Delta Air Lines reported strong profits and revenue for the fourth quarter of 2022, beating expectations, despite rising costs due to higher labor expenses. The company’s shares fell on its outlook for the first quarter of 2023, however, as it expects unit costs, excluding fuel, to increase 3% to 4%. Despite the increased costs, Delta’s net income still totaled $828 million in the fourth quarter of 2022, on 9% less flying than three years earlier, due to travelers’ willingness to continue booking, even at high fares. CEO Ed Bastian said in a news release that the carrier “rose to the challenges of 2022, delivering industry-leading operational reliability and financial performance.” He told CNBC that demand for premium products has remained robust, with premium revenue, which includes seats in first class, rising 13% in the last quarter, 8 points above sales growth from the main cabin.
Delta also reiterated its full-year 2023 earnings estimate of $5 to $6 a share. The airline was not the only one to report strong fourth-quarter profits. On Thursday, American Airlines hiked its revenue and profit forecast for the period, sparking a rally in the sector. Despite severe winter weather disrupting flights coast to coast over the year-end holidays, prompting mass cancellations, Southwest Airlines reported it could still see more than $800 million in profits. American and Southwest are scheduled to report on Jan. 26. Delta’s strong performance and outlook demonstrate the resilience of the travel industry as it continues to rebound from the effects of the COVID-19 pandemic. While rising labor costs continue to be a challenge, the airline is confident that its investments in customer service, reliability, and safety will enable it to continue to be a profitable business in the coming years.