High-end demand and a resilient economy are expected to drive more sales growth for Delta in 2025, according to forecasts.

High-end demand and a resilient economy are expected to drive more sales growth for Delta in 2025, according to forecasts.
High-end demand and a resilient economy are expected to drive more sales growth for Delta in 2025, according to forecasts.
  • Delta Air Lines predicts revenue growth of around 5-6% next year, in accordance with analyst predictions.
  • In 2025, the carrier anticipates increasing its capacity by no more than 4%.
  • Despite being the most profitable, the airline faces competition from United Airlines, whose shares have more than doubled this year.

Sales are expected to increase in 2025 due to a resilient economy, which will lead to strong travel demand and credit card spending, particularly for high-end offerings. Additionally, the company anticipates growth in earnings in the coming years.

Analysts predicted a roughly 6% revenue growth next year, and Delta is forecasting a similar growth rate.

Delta announced that it plans to increase its flying by 3% to 4% next year, from 2024. Additionally, the company reaffirmed its fourth-quarter outlook. In the long term, Delta anticipates growing its adjusted earnings by 10% annually over the next three to five years.

Delta's leaders highlight its successful partnership with and the high demand for premium seats as factors contributing to its profitability.

Since 2019, high-earning households have experienced significant wealth growth, and millennials and Gen Z are the fastest-growing consumer segments. As a result, the carrier has shifted its focus towards high-spending travelers, giving it a competitive edge.

On Wednesday, the company cut its profit forecast due to a "deceleration in discretionary demand" and higher costs.

Delta has gained traction in increasing profits and attracting affluent travelers. Delta's stock has risen by 60% this year through Tuesday's closing, while United's has increased by 128%. Both airlines are surpassing the broader market and other competitors.

In 2010, Delta generated 60% of its revenue from main cabin tickets, but this year, only 43% of its revenue comes from main cabin tickets, with 57% generated by premium seats and its lucrative loyalty program.

For years, the airline has been striving to convince passengers to pay for first-class seats, despite previously offering many of them for free.

Delta's president, Glen Hauenstein, revealed that 15 years ago, only 12% of Delta's domestic first-class seats were paid for, with the rest being upgrades for frequent flyers. Now, more than 70% of those seats are purchased, including buy-ups after booking. He admitted that the change was initially "traumatic" for some travelers.

Delta is exploring new ways to divide its cabins, including options for premium economy, extra-legroom seats, and basic economy, according to Hauenstein. Additionally, the airline is considering new choices for travelers in the front of the plane.

The airline's executives may be asked about future demand, cost control measures, and the steps taken to prevent another major impact from the July outage during their presentation.

-CNBC's Melissa Repko contributed to this article.

by Leslie Josephs

Business News