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Finally, he thought, the worst was behind them. Around Thanksgiving of last year, Delta CEO Ed Bastian was expecting a banner holiday season as Americans’ appetite for air travel rebounded following the pandemic. “I called it the final kick,” Bastian told the Harvard Business Review earlier this year. “We had a very, very busy Thanksgiving holiday. A lot of people back in the skies for the first time. Then two days after Thanksgiving, Omicron hit.” But though Christmas and New Year served a turkey last year, Bastian is expecting a banquet-in-the-skies this year. Not to mention his most anticipated arrival to date: Bastian will spend Thanksgiving in Delta’s hometown of Atlanta with his daughter who’s expecting a boy, and tells me he’s “incredibly excited” about becoming a grandfather for the first time.

In an interview with Fortune in mid-November, Bastian detailed how his flight plan has lifted the airline from the industry-wide tailspin that ended just ten months ago, and how he expects to hit pre-COVID heights of profitability in 2024. All U.S. airlines are greatly benefiting from the collective return to the skies, but Bastian’s strategy is distinct in that he’s aiming to grab a lot more travelers, and grow margins faster than his rivals, by following a carefully sequenced, two-step plan. The goal: to get “profits and sales consistently back to, or even well beyond, the levels of 2019,” Bastian told Fortune. In that year Delta hit $6.6 billion in operating profit, and a robust operating margin of 14%.

The airline is experiencing what Bastian calls a “counter-cyclical recovery.” His business is absolutely booming at time when inflation rampages, an economic slowdown is underway, a full-blown recession may be looming, and a host of sectors from housing to semiconductors are suffering. “But airlines have already been through the worst recession an industry can go through,” he told me. “We lost all revenue overnight. People had no access to airline travel in the pandemic. Now, they’re shifting from buying things to spending on experiences and seeing new places.” Folks are now just starting to quench that long pent-up thirst for air travel. “We’re seeing the strongest buying in our history,” says Bastian. He notes that domestic flights are consistently packed at over 90%, exceeding the strong load factors of 2019. “They’ve been that full since the start of April,” says Bastian. “It used to be that planes would be well below that number on a Tuesday or on a Saturday afternoon. Now, they’re over 90% full every day of the week.” When it comes to stock prices this year, the airlines are a mixed bag: While the S&P is down some 15% year to date, Delta and Southwest are down around 10%, American is down almost 19% and United’s stock price is virtually unchanged.

Delta, for its part, sees that the combination of huge demand and beaten-down capacity that’s just now returning has created a big opportunity for growing profits. And it’s the dynamic Bastian plans to exploit. In Q3, Delta garnered those peak revenues because it’s been able to recoup all of the big cost of jet fuel, and more, by raising prices—without denting customers’ yen for buying tickets. Delta booked 16.9 cents per “total available passenger mile” flown, or PRASM, in the September quarter. That figure beats Q3 of 2019 by an incredible 21%, and reflects Delta’s ability to greatly hike prices and still fill its planes. The rub is that its costs per available seat mile (CASM) jumped even more, by 26%, explaining why its margin of around 10% still trails its profitability in the months preceding the COVID-19 outbreak.

The reason margins lag despite high-flying sales is two-fold. First, Delta flew 17% fewer seat miles in Q3 of this year than in the same three months of 2019. Hence, its fixed costs of salaries, airplane financing, and wages were spread over a much lower number of tickets. Second, Delta spent heavily to restore its flights and rebuild and retrain its workforce. It cut 25,000 workers during the pandemic deploying generous early retirement packages. “We hired back 25,000 people since the start of last year as traffic came back,” says Bastian. “So one in every four of today’s employees is new. We had to invest tremendous amounts of time and money in training people.” The COVID years led to a chill between pilots and management at many of the major airlines, and earlier this fall Delta’s pilots authorized a strike if a new contract isn’t reached. In recent days, however, both sides appeared to inch closer to a deal. Delta also shouldered big extra costs from reactivating parked aircraft and paying extra overtime to its veteran flight and gate attendants and ramp crews while training those thousands of newly-hired workers.

Lesson #1: Focus your resources

As the recovery began in early 2021, Bastian faced a choice of where to concentrate his planes and people. “Because demand was so much lower than before the pandemic, we had to decide whether to use the same level of capacity across all of our markets, or favor certain cities,” he says. “We had limited assets to deploy. We knew our core hubs, Atlanta, Minneapolis, Detroit and Salt Lake City, are bastions where we have a very significant position and great brand loyalty. So we prioritized the extremely competitive markets, those on the coasts, Boston, La Guardia in New York, Seattle, and Los Angeles.” He notes that those cities ranked among the weakest for air travel as the recovery began. “People were going to the mountains or the beaches in Florida, not to those cities,” he says. “As a result, competitors were leaving. In the pandemic, we didn’t cut back on the coasts as much as our competitors, and in the recovery, we put most of our capacity increases into those markets.” Bastian saw an opportunity to gain share as rivals retreated.

