Get Cash Back and $0 Commissions
+ The Power of TradeStation
PRNewswire 11-Jul-2019 7:00 AM
ATLANTA, July 11, 2019 /PRNewswire/ -- Delta Air Lines (NYSE:DAL) today reported financial results for the June quarter 2019 and provided its outlook for the September quarter 2019. Highlights of the June quarter 2019 results, including both GAAP and adjusted metrics, are below and incorporated here.
June Quarter Financial Highlights
"Our record June quarter financial and operating results demonstrate that we are translating our powerful brand and competitive advantages into earnings growth, margin expansion and solid returns for our owners. Our people are the best in the business and I'm proud to recognize their hard work and dedication this quarter with an additional $518 million toward next year's profit sharing," said Ed Bastian, Delta's chief executive officer. "With our strong first half performance and building momentum from our customer-focused initiatives, we are increasing our full-year earnings guidance to $6.75 to $7.25 per share."
September Quarter 2019 Outlook
For the September quarter, Delta expects to deliver solid top-line growth and margin expansion.
3Q19 Forecast |
|
Earnings per share |
$2.10 - $2.40 |
Pre-tax margin |
14.5% - 16.5% |
Fuel price, including taxes and refinery impact |
$1.95 - $2.15 |
TRASM, adjusted (year-over-year) |
Up 1.5% to 3.5% |
CASM - Ex (year-over-year) |
Up 1% - 2% |
System Capacity (year-over-year) |
Up ~4% |
See Note A for information about reconciliation of projected non-GAAP financial measures |
Total adjusted revenue and TRASM, adjusted above exclude refinery sales and DAL Global |
Revenue Environment
Delta's adjusted operating revenue of $12.5 billion for the June quarter improved 8.7 percent, $1 billion higher than prior year quarter. This revenue result marks a record for the company, driven by improvements across Delta's business, including a ten percent increase in premium product ticket revenue and double-digit percentage increases in loyalty and third-party maintenance revenue. Cargo revenue during the quarter declined 17 percent driven by lower volumes and yield. Other revenue declined by $24 million as growth in loyalty and third-party maintenance was offset by $176 million lower third-party refinery sales.
Passenger Revenue by Geographic Region:
"With record passenger loads, customer satisfaction and $1 billion in revenue growth for the June quarter, demand for Delta's customer-focused product and service has never been stronger. Our third quarter is off to a great start with a new highest revenue day on record on July 7th," said Glen Hauenstein, Delta's president. "We now expect revenue growth of six to seven percent for the year, a $3 billion increase over 2018, as we benefit from our multi-year pipeline of fleet, product, and loyalty initiatives."
Cost Performance
Total adjusted operating expense for the June quarter increased $559 million versus the prior year quarter, with approximately 20% due to higher profit sharing expense. CASM-Ex was up 1.4 percent for the June quarter 2019 compared to the prior year quarter. This performance was driven by industry-leading operations, savings from the company's fleet transformation and the One Delta efficiency initiative, which partially offset investments in our people and product. During the quarter, the company decided to accelerate retirement of its MD-90 fleet by two years to the end of 2022, which pressured CASM-Ex by approximately $60 million due to higher depreciation expense.
Adjusted fuel expense decreased $35 million, down two percent, relative to June quarter 2018. Delta's adjusted fuel price per gallon for the June quarter was $2.08, which includes a $37 million benefit from the refinery.
Adjusted non-operating expense for the quarter was $60 million higher versus the prior year quarter, driven primarily by lower pension income and lower results from international equity partners.
Cash Flow and Shareholder Returns
Delta generated $3.3 billion of operating cash flow and $1.8 billion of free cash flow during the quarter after the investment of $1.4 billion into the business primarily for aircraft purchases and improvements. Year-to-date, the company has generated $5.2 billion of operating cash flow and $2.5 billion of free cash flow.
For the June quarter, Delta returned $497 million to shareholders, comprised of $268 million of share repurchases and $229 million in dividends. The company also completed repayment of the $1 billion short-term loan that was used to accelerate the repurchase of shares in the March quarter.
The Board of Directors today declared a quarterly dividend of $0.4025 per share, an increase of 15% over previous levels. This marks the sixth consecutive increase in Delta's dividend since it was established in 2013. The September quarter dividend will be payable to shareholders of record as of the close of business on July 25, 2019, to be paid on August 15, 2019.
"With efficiency gains from our operations, fleet transformation, and One Delta initiatives, we have solid line of sight to achieve our 1% cost growth target for the year," said Paul Jacobson, Delta's chief financial officer. "Our strong financial foundation and cash generation allow us to sustainably invest in the business, while maintaining our investment grade balance sheet and consistently returning cash to shareholders. With our cash flow exceeding original expectations, we are on track to return $3 billion to our owners this year through share repurchases and our increased dividend."
Strategic Highlights
In the June quarter, Delta achieved a number of milestones across its five key strategic pillars.
Culture and People
Operational Reliability
Network and Partnerships
Customer Experience and Loyalty
Investment Grade Balance Sheet
June Quarter Results
Adjusted results primarily exclude the impact of unrealized gains/losses on investments.
