(Bloomberg) -- Delta Air Lines Inc. will expand its premium travel offerings in a nod to what it sees as upscale tastes of millennial customers, helping the carrier counter persistently high costs.
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Operating profit margin should reach a mid-teens percentage between 2027 and 2029, above Wall Street expectations and the roughly 11% the carrier expects this year, Delta said in a statement outlining long-term financial targets on Wednesday.
Still, near-term challenges remain, including higher-than-expected expenses and sales constraints. Delta expects revenue in 2025 to grow in the mid-single digits, compared with analysts' expectations for about 6.1%. Non-fuel costs to fly each seat a mile, an industry gauge of efficiency, will increase in the low-single digits, while analysts were expecting a 1.3% decline.
Delta's shares fell 1.1% in premarket trading on Wednesday.
The outlook highlights how Delta is managing near-term challenges as it continues an aggressive push into upscale travel experiences and products that many rivals are now seeking to replicate. The carrier plans to offer more premium seats in its aircraft fleet, with sales from those classes expected to exceed economy tickets by the end of 2027, it said. At the same time, the airline will keep offering some cut-rate basic economy fares to lure travelers away from deep-discounters.
"We've been at it for 15 years, investing aggressively," Chief Executive Officer Ed Bastian said in a briefing with reporters.
Delta expects millennial travelers to buy many of those pricier tickets. That group -- people generally born between the early 1980s and mid-1990s -- is spending more on air travel than all other generations, and about two-thirds are willing to pay for luxury travel, the carrier said.
About 85% of the seats Delta plans to add in 2025 will be premium, Chief Financial Officer Dan Janki said. Delta will also use Airbus SE's A350-1000 widebody jet for its longest international flights after deliveries begin in 2026. About half of the plane's cabin will be comprised of premium seats.
The carrier intends to further divide each fare class to offer more opportunities to add features for an additional cost, Delta President Glen Hauenstein said. The airline's not worried about a backlash, he said, because history has shown that customers are not disappointed so long as ticket features are not being taken away.