Delta expects 2023 earnings to nearly double thanks to 'robust' travel demand

Delta Air Lines says the travel boom isn't over.

The airline expects its adjusted earnings to nearly double to as much as $6 per share next year, above analysts' estimates. It forecast a 15% to 20% jump in revenue in 2023 from this year, which is expected to bring in roughly $45.5 billion.

Free cash flow will likely rise from more than $2 billion next year to more than $4 billion in 2024, a sharp turnaround from 2020 when Delta posted a record loss. Delta is planning to pay down more of its debt over the next two years.

Delta and other airline executives in recent weeks have been upbeat about travel demand, despite warnings from other industries about economic weakness ahead.

"We've seen our recession," CEO Ed Bastian said about the airline industry. He said now we're still coming out of a recession... and you couple Consumers are prioritizing their spend, where they're prioritizing investing in themselves and experience,"

Shares of Delta gained more than 2% in morning trading following the release.

The U.S. airline industry returned to profitability this year thanks to a sharp rebound in travel demand and consumers' willingness to pay higher fares, which helped carriers more than make up for increased costs like fuel.

Airlines have cut some routes and been forced to limit their capacity growth, which has kept fares firm. Supply chain and labor constraints have delayed deliveries of new aircraft, and airlines continue to struggle with a shortage of trained pilots.

Delta and other airline executives in recent weeks have been upbeat about travel demand, despite warnings from other industries about economic weakness ahead.

Delta on Wednesday raised its fourth-quarter earnings forecast to a range of $1.35 to $1.40 a share, up from its previous outlook of $1 to $1.25 per share. It expects total revenue to come in 7% to 8% higher than the fourth quarter of 2019, before the Covid pandemic.

Delta executives are likely to face questions Wednesday about costs, a new preliminary pilot labor deal, fleet planning, business travel demand, its loyalty program and how prepared they are to weather a potential economic downturn.