GAAP |
$ |
% |
||||||||||||
($ in millions except per share and unit costs) |
2Q19 |
2Q18 |
||||||||||||
Pre-tax income |
1,907 |
1,386 |
521 |
37.6 |
% |
|||||||||
Net income |
1,443 |
1,036 |
407 |
39.3 |
% |
|||||||||
Diluted earnings per share |
2.21 |
1.49 |
0.72 |
48.3 |
% |
|||||||||
Operating revenue |
12,536 |
11,775 |
761 |
6.5 |
% |
|||||||||
Total revenue per available seat mile (TRASM) |
17.47 |
17.19 |
0.28 |
1.6 |
% |
|||||||||
Operating margin |
17.0 |
% |
14.3 |
% |
2.7 |
18.9 |
% |
|||||||
Operating cash flow |
3,273 |
2,898 |
375 |
12.9 |
% |
|||||||||
Consolidated unit cost (CASM) |
14.51 |
14.73 |
(0.22) |
(1.5) |
% |
|||||||||
Operating expense |
10,408 |
10,091 |
317 |
3.1 |
% |
|||||||||
Fuel expense |
2,291 |
2,341 |
(50) |
(2.1) |
% |
|||||||||
Average fuel price per gallon |
2.08 |
2.19 |
(0.11) |
(5.0) |
% |
|||||||||
Non-operating expense |
221 |
298 |
(77) |
(25.8) |
% |
|||||||||
Adjusted |
$ |
% |
||||||||||||
($ in millions except per share and unit costs) |
2Q19 |
2Q18 |
||||||||||||
Pre-tax income |
1,997 |
1,617 |
379 |
23.5 |
% |
|||||||||
Net income |
1,532 |
1,240 |
292 |
23.6 |
% |
|||||||||
Diluted earnings per share |
2.35 |
1.78 |
0.57 |
32.1 |
% |
|||||||||
Operating revenue |
12,496 |
11,498 |
998 |
8.7 |
% |
|||||||||
Total revenue per available seat mile (TRASM, adjusted) |
17.42 |
16.78 |
0.63 |
3.8 |
% |
|||||||||
Operating margin |
17.1 |
% |
14.8 |
% |
2.3 |
15.5 |
% |
|||||||
Free cash flow |
1,771 |
1,392 |
379 |
27.2 |
% |
|||||||||
Consolidated unit cost (CASM-Ex) |
10.15 |
10.00 |
0.15 |
1.4 |
% |
|||||||||
Operating expense |
10,358 |
9,799 |
559 |
5.7 |
% |
|||||||||
Fuel expense |
2,282 |
2,317 |
(35) |
(1.5) |
% |
|||||||||
Average fuel price per gallon |
2.08 |
2.17 |
(0.10) |
(4.4) |
% |
|||||||||
Non-operating expense |
141 |
81 |
60 |
74.1 |
% |
|||||||||
About Delta
Delta Air Lines (NYSE:DAL) is the U.S. global airline leader in products, services, innovation, reliability and customer experience. Powered by its 80,000 people around the world, Delta continues to invest billions in its people, improving the air travel experience and generating industry-leading shareholder returns.
Forward Looking Statements
Statements in this press release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the availability of aircraft fuel; the impact of fuel hedging activity including rebalancing our hedge portfolio, recording mark-to-market adjustments or posting collateral in connection with our fuel hedge contracts; the performance of our significant investments in airlines in other parts of the world; the possible effects of accidents involving our aircraft; breaches or security lapses in our information technology systems; disruptions in our information technology infrastructure; our dependence on technology in our operations; the restrictions that financial covenants in our financing agreements could have on our financial and business operations; labor issues; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third parties; failure or inability of insurance to cover a significant liability at Monroe's Trainer refinery; the impact of environmental regulation on the Trainer refinery, including costs related to renewable fuel standard regulations; our ability to retain senior management and key employees; damage to our reputation and brand if we are exposed to significant adverse publicity through social media; the effects of terrorist attacks or geopolitical conflict; competitive conditions in the airline industry; interruptions or disruptions in service at major airports at which we operate; the effects of extensive government regulation on our business; the sensitivity of the airline industry to prolonged periods of stagnant or weak economic conditions; uncertainty in economic conditions and regulatory environment in the United Kingdom related to the exit of the United Kingdom from the European Union; and the effects of the rapid spread of contagious illnesses.
Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2018. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of July 11, 2019, and which we have no current intention to update.
