How might Delta's expense structure change going forward?

Delta's expense structure is likely to evolve in several key areas, influenced by both operational efficiencies and external factors such as fuel costs and labor conditions. Here are some potential shifts to watch:

1. **Fuel Costs and Efficiency**: Delta has seen a decrease in fuel costs per gallon, with an average of $2.83/gallon for 2023, down from $3.36/gallon in 2022. This trend could continue if oil prices remain stable or decline. However, increased fuel usage might offset some of these savings.
2. **Labor Costs and Productivity**: Salaries and related costs rose by 13% to $4.23 billion in Q3 2024. With labor costs remaining a significant portion of expenses, Delta's focus on productivity and efficiency gains will likely impact future expenses. The airline has been improving operational performance and reliability, which could lead to reduced costs associated with cancellations and delays.
3. **Operating Expenses and Capacity Growth**: Delta's operating expenses increased by 6% to $55.648 billion, primarily due to higher employee-related costs and increased capacity. As capacity growth moderates, non-fuel unit costs are expected to increase by 1 to 2% year-over-year. This suggests that while overall efficiency improves, the cost per available seat mile might rise slightly.
4. **Refinery Segment Performance**: The refinery segment reported an operating income of $38 million in 2024, down from $385 million in 2023. Fluctuations in industry refining margins and the optimization of refinery operations will likely influence future earnings.
5. **Debt Repayment and Interest**: Delta has been actively managing its debt and finance lease obligations. As the airline continues to generate cash and improve its balance sheet, the interest burden could potentially decrease as a percentage of total expenses.

In summary, while Delta may face increased costs related to labor and capacity, improvements in fuel efficiency and operational performance could help mitigate these expenses. The airline's strategic focus on debt repayment and dividend payments also suggests a commitment to optimizing its expense structure.