Delta Air Lines issues long-term growth targets, bets on premium travel

Delta Air Lines Inc (NYSE:DAL ) in its investor day on Wednesday projected financial targets, assuring investors around carrier's post-pandemic recovery and operational efficiency.

The company projects a 10% compound annual growth rate (CAGR) in its per share profit, aiming to hit $8.65 by 2027, up from a midpoint of $6.10 in 2024. The Atlanta-based company expects its high-margin premium offerings to outpace its main cabin by 2027.

For 2025, Delta expects capacity growth of 3-4% and mid-single-digit revenue growth, supported by rising premium travel demand. Non-ticket revenue sources, such as credit card partnerships, checked baggage fees, and extra-legroom seats, are also expected to boost profitability.

Since the pandemic, premium travel has surged, with consumers willing to spend more on amenities like extra-comfortable seating.

By doubling down on premium travel and maintaining a focus on operational efficiency, Delta is positioning itself for sustainable growth, even as it navigates broader industry pressures.

While its Free cash flow is expected to range between $3 billion and $5 billion annually, driven by mid-teens operating margins and disciplined cost management.

The airline plans to bolster margins, projecting an expansion to 15% by 2027, well above the 10.5% forecast for 2024. This trajectory is supported by Delta's focus on premium revenue streams, which are expected to account for over 60% of sales by 2027, as demand for upgraded seating and loyalty programs continues to outpace main cabin growth.

Source: Investing.com