Delta says a stock buyback isn't in the cards as it lays out a tame vision during its investor day
Delta Air Lines (DAL) wants Wall Street to know it’s playing the long game. At its annual investor day on Wednesday in New York, the carrier outlined a conservative growth strategy focused on premium travelers and debt reduction rather than rapid expansion.
“Our consistent strategy, investment, and execution over the past 15 years continue to elevate and unlock the value of our trusted brand,” CEO Ed Bastian said in a statement accompanying the outlook. “With this foundation, Delta is continuing to drive innovation for our customers and deliver sustained value for our owners.”
The Atlanta-based company says that its system capacity will only increase in 2025 by 3 or 4%, an acceleration from 2024 (down 0.4%), but a massive slowdown from 2023, when Delta increased its supply of seat miles by 17% according to its most recent annual report.
Delta said that revenue growth would be in the “mid-single digits” in 2025 over the $58 billion it’s expecting to bring in this year. The airline plans to stick to its plan to get that revenue by leaning on its richest customers.
In a presentation made during its investor day, the company pointed out that “high-income household wealth over 40% higher than 2019" and “high-income travelers accounted for 75% of spending on air travel,” as a means of saying why the company thinks there’s more to squeeze from that consumer segment.
Though premium customers (business class, first class, ultra-premium Delta One flyers) currently make up about 40% of passenger revenue, the carrier is trying to get it to be its biggest moneymaking category by 2027. That’s why it’s opening huge premium airport lounges and serving those customers Shake Shack burgers to curry their favor.
It’s a pretty tame sales pitch all things considered, but in Wednesday trading investors have received it less than enthusiastically. Delta shares are down about 2%. Some on Wall Street had expected a share repurchase to help spice things up, but Delta is choosing to pay down debt instead.
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