DELTA AIR LINES, INC. |
|||||||||||||||||||||||
Consolidated Statements of Operations |
|||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||
June 30, |
June 30, |
||||||||||||||||||||||
(in millions, except per share data) |
2019 |
2018 |
$ Change |
% Change |
2019 |
2018 |
$ Change |
% Change |
|||||||||||||||
Operating Revenue: |
|||||||||||||||||||||||
Passenger |
$ |
11,368 |
$ |
10,546 |
$ |
822 |
8 |
% |
$ |
20,622 |
$ |
19,311 |
$ |
1,311 |
7 |
% |
|||||||
Cargo |
186 |
223 |
(37) |
(17) |
% |
378 |
425 |
(47) |
(11) |
% |
|||||||||||||
Other |
982 |
1,006 |
(24) |
(2) |
% |
2,008 |
2,007 |
1 |
— |
% |
|||||||||||||
Total operating revenue |
12,536 |
11,775 |
761 |
6 |
% |
23,008 |
21,743 |
1,265 |
6 |
% |
|||||||||||||
Operating Expense: |
|||||||||||||||||||||||
Salaries and related costs |
2,752 |
2,668 |
84 |
3 |
% |
5,391 |
5,252 |
139 |
3 |
% |
|||||||||||||
Aircraft fuel and related taxes |
2,291 |
2,341 |
(50) |
(2) |
% |
4,269 |
4,195 |
74 |
2 |
% |
|||||||||||||
Regional carriers expense, excluding fuel |
905 |
863 |
42 |
5 |
% |
1,798 |
1,701 |
97 |
6 |
% |
|||||||||||||
Depreciation and amortization |
713 |
583 |
130 |
22 |
% |
1,328 |
1,186 |
142 |
12 |
% |
|||||||||||||
Contracted services |
657 |
540 |
117 |
22 |
% |
1,288 |
1,084 |
204 |
19 |
% |
|||||||||||||
Passenger commissions and other selling expenses |
538 |
511 |
27 |
5 |
% |
965 |
938 |
27 |
3 |
% |
|||||||||||||
Aircraft maintenance materials and outside repairs |
434 |
427 |
7 |
2 |
% |
910 |
862 |
48 |
6 |
% |
|||||||||||||
Landing fees and other rents |
442 |
425 |
17 |
4 |
% |
861 |
814 |
47 |
6 |
% |
|||||||||||||
Profit sharing |
518 |
404 |
114 |
28 |
% |
739 |
592 |
147 |
25 |
% |
|||||||||||||
Ancillary businesses and refinery |
316 |
494 |
(178) |
(36) |
% |
667 |
987 |
(320) |
(32) |
% |
|||||||||||||
Passenger service |
322 |
300 |
22 |
7 |
% |
593 |
563 |
30 |
5 |
% |
|||||||||||||
Aircraft rent |
107 |
97 |
10 |
10 |
% |
209 |
191 |
18 |
9 |
% |
|||||||||||||
Other |
413 |
438 |
(25) |
(6) |
% |
842 |
850 |
(8) |
(1) |
% |
|||||||||||||
Total operating expense |
10,408 |
10,091 |
317 |
3 |
% |
19,860 |
19,215 |
645 |
3 |
% |
|||||||||||||
Operating Income |
2,128 |
1,684 |
444 |
26 |
% |
3,148 |
2,528 |
620 |
25 |
% |
|||||||||||||
Non-Operating Expense: |
|||||||||||||||||||||||
Interest expense, net |
(75) |
(79) |
4 |
(5) |
% |
(158) |
(170) |
12 |
(7) |
% |
|||||||||||||
Unrealized gain/(loss) on investments, net |
(82) |
(238) |
156 |
(66) |
% |
18 |
(220) |
238 |
NM |
||||||||||||||
Miscellaneous, net |
(64) |
19 |
(83) |
NM |
(155) |
(19) |
(136) |
NM |
|||||||||||||||
Total non-operating expense, net |
(221) |
(298) |
77 |
(26) |
% |
(295) |
(409) |
114 |
(28) |
% |
|||||||||||||
Income Before Income Taxes |
1,907 |
1,386 |
521 |
38 |
% |
2,853 |
2,119 |
734 |
35 |
% |
|||||||||||||
Income Tax Provision |
(464) |
(350) |
(114) |
33 |
% |
(680) |
(525) |
(155) |
30 |
% |
|||||||||||||
Net Income |
$ |
1,443 |
$ |
1,036 |
$ |
407 |
39 |
% |
$ |
2,173 |
$ |
1,594 |
$ |
579 |
36 |
% |
|||||||
Basic Earnings Per Share |
$ |
2.22 |
$ |
1.49 |
$ |
3.30 |
$ |
2.28 |
|||||||||||||||
Diluted Earnings Per Share |
$ |
2.21 |
$ |
1.49 |
$ |
3.29 |
$ |
2.27 |
|||||||||||||||
Basic Weighted Average Shares Outstanding |
650 |
695 |
658 |
699 |
|||||||||||||||||||
Diluted Weighted Average Shares Outstanding |
652 |
697 |
660 |
701 |
|||||||||||||||||||
Note: The prior periods presented here have been recast to reflect adoption of certain new accounting standards. |
DELTA AIR LINES, INC. |
|||||||||||||||||||||||
Passenger Revenue |
|||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||
June 30, |
June 30, |
||||||||||||||||||||||
(in millions) |
2019 |
2018 |
$ Change |
% Change |
2019 |
2018 |
$ Change |
% Change |
|||||||||||||||
Ticket- Main cabin |
$ |
5,938 |
$ |
5,644 |
$ |
294 |
5 |
% |
$ |
10,659 |
$ |
10,267 |
$ |
392 |
4 |
% |
|||||||
Ticket- Business cabin and premium products |
4,031 |
3,664 |
367 |
10 |
% |
7,298 |
6,694 |
604 |
9 |
% |
|||||||||||||
Loyalty travel awards |
751 |
680 |
71 |
10 |
% |
1,442 |
