The giants of the USA aviation industry $Delta Air Lines (DAL.US)$ In the last few months of 2024, profits exceeded Wall Street Analysts' expectations, thanks to strong growth in international travel and business travel. The company stated that strong demand is expected to continue into the new year. Delta Air Lines' sustained strong profit expansion prospects also confirm that the global tourism industry is still in a booming period in 2025, and airlines are likely to continue the upward performance of stock prices seen since 2024.

Today, USA aviation stocks collectively rose against the trend; as of the time of publication, Delta Air Lines is up over 10%. $United Airlines (UAL.US)$ Increased by nearly 5%, $American Airlines (AAL.US)$ Up nearly 4%.

In a statement on Friday, the airline indicated that it expects adjusted EPS for the current quarter (Q1 2025) to be between 70 cents and 1 dollar, and this statement also includes financial performance for the fourth quarter of 2024. In comparison, the average EPS forecast from Wall Street Analysts compiled by Bloomberg is 76 cents. The airline stated that this quarter's sales will grow by 9% compared to the same period last year, while Analysts generally expect a growth of 5.75%.

"As we look towards 2025, the balance of supply and demand will be the best year we can remember," said Delta Air Lines CEO Ed Bastian in an interview. "We are very optimistic about the financial performance in the first quarter and spring."

Delta Air Lines is the first major airline in the USA to report its earnings, and its extremely optimistic performance outlook reflects that after airlines slowed their domestic market expansion, ticket prices rebounded, while demand for international flights and overseas travel remained strong even in winter. Deutsche Bank's analysis team stated that these factors, combined with new high-end products sold by discount airlines, should allow the USA aviation industry to achieve its first profit expansion since 2019 in the historically weaker first quarter.

After announcing its earnings report, Delta Air Lines' stock reversed the downward trend in Pre-Market Trading, rising over 6% as of the time of writing. The stock surged 50% last year amid a thriving aviation industry driven by strong travel demand, more than doubling the rise of the benchmark index of USA stocks - the S&P 500 Index.

According to booking app Hopper Inc., despite typical price declines in January compared to the fourth quarter of 2024, domestic airfare in the USA is still about 12% higher than the same period last year. Hopper stated that USA ticket prices are expected to stay above the 2023 and 2024 benchmark levels at least until the middle of this year.

Delta Air Lines plans to continue making active investments in high-end aviation and related Airline Services, partly to attract millennials, as the airline states that millennials spend more on air travel than any other generation. About 85% of the seats the airline plans to add by 2025 will be high-end type seats.

The airline also expects that the adjusted EPS for the entire year will "slightly exceed" $7.35, which is largely in line with the benchmark expectations of Analysts.

Wall Street investment Institutions are generally optimistic that the significant improvement in the regulatory environment under the re-elected president of the USA, Donald Trump, will support the prosperous development of the aviation Industry. Aviation Industry executives generally believe that Trump's promised deregulation and tax cuts could further boost tourism development and overall demand for the aviation Industry, and may be more friendly towards mergers and integrations in the aviation Industry compared to the USA government under President Joe Biden.

Profits and sales both break through.

In the fourth quarter performance, Delta Air Lines reported an adjusted EPS of $1.85, exceeding Wall Street Analysts' average forecast of $1.76. The overall sales for the fourth quarter were approximately $14.44 billion, surpassing Wall Street Analysts' expectations of $14.16 billion.

Bastian stated that these results are "largely attributable to the health of the demand environment." He pointed out that corporate travel sales achieved a 10% growth rate led by Technology and financial services companies.

Delta Air Lines' international travel line business sales in the fourth quarter increased by 6% year-on-year, while first-class sales were even 6 percentage points higher than economy class. Loyalty points payments from credit card partner American Express Co. grew significantly by 14%, reaching nearly $2 billion.

The airline also announced that it will allocate up to $1.4 billion in profit sharing to employees next month.

The tourism boom continues to sweep the globe, with airlines expected to see significant growth in performance by 2025.

The USA tourism industry is experiencing record sales growth momentum in 2024, driving the performance of aviation/airlines industry stocks in the US stock market to soar, with the benchmark index for US airline stocks rising significantly by 60%, far outperforming the S&P 500 Index, while the ongoing strong earnings expansion outlook also indicates an optimistic stock market outlook for 2025.

After the COVID-19 pandemic, global airlines are struggling to balance air transportation capacity with increasingly strong demand, rushing to expand routes and the number of aircraft in any way possible to keep up with the so-called revenge travel boom. Overall, airlines' capacity is falling short of the increasingly strong demand from global travelers. Airlines need a long period to restore or expand capacity, such as reopening routes, recruiting and training crew members, purchasing or leasing new aircraft, etc. These adjustments typically lag significantly behind the rapid changes in demand, resulting in a continued shortage of capacity.

It is reported that the largest manufacturer of civil aircraft, Boeing, was controlled by American aviation regulatory authorities this year due to a series of scandals, limiting aircraft production capacity. On January 5, 2024, a Boeing 737 MAX 9 passenger aircraft operated by Alaska Air experienced a door detachment during flight, forcing an emergency landing. Following the incident, the FAA restricted the production rate of the Boeing 737 MAX.

This imbalance is most evident among low-cost airlines focused on the domestic market in the USA. Due to the long-term inability of capacity to meet demand and high maintenance and monitoring costs for older aircraft, these airlines are now shifting towards offering a higher-end flying experience to attract global travelers with bigger budgets.

In the USA, according to the latest statistics from the Department of Transportation, the number of Americans flying has reached an unprecedented level, with the busiest 10 travel days in the history of the TSA occurring in the Calendar for 2024. American tourists are primarily heading to Europe and regions in East Asia and Southeast Asia.

A forecast report from Deutsche Bank shows that the gap between 'rich' and 'poor' countries in the aviation industry is widening, with Delta Air Lines, American Airlines, and United Airlines expected to account for about 90% of the operating and pre-tax profits by 2025.

Barclays has stated that the significant rise in Aviation stocks in 2024 indicates a positive outlook for the Global Aviation Industry in the coming year. "We believe that by 2025, the fundamentals of the Aviation Industry will continue to improve significantly, which will provide important support for the strong profit margins and earnings growth prospects of many Airlines in the industry," wrote analysts led by Ogleneski in a research report.

Editor/lambor