ATLANTA, April 10, 2019 /PRNewswire/ -- Delta Air
Lines (NYSE: DAL) today reported financial results for the March
quarter 2019 and provided its outlook for the June quarter 2019.
Highlights of the March quarter 2019 results, including both GAAP
and adjusted metrics, are below and incorporated here.
March Quarter Financial Highlights
- Adjusted earnings per share were $0.96, reflecting a 28 percent increase year over
year on solid core performance and benefit from the early renewal
of the American Express agreement.
- Total adjusted revenue, which excludes refinery sales, grew 7.5
percent to $10.4 billion with 55
percent from premium products and non-ticket sources.
- Total unit revenue, adjusted, increased 2.4 percent driven by
double-digit growth in domestic corporate revenue and an
approximate one point benefit from the American Express
agreement.
- Non-fuel unit cost (CASM-Ex) decreased 0.2 percent compared to
the prior year period, marking the third consecutive quarter of
strong cost performance.
- Generated $2.0 billion of
operating cash flow and $760 million
of free cash flow after investing $1.3
billion into the business, primarily for aircraft purchases
and modifications.
- Returned $1.6 billion to
shareholders, comprised of $1.3
billion of share repurchases and $233
million in dividends.
"Delta is off to a solid start
in 2019. Our March quarter performance demonstrates the power
of our growing brand preference, our unmatched competitive
advantages, and most importantly the Delta people who are committed to providing
the best travel experiences for our customers every day. I'm
pleased to recognize their efforts with $220
million toward next year's profit sharing," said
Ed Bastian, Delta's chief executive officer. "With the
momentum in our business and our American Express contract renewal,
we have increased confidence in achieving our full-year plan of
top-line growth, margin expansion and double-digit earnings
growth."
June Quarter 2019 Outlook
For the June quarter, Delta
expects to deliver six to eight percent top-line growth and margin
expansion.
|
2Q19
Forecast
|
Earnings per
share
|
$2.05 -
$2.35
|
Pre-tax
margin
|
14% - 16%
|
Fuel price, including
taxes and refinery impact
|
$2.10 -
$2.20
|
Total revenue,
adjusted (year-over-year)
|
Up 6% - 8%
|
TRASM, adjusted
(year-over-year)
|
Up 1.5% -
3.5%
|
CASM - Ex
(year-over-year)
|
Up 1% - 2%
|
System Capacity
(year-over-year)
|
Up 4% -
4.5%
|
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
Services (due to the sale of DGS in
December 2018)
|
Revenue Environment
Delta's adjusted operating
revenue of $10.4 billion for the
March quarter improved 7.5 percent, or $728
million versus the prior year. This revenue result marks a
March quarter record for the company, driven by improvements across
Delta's business, including an
eight percent increase in premium product ticket revenue and
double-digit percentage increases in loyalty and Maintenance,
Repair and Overhaul revenue. Cargo revenue declined five
percent driven by lower volumes.
"Demand for Delta's product has
never been stronger, as evidenced by our 7.5 percent top line
growth in the March quarter. This underpins our expectation
that June quarter unit revenue should grow 1.5 to 3.5 percent, with
sequential improvement in passenger unit revenue across all
entities," said Glen Hauenstein,
Delta's president. "With our
customer-focused commercial initiatives delivering strong customer
loyalty and top-line momentum, we now expect full-year revenue
growth of five to seven percent, an increase from our prior
guidance."
Cost Performance
Total adjusted operating expense for the March quarter increased
$510 million versus the prior year
quarter. CASM-Ex was down 0.2 percent for the March quarter
2019 compared to the prior year period driven by record operations,
a shift in expense timing and strong cost controls.
Adjusted fuel expense increased $87
million, or five percent, relative to March quarter
2018. Delta's adjusted fuel
price per gallon for the March quarter was $2.05, which includes a $34 million loss at the refinery due to low
gasoline crack spreads.
Adjusted non-operating expense for the quarter was $69 million higher versus the prior year, driven
primarily by lower pension income and earnings pressure from
international equity partners.
"Delta's March quarter
operating cash flow improved, driven by top-line growth, strong
cost controls and margin expansion. Our cash flow performance
allows us to reinvest for Delta's
long-term earnings growth, while maintaining our investment grade
balance sheet and consistently returning cash to shareholders,"
said Paul Jacobson, Delta's chief financial officer. "With
non-fuel unit cost momentum from our fleet transformation and One
Delta efforts, we have clear line of sight to achieve our full year
targets of one percent non-fuel unit cost growth and $3 to 4 billion in free cash flow."
Cash Flow and Shareholder Returns
Delta generated $2 billion of operating cash flow, as improved
profitability and the seasonal build of cash were partially offset
by the $1.3 billion profit sharing
payment to employees for 2018 performance. Delta generated $760
million of free cash flow during the quarter after the
investment of $1.3 billion into the
business primarily for aircraft purchases and improvements.
Delta accelerated the
repurchase of shares in the quarter, funded by a $1 billion short-term loan. During the
quarter, the company repaid $300
million of this loan and expects that the remainder will be
repaid by year end. Delta
returned $1.6 billion to shareholders
during the March quarter, comprised of $1.3
billion of share repurchases and $233
million in dividends.
Strategic Highlights
In the March quarter, Delta
achieved a number of milestones across its five key strategic
pillars.
Culture and People
- Celebrated the commitment of the Delta people through $1.3 billion in profit sharing for 2018
performance, the second largest profit sharing payout in the
airline's history.