1,298 |
144 |
11 |
% |
|||||||||||||
Travel-related services |
648 |
558 |
90 |
16 |
% |
1,223 |
1,052 |
171 |
16 |
% |
|||||||||||||
Total passenger revenue |
$ |
11,368 |
$ |
10,546 |
$ |
822 |
8 |
% |
$ |
20,622 |
$ |
19,311 |
$ |
1,311 |
7 |
% |
|||||||
DELTA AIR LINES, INC. |
|||||||||||||||||||||||
Other Revenue |
|||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||||||
June 30, |
June 30, |
||||||||||||||||||||||
(in millions) |
2019 |
2018 |
$ Change |
% Change |
2019 |
2018 |
$ Change |
% Change |
|||||||||||||||
Loyalty program |
$ |
484 |
$ |
358 |
$ |
126 |
35 |
% |
$ |
958 |
$ |
705 |
$ |
253 |
36 |
% |
|||||||
Ancillary businesses and refinery |
330 |
522 |
(192) |
(37) |
% |
699 |
1,042 |
(343) |
(33) |
% |
|||||||||||||
Miscellaneous |
168 |
126 |
42 |
33 |
% |
351 |
260 |
91 |
35 |
% |
|||||||||||||
Total other revenue |
$ |
982 |
$ |
1,006 |
$ |
(24) |
(2) |
% |
$ |
2,008 |
$ |
2,007 |
$ |
1 |
— |
% |
|||||||
DELTA AIR LINES, INC. |
||||||||||||||||||||
Total Revenue |
||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||
Increase (Decrease) |
||||||||||||||||||||
2Q19 versus 2Q18 |
||||||||||||||||||||
Revenue |
2Q19 ($M) |
Change YoY |
Unit |
Yield |
Capacity |
|||||||||||||||
Domestic |
$ |
8,071 |
8.8% |
3.6% |
0.9% |
5.1% |
||||||||||||||
Atlantic |
1,880 |
6.1% |
1.5% |
1.9% |
4.6% |
|||||||||||||||
Latin America |
760 |
5.2% |
7.8% |
5.6% |
(2.4)% |
|||||||||||||||
Pacific |
657 |
3.2% |
(5.9)% |
(3.9)% |
9.7% |
|||||||||||||||
Total Passenger |
$ |
11,368 |
7.8% |
2.9% |
1.4% |
4.7% |
||||||||||||||
Cargo Revenue |
186 |
(16.7)% |
||||||||||||||||||
Other Revenue |
982 |
(2.4)% |
||||||||||||||||||
Total Revenue |
$ |
12,536 |
6.5% |
1.6% |
||||||||||||||||
Third Party Refinery Sales |
(40) |
|||||||||||||||||||
Total Revenue, adjusted |
$ |
12,496 |
8.7% |
3.8% |
||||||||||||||||
DELTA AIR LINES, INC. |
|||||||||||||||||||
Three Months Ended |
Six Months Ended |
||||||||||||||||||
June 30, |
June 30, |
||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
||||||||||||||
Revenue passenger miles (millions) |
63,173 |
59,406 |
6.3 |
% |
114,790 |
108,682 |
5.6 |
% |
|||||||||||
Available seat miles (millions) |
71,754 |
68,514 |
4.7 |
% |
134,169 |
127,967 |
4.8 |
% |
|||||||||||
Passenger mile yield (cents) |
18.00 |
17.75 |
1.4 |
% |
17.96 |
17.77 |
1.1 |
% |
|||||||||||
Passenger revenue per available seat mile (cents) |
15.84 |
15.39 |
2.9 |
% |
15.37 |
15.09 |
1.8 |
% |
|||||||||||
Total revenue per available seat mile (cents) |
17.47 |
17.19 |
1.6 |
% |
17.15 |
16.99 |
0.9 |
% |
|||||||||||
TRASM, adjusted - see Note A (cents) |
17.42 |
16.78 |
3.8 |
% |
17.08 |
16.57 |
3.1 |
% |
|||||||||||
Operating cost per available seat mile (cents) |
14.51 |
14.73 |
(1.5) |
% |
14.80 |
15.02 |
(1.5) |
% |
|||||||||||
CASM-Ex - see Note A (cents) |
10.15 |
10.00 |
1.4 |
% |
10.57 |
10.50 |
0.6 |
% |
|||||||||||
Passenger load factor |
88.0 |
% |
86.7 |
% |
1.3 |
pts |
85.6 |
% |
84.9 |
% |
0.6 |
pts |
|||||||
Fuel gallons consumed (millions) |
1,099 |
1,067 |
3.0 |
% |
2,061 |
2,003 |
2.9 |
% |
|||||||||||
Average price per fuel gallon |
$ |
2.08 |
$ |
2.19 |
(5.0) |
% |
$ |
2.07 |
$ |
2.10 |
(1.4) |
% |
|||||||
Average price per fuel gallon, adjusted - see Note A |
$ |
2.08 |
$ |
2.17 |
(4.4) |
% |
$ |
2.06 |
$ |
2.10 |
(1.6) |
% |
|||||||
Number of aircraft in fleet, end of period |
1,060 |
1,031 |
29 |
||||||||||||||||
Note: The prior periods presented here have been recast to reflect adoption of certain new accounting standards. Except for number of aircraft in fleet, consolidated data presented includes operations under Delta's contract carrier arrangements. |
DELTA AIR LINES, INC. |
|||||||
Consolidated Statements of Cash Flows |
|||||||
(Unaudited) |
|||||||
Three Months Ended |
|||||||
June 30, |
|||||||
(in millions) |
2019 |
2018 |
|||||
Cash Flows From Operating Activities: |
|||||||
Net income |
$ |
1,443 |
$ |
1,036 |
|||
Depreciation and amortization |
713 |
583 |
|||||
Deferred income taxes |
470 |
338 |
|||||
Pension, postretirement and postemployment payments greater than expense |
