ATLANTA, Ga. (AP) - Delta Air Lines, the most profitable U.S. carrier, expects profits and revenue to increase next year on sustained demand for air travel and stable prices for jet fuel.
The airline’s top executive, however, warns that concern about the environmental impact of flying including flight shaming and the potential for higher taxes on emissions is “the existential threat’” to Delta’s ability to keep growing.
“You see it happening in Europe; it’s increasingly coming here to the U.S.; you’ll see it on a global scale,” CEO Ed Bastian recently said. “We are seen in the world’s eyes as somewhat of a dirty industry.”
During a meeting with analysts in Atlanta, Bastian said the airline industry has done a “terrible” job explaining how it is reducing emissions through the use of more fuel efficient planes and needs to more forcefully argue for the economic and other benefits of travel.
On Thursday, however, investors seemed more interested in Delta’s short-term financial outlook. They bid up shares of Delta Air Lines Inc. by $1.89, or 3.4%, to $56.97 in midday trading.
The Atlanta based airline said that 2020 adjusted earnings will be between $6.75 and $7.75 per share. The midpoint of that range is modestly higher than the $7.05 projected by industry analysts, according to a survey by FactSet.
Delta expects revenue to grow 4% to 6% over this year, above the 3.6% increase predicted by the analysts.
Bastian said strong spending by travelers boosting the airline now should spill into 2020.
There are a number of other factors that could influence travel decisions, including political uncertainty with a general election in the U.S. next year.
“The last election cycle, in 2016, we did see spending slow down a little bit in certain spaces some consumer spending as well as business spending,” Bastian said.
Delta expects to increase its passenger carrying capacity by 3% to 4% next year unchanged from earlier plans with a chunk of that related to resuming flights to India.
Delta predicted a modest increase in costs. After a sustained increase between 2016 and 2018, the cost of jet fuel has remained stable this year. This summer, Delta increased spending on overtime to handle heavy traffic, and it is negotiating with pilots over a new contract that is certain to include pay raises.