Increases in premium ticket sales and higher cargo revenue underpinned double-digit profit growth at Delta Air Lines last year despite a nearly $2.3 billion jump in fuel costs.
Overall, revenue grew 8 percent for the year to $44.1 billion, while net income rose 23 percent to $3.9 billion or $5.67 per share. Cargo revenue increased 16 percent to $865 million and sales of premium products, like business and first-class seating, grew 14 percent to nearly $14 million, helping to offset the 34 percent rise in fuel costs.
Looking ahead, lower fuel costs in 2019 coupled with cost control measures are expected to propel double-digit earnings growth at Delta, according to CEO Ed Bastian. Fuel expenses have already come down from October highs, and January prices are 4.7 percent below the same time last year, according to data from the International Air Transport Association.
“We remain confident in our full-year earnings guidance of $6 to $7 per share,” Bastian said in a statement.
Despite the rosy outlook, the ongoing 25-day government shutdown — the longest in U.S. history — could lead to flat earnings for the first quarter, the company said. The lapse in funding is expected to lead to a $25 million loss in revenue for January, Bastian told CNBC on Tuesday.
The Transportation Security Administration is shifting its workforce to cover gaps caused by unscheduled departures, as more agents opt to take sick days rather than work without pay. Miami International Airport, George Bush Intercontinental Airport in Houston, Hartsfield–Jackson Atlanta International Airport, and Washington-Dulles International Airport have all closed some security checkpoints during the shutdown.
On top of longer wait times, airlines are facing delays in Federal Aviation Administration certification of new aircraft and disruptions in employee training. American Airlines, for example, is awaiting certification on two new, narrow-body Boeing 737 MAX planes.
Delta’s stock fell 1.78 percent to $46.90 in pre-market trading in New York.