(481) |
(62) |
|||||
Changes in air traffic liability |
17 |
127 |
|||||
Changes in profit sharing |
518 |
400 |
|||||
Other, net |
593 |
476 |
|||||
Net cash provided by operating activities |
3,273 |
2,898 |
|||||
Cash Flows From Investing Activities: |
|||||||
Property and equipment additions: |
|||||||
Flight equipment, including advance payments |
(1,166) |
(1,272) |
|||||
Ground property and equipment, including technology |
(393) |
(308) |
|||||
Purchase of equity investments |
(89) |
— |
|||||
Other, net |
81 |
35 |
|||||
Net cash used in investing activities |
(1,567) |
(1,545) |
|||||
Cash Flows From Financing Activities: |
|||||||
Payments on long-term debt and capital lease obligations |
(1,165) |
(1,848) |
|||||
Repurchases of common stock |
(268) |
(600) |
|||||
Cash dividends |
(229) |
(213) |
|||||
Proceeds from long-term obligations |
— |
3,124 |
|||||
Other, net |
— |
(38) |
|||||
Net cash (used in) provided by financing activities |
(1,662) |
425 |
|||||
Net Increase in Cash, Cash Equivalents and Restricted Cash Equivalents |
44 |
1,778 |
|||||
Cash, cash equivalents and restricted cash equivalents at beginning of period |
2,985 |
1,482 |
|||||
Cash, cash equivalents and restricted cash equivalents at end of period |
$ |
3,029 |
$ |
3,260 |
|||
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the total of the same such amounts shown above: |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
2,009 |
$ |
1,886 |
|||
Restricted cash included in prepaid expenses and other |
127 |
48 |
|||||
Other assets: |
|||||||
Cash restricted for airport construction |
893 |
1,326 |
|||||
Total cash, cash equivalents and restricted cash equivalents |
$ |
3,029 |
$ |
3,260 |
|||
Note: The prior periods presented here have been recast to reflect adoption of certain new accounting standards. |
DELTA AIR LINES, INC. |
||||||||
Consolidated Balance Sheets |
||||||||
(Unaudited) |
||||||||
June 30, |
December 31, |
|||||||
(in millions) |
2019 |
2018 |
||||||
ASSETS |
||||||||
Current Assets: |
||||||||
Cash and cash equivalents |
$ |
2,009 |
$ |
1,565 |
||||
Accounts receivable, net |
2,844 |
2,314 |
||||||
Fuel inventory |
590 |
592 |
||||||
Expendable parts and supplies inventories, net |
493 |
463 |
||||||
Prepaid expenses and other |
1,198 |
1,406 |
||||||
Total current assets |
7,134 |
6,340 |
||||||
Property and Equipment, Net: |
||||||||
Property and equipment, net |
30,165 |
28,335 |
||||||
Other Assets: |
||||||||
Operating lease right-of-use assets |
5,906 |
5,994 |
||||||
Goodwill |
9,781 |
9,781 |
||||||
Identifiable intangibles, net |
4,824 |
4,830 |
||||||
Cash restricted for airport construction |
893 |
1,136 |
||||||
Other noncurrent assets |
3,815 |
3,850 |
||||||
Total other assets |
25,219 |
25,591 |
||||||
Total assets |
$ |
62,518 |
$ |
60,266 |
||||
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
Current Liabilities: |
||||||||
Current maturities of long-term debt and finance leases |
$ |
2,281 |
$ |
1,518 |
||||
Current maturities of operating leases |
841 |
955 |
||||||
Air traffic liability |
6,616 |
4,661 |
||||||
Accounts payable |
3,359 |
2,976 |
||||||
Accrued salaries and related benefits |
2,617 |
3,287 |
||||||
Loyalty program deferred revenue |
3,048 |
2,989 |
||||||
Fuel card obligation |
1,067 |
1,075 |
||||||
Other accrued liabilities |
1,335 |
1,117 |
||||||
Total current liabilities |
21,164 |
18,578 |
||||||
Noncurrent Liabilities: |
||||||||
Long-term debt and finance leases |
7,710 |
8,253 |
||||||
Pension, postretirement and related benefits |
8,516 |
9,163 |
||||||
Loyalty program deferred revenue |
3,606 |
3,652 |
||||||
Noncurrent operating leases |
5,539 |
5,801 |
||||||
Other noncurrent liabilities |
2,025 |
1,132 |
||||||
Total noncurrent liabilities |
27,396 |
28,001 |
||||||
Commitments and Contingencies |
||||||||
Stockholders' Equity: |
13,958 |
13,687 |
||||||
Total liabilities and stockholders' equity |
$ |
62,518 |
$ |
60,266 |
||||
Note A: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below. Reconciliations may not calculate due to rounding.
