted net debt of $18.0 billion at December quarter end, a reduction of $3.6 billion from the end of 2023
• Payments on debt and finance lease obligations for the December quarter of $1.5 billion
• Weighted average interest rate of 4.3 percent with 94 percent fixed rate debt and 6 percent variable rate debt
• Adjusted operating cash flow in the December quarter of $1.8 billion, and with gross capital expenditures of $1.2 billion, free cash flow was $678 million
• Full year adjusted operating cash flow of $8.0 billion and gross capital expenditures of $4.8 billion, resulting in $3.4 billion free cash flow
• Air Traffic Liability ended the quarter at $7.1 billion
• Liquidity* of $6.1 billion at year-end, including $3.1 billion in undrawn revolver capacity

December Quarter and Full Year 2024 Highlights

Operations, Network and Fleet

• Earned the Cirium Platinum Award for operational excellence for the fourth consecutive year and named the most on-time airline in North America, recognizing Delta's commitment to strong operational performance
• Operated the most reliable airline among our competitors in the December quarter, leading on all key metrics, including completion factor, and on-time departures and arrivals1
• Took delivery of 11 aircraft in the December quarter, bringing full year aircraft deliveries to 38, including the A321neo, A220-300, A330-900 and A350-900 aircraft
• Began flying a new long-haul route to Brisbane this winter and expanded connectivity with nonstop flights from Tampa to Amsterdam, Orlando to London and New York to Lagos
• Completed DCA connectivity from Delta hubs with the launch of SEA-DCA starting in March 2025
• Announced first-ever nonstop service between Minneapolis-St. Paul and Copenhagen, expanding Delta's European network and increasing options to European destinations for Minneapolis customers
• Added 13 new Latin America routes from 6 hubs, increasing Delta's reach to winter leisure destinations

Culture and People

• Delta people earned $1.4 billion in profit sharing to be paid out in February, and $86 million in Shared Rewards for the year, recognizing the outstanding performance of Delta's 100,000 employees
• Highest scoring airline in the 2024-2025 All-American Executive Team rankings by Extel (formerly Institutional Investor) for the seventh consecutive year and earned the Most Honored Company designation
• Opened a new pilot training facility in Salt Lake City, a nearly 50,000-square-foot facility, constructed to host more than 1,000 training events every month
• Hosted "Breast Cancer One" charter for the 18th year, bringing together 150 employees who have battled breast cancer and highlighting Delta's 19-year partnership with the Breast Cancer Research Foundation
• Contributed $1 million to the American Red Cross for Hurricane Helene and Hurricane Milton relief
• Partnered with Marine Toys for Tots for the 20th annual TechOps Bike Drive in December and presented them with a record 1,700 bikes and over 2,000 toys
• Delta volunteers helped build four new homes with Atlanta Habitat for Humanity, bringing the total number of homes built or rehabbed to 287 across 13 countries
• Hosted Delta's 13th annual Veterans Day Celebration, a two-day event led by the Delta TechOps team and Veterans Business Resource Group to honor the 11,000 veteran employees at Delta

Customer Experience and Loyalty

• Named No. 1 for business travelers for the 14th consecutive year by Business Travel News, highlighting Delta's outstanding customer service and experience
• Led U.S. airlines in the Forbes Travel Guide's inaugural Verified Air Travel Awards, winning Best U.S. Airline, Best Domestic Business Class, Best U.S. Airline Lounge: JFK Delta One Lounge, Best Loyalty Program and Best Airline App
• Named Airline of the Year by Global Traveler; recognized by the 21st Annual Global Traveler Tested Reader Survey Awards for Best Airline website, Best Airline Lounges, Best Airline for Domestic First Class and Best Airline App
• Opened third Delta One Lounge in Boston, offering elevated services to customers including a one-of-a-kind culinary experience and access to the award-winning BOS Terminal E Delta Sky Club
• Opened first-ever Delta Sky Club at Charlotte Douglass International Airport (CLT), spanning over 14,000 square feet, an important milestone in strengthening Delta's presence in Charlotte
• Unveiled new cabin design to be implemented across the entire fleet, a modern interior designed to elevate the travel experience with new seating materials, enhanced lighting and a refreshed color palette
• Launched first-of-its-kind partnership with Shake Shack, offering burgers on select flights out of Boston, with plans for expansion throughout 2025
• Expanded Delta Digital ID to SLC and DCA with the TSA PreCheck® Touchless ID lane, giving customers access to the industry-leading touchless airport technology

Environmental, Social and Governance

• In partnership with the Minnesota SAF Hub, Delta announced a new blending facility set to open in 2025 in Minnesota and has successfully transported sustainable aviation fuel (SAF) via pipeline to MSP and DTW
• Began rolling out paper cups across the international network, with plans to expand across entire network in 2025, eliminating nearly 7 million pounds of single-use-plastic onboard annually once available system wide
• Delta's Carbon Council nearly doubled fuel savings from 2023, saving 41 million gallons of jet fuel2 in 2024
• Began the installation of rooftop solar panels at Delta's headquarters in Atlanta, introducing renewable energy sources