Bastian reinforced Delta’s standing in L.A. and La Guardia by pushing hard to complete giant new facilities started well before crisis hit. The ultra-modern venues, Delta’s Terminal C at La Guardia and Terminal 3 at LAX, both opened this year. “They’re the two finest facilities in the two top markets in the country,” says Bastian. “They will not be replicated for many years to come.” The formula of keeping a higher proportion of flights during the downturn, and ramping faster than rivals in the recovery, worked well. In the past two years, Delta has maintained its number one spot at LAG, risen from second or third to first in LAX, surpassed Jet Blue to become the leader in Boston, and held its strong second-place position in Seattle.

Lesson #2: Don’t ramp up too fast

Bastian acknowledges that Delta floundered at the controls when air travel made a sudden takeoff. “In late 2021 and early 2022, we were running at 50% of capacity. People weren’t flying because of Omicron. Then around Spring Break and Presidents Day, demand went to what would have filled 100% of our capacity overnight,” he recalls. “People didn’t care about prices. The demand was overwhelming, we were sold out in every important market. We wanted to meet as much of that demand as possible.” In weeks, Delta nearly doubled its flights in an effort to carry as many passengers as in 2019. The upshot was the famous chaos of cancellations and delays in the spring, as new workers who’d just left training couldn’t handle the surge in volumes of customers and baggage, and Delta couldn’t find enough pilots to cover the ballooning schedule. “We flew all we could and stretched our resources and capacity beyond our means. We had no buffer for bad weather or bottlenecks,” recalls Bastian.

To get Delta’s wings level, Bastian slashed capacity back to the 85% that Delta could handle. “To get there, we cut around 100 flights a day,” he says. “That allowed us to get the stability we needed, and to the reliability we’re showing today. Over the 45 days to early November, excluding Hurricane Ian, we had just 108 cancellations in 120,000 flights, for a 99%-plus completion record.”

Now, Bastian’s principal goal is restoring full service in its core cities. In Atlanta’s Hartsfield-Jackson, the world’s busiest airport, Delta holds an 80% share of traffic, and the figures range between 50% and 55% in Detroit, Salt Lake City and Minneapolis. It’s that dominance that convinced Bastian to steer resources to the coastal cities, and offer proportionately fewer flights where it’s strongest. It offers far more frequencies than its rivals, an edge that attracts hordes of business travelers to its loyalty programs, leading to fuller flights and higher fares. Delta also gets maximum use from the planes and crews flying all the nonstops from those airports, simply because it connects from an Atlanta or Minneapolis to so many destinations. If Southwest or United, say, lower prices in an attempt to poach road warriors, Delta can match their fares—and still generate higher margins.

Lesson #3: Keep “marginal” costs low

Bastian is determined not to repeat the mistakes of this spring as he moves traffic back to pre-pandemic numbers. “We’ll do it gradually, without straining our capabilities like we did in the spring,” he says. Lifting the volume of seats flying to and from the big hubs will lower prices, he says. “But demand is so strong that fares won’t go back to 2019 levels,” he adds. And the “marginal” cost of the new seats will be extremely low. “We own the planes and are already paying the people,” he told me. “The big extra cost is the incremental fuel.” He’s expecting the second step in his two-phase strategy to provide a large boost to margins.

Looking to the future, Bastian is highly encouraged by the sudden return in the trans-Atlantic trade. “We missed three years of demand to Europe and now it’s back,” he says. “We had 20% more domestic passengers going to Europe in October than in the same months of 2019. About 80% of the customer mix is coming out of the U.S. Usually it’s about 60%. The strong dollar is putting Europe on sale for Americans.” In the domestic market, Delta will not grow by gaining more gates at its hub airports, simply because they’re already full. That appears to be fine with Bastian, since as long as they’re choc-a-bloc with frequencies, rivals have little room to steal business. But he adds that Delta can substantially raise both traffic and margins in its stalwart cities by flying bigger planes. “We have large orders for the Airbus A321neo at 185 seats that will replace the A320s at 110 to 130 seats,” he says. “The bigger planes are a lot more fuel efficient than the smaller one, and the crew costs are spread across a larger number of passengers, so you’re lowering your unit costs.”

A spring season from hell that left Delta stuck on the tarmac while stranded passengers fumed temporarily derailed Bastian’s high-altitude comeback plan. Now, it’s wheels up.