Delta sometimes uses information ("non-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The tables below show reconciliations of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures.
Forward Looking Projections. The Company is not able to reconcile forward looking non-GAAP financial measures because the adjusting items such as those used in the reconciliations below will not be known until the end of the period and could be significant.
Pre-tax Income and Net Income, adjusted. We adjust pre-tax income and net income for the following items to determine pre-tax income and net income, adjusted for the reasons described below. We include the income tax effect of adjustments when presenting net income, adjusted.
MTM adjustments and settlements. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the period (defined below).
Equity investment MTM adjustments. We record our proportionate share of earnings/loss from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense. We adjust for our equity method investees' hedge portfolio MTM adjustments to allow investors to better understand and analyze our core operational performance in the periods shown.
Unrealized gain/loss on investments. We record the unrealized gains/losses on our equity investments in GOL, China Eastern, Air France-KLM and Korean, which are accounted for at fair value in non-operating expense. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.
DGS sale adjustment. Because we sold DAL Global Services, LLC ("DGS") in December 2018, we have excluded the impact of DGS from 2018 results for comparability.
Three Months Ended |
Three Months Ended |
||||||||||||||
June 30, 2019 |
June 30, 2019 |
||||||||||||||
Pre-Tax |
Income |
Net |
Net Income |
||||||||||||
(in millions, except per share data) |
Income |
Tax |
Income |
Per Diluted Share |
|||||||||||
GAAP |
$ |
1,907 |
$ |
(464) |
$ |
1,443 |
$ |
2.21 |
|||||||
Adjusted for: |
|||||||||||||||
MTM adjustments and settlements |
10 |
(2) |
8 |
||||||||||||
Equity investment MTM adjustments |
(2) |
— |
(2) |
||||||||||||
Unrealized gain/loss on investments |
82 |
1 |
83 |
||||||||||||
Total adjustments |
90 |
(1) |
89 |
0.14 |
|||||||||||
Non-GAAP |
$ |
1,997 |
$ |
(465) |
$ |
1,532 |
$ |
2.35 |
|||||||
Year-over-year change |
32 |
% |
|||||||||||||
Three Months Ended |
Three Months Ended |
||||||||||||||
June 30, 2018 |
June 30, 2018 |
||||||||||||||
Pre-Tax |
Income |
Net |
Net Income |
||||||||||||
(in millions, except per share data) |
Income |
Tax |
Income |
Per Diluted Share |
|||||||||||
GAAP |
$ |
1,386 |
$ |
(350) |
$ |
1,036 |
$ |
1.49 |
|||||||
Adjusted for: |
|||||||||||||||
MTM adjustments and settlements |
24 |
(6) |
18 |
||||||||||||
Equity investment MTM adjustments |
(22) |
5 |
(17) |
||||||||||||
Unrealized gain/loss on investments |
238 |
(29) |
209 |
||||||||||||
DGS sale adjustment |
(9) |
2 |
(7) |
||||||||||||
Total adjustments |
231 |
(28) |
203 |
0.29 |
|||||||||||
Non-GAAP |
$ |
1,617 |
$ |
(378) |
$ |
1,240 |
$ |
1.78 |
|||||||
Operating Revenue, adjusted and Total Revenue Per Available Seat Mile ("TRASM"), adjusted. We adjust operating revenue and TRASM for refinery sales to third parties to determine operating revenue, adjusted and TRASM, adjusted because refinery sales to third parties are not related to our airline segment. Operating revenue, adjusted and TRASM, adjusted therefore provide a more meaningful comparison of revenue from our airline operations to the rest of the airline industry. We adjust for the DGS sale for the same reason described above under the heading pre-tax income and net income, adjusted.
Three Months Ended |
||||||||||||
(in millions) |
June 30, 2019 |
June 30, 2018 |
Change |
|||||||||
Operating revenue |
$ |
12,536 |
$ |
11,775 |
||||||||
Adjusted for: |
||||||||||||
Third-party refinery sales |
(40) |
(216) |
||||||||||
DGS sale adjustment |
— |
(61) |
||||||||||
Operating revenue, adjusted |
$ |
12,496 |
$ |
11,498 |
8.7 |
% |
||||||
Year-over-year change |
$ |
998 |
||||||||||
Six Months Ended |
||||||||||||
(in millions) |
June 30, 2019 |
June 30, 2018 |
Change |
|||||||||
Operating revenue |
$ |
23,008 |
$ |
21,743 |
||||||||
Adjusted for: |
||||||||||||
Third-party refinery sales |
(89) |
(429) |
||||||||||
DGS sale adjustment |
— |
(121) |
||||||||||
Operating revenue, adjusted |
$ |
22,920 |
$ |
21,194 |
8.1 |
% |
||||||
Three Months Ended |
||||||||||||
June 30, 2019 |
June 30, 2018 |
Change |
||||||||||
TRASM (cents) |
17.47 |
17.19 |
||||||||||
Adjusted for: |
||||||||||||
Third-party refinery sales |
(0.06) |
(0.32) |
||||||||||
DGS sale adjustment |
— |
(0.09) |
||||||||||
TRASM, adjusted |
17.42 |
16.78 |
3.8 |
% |
||||||||
Six Months Ended |
||||||||||||
June 30, 2019 |
June 30, 2018 |
Change |
||||||||||
TRASM (cents) |
17.15 |
16.99 |
||||||||||
Adjusted for: |
||||||||||||
Third-party refinery sales |
(0.07) |
(0.33) |
||||||||||
DGS sale adjustment |
— |
(0.09) |
||||||||||
TRASM, adjusted |
17.08 |
16.57 |
3.1 |
% |
||||||||
Operating Margin, adjusted. We adjust operating margin for MTM adjustments and settlements and third-party refinery sales for the same reasons described above under the headings Pre-tax income and net income, adjusted and Operating Revenue and TRASM, adjusted.
