(Reuters) – Delta Air Lines (NYSE:DAL) said on Wednesday it expects 2025 revenue to grow by a mid single-digit percentage as it strengthens its bet on premium travel, a major revenue driver for the carrier.
The airline added that affluent customers were thriving with leisure travel being the highest priority purchase for high-income households.
Premium travel has been on the rise since the pandemic, with consumers preferring to pay extra dollars for amenities such as more comfortable seats.
Premium seating, which previously depended heavily on corporate bookings, is now seeing increased interest from individual travelers.
Delta Air said it is targeting profit per share to increase 10% in the next three to five years, and expects operating margins to be in the mid-teens percentage.
The Atlanta-based company expects its high-margin premium offerings to outpace its main cabin by 2027.
That opens up avenues for the carrier to grow revenue through non-ticket sources such as airline-branded credit card fees, checked bags and extra legroom.
Delta also forecast 2025 capacity growth between 3% and 4%. The carrier’s shares fell nearly 1% before the bell suggesting investor worries about effects of excess capacity on air fares.
An excess supply of airline seats in the U.S. market during the summer travel season had forced carriers to discount fares to fill their planes, hurting their earnings.
However, measures taken by airlines to moderate capacity growth have since aided pricing power.
Delta Air’s investor day is scheduled on Wednesday where it is expected to provide further details on its long-term financial targets.