Three Months Ended |
||||||||||||||||||||
June 30, 2019 |
June 30, 2018 |
Change |
||||||||||||||||||
Operating margin |
17.0 |
% |
14.3 |
% |
||||||||||||||||
Adjusted for: |
||||||||||||||||||||
MTM adjustments and settlements |
0.1 |
% |
0.2 |
% |
||||||||||||||||
Third-party refinery sales |
— |
% |
0.3 |
% |
||||||||||||||||
Operating margin, adjusted |
17.1 |
% |
14.8 |
% |
2.3 |
pts |
||||||||||||||
Free Cash Flow. We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:
Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust free cash flow for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.
Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operational performance in the periods shown.
Three Months Ended |
||||||
(in millions) |
June 30, 2019 |
|||||
Net cash provided by operating activities |
$ |
3,273 |
||||
Net cash used in investing activities |
(1,567) |
|||||
Adjustments: |
||||||
Net cash flows related to certain airport construction projects and other |
65 |
|||||
Total free cash flow |
$ |
1,771 |
||||
Six Months Ended |
||||||
(in millions) |
June 30, 2019 |
|||||
Net cash provided by operating activities |
$ |
5,223 |
||||
Net cash used in investing activities |
(2,671) |
|||||
Adjustments: |
||||||
Net redemptions of short-term investments |
(206) |
|||||
Net cash flows related to certain airport construction projects and other |
185 |
|||||
Total free cash flow |
$ |
2,531 |
||||
Three Months Ended |
||||||
(in millions) |
June 30, 2018 |
|||||
Net cash provided by operating activities |
$ |
2,898 |
||||
Net cash used in investing activities |
(1,545) |
|||||
Adjustments: |
||||||
Net redemptions of short-term investments |
(4) |
|||||
Net cash flows related to certain airport construction projects and other |
43 |
|||||
Total free cash flow |
$ |
1,392 |
Non-Fuel Unit Cost or Cost per Available Seat Mile, ("CASM-Ex"). We adjust CASM for the following items to determine CASM-Ex for the reasons described below:
Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to understand and analyze our non-fuel costs and year-over-year financial performance.
Ancillary businesses and refinery. These expenses include aircraft maintenance we provide to third parties, our vacation wholesale operations, Delta Private Jets and refinery cost of sales to third parties. 2018 results also include staffing services performed by DAL Global Services. Because these businesses are not related to the generation of a seat mile, we adjust for the costs related to these areas to provide a more meaningful comparison of the costs of our airline operations to the rest of the airline industry.
Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
Three Months Ended |
||||||||||||||||||||
June 30, 2019 |
June 30, 2018 |
Change |
||||||||||||||||||
CASM (cents) |
14.51 |
14.73 |
||||||||||||||||||
Adjusted for: |
||||||||||||||||||||
Aircraft fuel and related taxes |
(3.19) |
(3.42) |
||||||||||||||||||
Ancillary businesses and refinery |
(0.44) |
(0.72) |
||||||||||||||||||
Profit sharing |
(0.72) |
(0.59) |
||||||||||||||||||
CASM-Ex |
10.15 |
10.00 |
1.4 |
% |
||||||||||||||||
Six Months Ended |
||||||||||||||||||||
June 30, 2019 |
June 30, 2018 |
Change |
||||||||||||||||||
CASM (cents) |
14.80 |
15.02 |
||||||||||||||||||
Adjusted for: |
||||||||||||||||||||
Aircraft fuel and related taxes |
(3.18) |
(3.28) |
||||||||||||||||||
Ancillary businesses and refinery |
(0.50) |
(0.77) |
||||||||||||||||||
Profit sharing |
(0.55) |
(0.46) |
||||||||||||||||||
CASM-Ex |
10.57 |
10.50 |
0.6 |
% |
||||||||||||||||
Capital Expenditures, net. We present net capital expenditures because management believes investors should be informed that a portion of these capital expenditures are reimbursed by a third party.
Three Months Ended |
|||||
(in millions) |
June 30, 2019 |
||||
Flight equipment, including advance payments |
$ |
1,166 |
|||
Ground property and equipment, including technology |
393 |
||||
Net cash flows related to certain airport construction projects |
(127) |
||||
Capital expenditures, net |
$ |
1,433 |
|||
Six Months Ended |
|||||
(in millions) |
June 30, 2019 |
||||
Flight equipment, including advance payments |
$ |
2,226 |
|||
Ground property and equipment, including technology |
694 |
||||
Net cash flows related to certain airport construction projects |
(228) |
||||
Capital expenditures, net |
$ |
2,692 |
|||
Operating Expense, adjusted. We adjust operating expense for MTM adjustments and settlements, third-party refinery sales and DGS sale adjustment for the same reasons described above under the headings pre-tax income and net income, adjusted and operating revenue and TRASM, adjusted to determine operating expense, adjusted.
Three Months Ended |
|||||||
June 30, |
|||||||
(in millions) |
2019 |
2018 |
|||||
Operating expense |
$ |
10,408 |
$ |
10,091 |
|||
Adjusted for: |
|||||||
MTM adjustments and settlements |
(10) |
(24) |
|||||
Third-party refinery sales |
(40) |
(216) |
|||||
DGS sale adjustment |
— |
(51) |
|||||
Operating expense, adjusted |
$ |
10,358 |
$ |
9,799 |
|||
Year-over-year change |
$ |
559 |
|||||
Fuel expense, adjusted and Average fuel price per gallon, adjusted. The tables below show the components of fuel expense, including the impact of the refinery segment and airline segment hedging on fuel expense and average price per gallon. We then adjust for MTM adjustments and settlements for the same reason described under the heading pre-tax income and net income, adjusted.
Average Price Per Gallon |
|||||||||||||||
Three Months Ended |
Three Months Ended |
||||||||||||||
June 30, |
June 30, |
||||||||||||||
(in millions, except per gallon data) |
2019 |
2018 |
2019 |
2018 |
|||||||||||
Fuel purchase cost |
$ |
2,318 |
$ |
2,361 |
$ |
2.11 |
$ |
2.21 |
|||||||
Fuel hedge impact |
10 |
25 |
— |
0.02 |
|||||||||||
Refinery segment impact |
(37) |
(45) |
(0.03) |
(0.04) |
|||||||||||
Total fuel expense |
$ |
2,291 |
$ |
2,341 |
$ |
2.08 |
$ |
2.19 |
|||||||
MTM adjustments and settlements |
(10) |
(24) |
— |
(0.02) |
|||||||||||
Total fuel expense, adjusted |
$ |
2,282 |
$ |
2,317 |
$ |
2.08 |
$ |
2.17 |
|||||||
Change year-over-year |
$ |
(35) |
|||||||||||||
Percent change year-over-year |
(2) |
% |
|||||||||||||
Average Price Per Gallon |
|||||||||||||||
Six Months Ended |
Six Months Ended |
||||||||||||||
June 30, |
June 30, |
||||||||||||||
(in millions, except per gallon data) |
2019 |
2018 |
2019 |
2018 |
|||||||||||
Fuel purchase cost |
$ |
4,255 |
$ |
4,289 |
$ |
2.06 |
$ |
2.14 |
|||||||
Airline segment fuel hedge impact |
17 |
(5) |
0.01 |
— |
|||||||||||
Refinery segment impact |
(3) |
(89) |
— |
(0.04) |
|||||||||||
Total fuel expense |
$ |
4,269 |
$ |
4,195 |
$ |
2.07 |
$ |
2.10 |
|||||||
MTM adjustments and settlements |
(17) |
4 |
(0.01) |
— |
|||||||||||
Total fuel expense, adjusted |
$ |
4,252 |
$ |
4,199 |
$ |
2.06 |
$ |
2.10 |
|||||||
Change year-over-year |
$ |
52 |
Non-operating Expense, adjusted. We adjust for equity investment MTM adjustments and unrealized gain/loss on investments to determine non-operating expense, adjusted for the same reasons described above in the heading pre-tax income and net income, adjusted.
Three Months Ended |
|||||||
(in millions) |
June 30, 2019 |
June 30, 2018 |
|||||
Non-operating expense |
$ |
221 |
$ |
298 |
|||
Adjusted for: |
|||||||
Equity investment MTM adjustments |
2 |
22 |
|||||
Unrealized gain/loss on investments |
(82) |
(238) |
|||||
Non-operating expense, adjusted |
$ |
141 |
$ |
81 |
|||
Change year-over-year |
$ |
60 |
|||||
Adjusted Debt to Earnings Before Interest, Taxes, Depreciation, Amortization and Rent ("EBITDAR"). We present adjusted debt to EBITDAR because management believes this metric is helpful to investors in assessing the company's overall debt profile. Adjusted debt includes LGA bonds and operating lease liabilities. We calculate EBITDAR by adding depreciation and amortization to GAAP operating income and adjusting for the fixed portion of operating lease expense.
(in billions) |
June 30, 2019 |
||||
Debt and finance lease obligations |
$ |
10 |
|||
Plus: Operating lease liability |
6 |
||||
Adjusted Debt |
$ |
16 |
|||
Last Twelve Months Ended |
|||||
(in billions) |
June 30, 2019 |
||||
GAAP operating income |
$ |
6 |
|||
Adjusted for: |
|||||
Depreciation and amortization |
2 |
||||
Fixed portion of operating lease expense |
1 |
||||
EBITDAR |
$ |
9 |
|||
Adjusted Debt to EBITDAR |
1.7x |
View original content to download multimedia:http://www.prnewswire.com/news-releases/delta-air-lines-announces-june-quarter-profit-300883175.html
SOURCE Delta Air Lines