- Achieved Delta's highest
overall ranking in Fortune's Most Admired Companies for 2019 and
ranked first for the eighth time in the past nine years as
Fortune's Most Admired Airline.
- Introduced a paid day of service for all employees, building on
Delta's commitment of donating 1%
of profits to charitable organizations, through approximately
640,000 hours of community service.
- Continued Delta's commitment
to the communities of our employees, partners and customers through
participation in the 16th Delta Global Build with Habitat for
Humanity and celebrating the life of Dr. Martin Luther King, Jr. through a grant to re-open
the Martin Luther King, Jr. National Historical Park in
Atlanta during the MLK Holiday
Weekend after it had remained closed due to lack of federal
appropriations.
Operational Reliability
- Achieved the highest network system completion factor for the
first quarter since 2012, continuing to raise the bar on
operational excellence and delivering consistency and reliability
to our customers.
- Delivered 69 days of zero mainline cancellations, 28 days of
zero system cancellations and achieved mainline on-time performance
(A0) of 72.0% for the March quarter.
Network and Partnerships
- Celebrated five years of the Delta and Virgin Atlantic partnership, focused
on delivering the best customer experience in the trans-Atlantic
market, with more than 70 daily nonstop flights between the U.K.
and U.S., leading on-time performance, and enhanced terminal and
in-cabin technology and service.
- Filed with the U.S. Department of Transportation for additional
service to Tokyo-Haneda airport, proposing to expand Delta's operational reliability and
exceptional customer service to more customers flying across the
Pacific.
Customer Experience and Loyalty
- Signed an 11-year renewal with American Express, ensuring that
the two companies continue to work together to deliver
best-in-class value to customers, while doubling the expected
benefits to Delta to nearly
$7 billion annually by 2023 from
$3.4 billion in 2018.
- Debuted Delta's
state-of-the-art A220, flying from Delta's New York-LaGuardia hub to Dallas/Ft. Worth and Boston and from Delta's Detroit hub to Dallas/Ft. Worth.
- Launched the ability for SkyMiles members to upgrade their
experience post-purchase using miles through the Fly Delta App,
increasing customer choice and the opportunities for customers to
use miles as a form of payment with Delta.
Investment Grade Balance Sheet
- Completed $1.3 billion in share
repurchases, opportunistically repurchasing 26 million shares and
reaffirming Delta's commitment to
consistent shareholder returns.
- Lowered Delta's borrowing
costs while keeping debt balanced by securing a blended 3.2% fixed
rate on a $500 million Enhanced
Equipment Trust Certificate (EETC) secured by 14 aircraft.
Annual Shareholder Meeting
The Board of Directors has set the airline's annual meeting of
shareholders for 7:30 a.m. EDT,
June 20, 2019. The meeting will be
held at the offices of Davis Polk
& Wardwell LLP, 450 Lexington Avenue, New York, New York.
March Quarter Results
Adjusted results primarily exclude the impact of unrealized
gains/losses on investments.
|
GAAP
|
$
Change
|
%
Change
|
($ in millions except
per share and unit costs)
|
1Q19
|
1Q18
|
Pre-tax
income
|
946
|
|
732
|
|
214
|
|
29.2
|
%
|
Net income
|
730
|
|
557
|
|
173
|
|
31.1
|
%
|
Diluted earnings per
share
|
1.09
|
|
0.79
|
|
0.3
|
|
38.0
|
%
|
Operating
revenue
|
10,472
|
|
9,968
|
|
504
|
|
5.1
|
%
|
Total revenue per
available seat mile (TRASM)
|
16.78
|
|
16.77
|
|
0.01
|
|
0.1
|
%
|
Consolidated unit
cost (CASM)
|
15.14
|
|
15.35
|
|
(0.21)
|
|
(1.4)
|
%
|
Operating
expense
|
9,452
|
|
9,124
|
|
328
|
|
3.6
|
%
|
Fuel
expense
|
1,978
|
|
1,856
|
|
122
|
|
6.6
|
%
|
Average fuel price
per gallon
|
2.06
|
|
1.98
|
|
0.08
|
|
4.0
|
%
|
Non-operating
expense
|
74
|
|
112
|
|
(38)
|
|
(33.9)
|
%
|
|
Adjusted
|
$
Change
|
%
Change
|
($ in millions except
per share and unit costs)
|
1Q19
|
1Q18
|
Pre-tax
income
|
832
|
|
683
|
|
149
|
|
21.8
|
%
|
Net income
|
639
|
|
529
|
|
110
|
|
20.8
|
%
|
Diluted earnings per
share
|
0.96
|
|
0.75
|
|
0.21
|
|
28.0
|
%
|
Operating
revenue
|
10,424
|
|
9,696
|
|
728
|
|
7.5
|
%
|
Total revenue per
available seat mile (TRASM, adjusted)
|
16.70
|
|
16.31
|
|
0.39
|
|
2.4
|
%
|
Consolidated unit
cost (CASM-Ex)
|
11.06
|
|
11.08
|
|
(0.02)
|
|
(0.2)
|
%
|
Operating
expense
|
9,396
|
|
8,886
|
|
510
|
|
5.7
|
%
|
Fuel
expense
|
1,970
|
|
1,883
|
|
87
|
|
4.6
|
%
|
Average fuel price
per gallon
|
2.05
|
|
2.01
|
|
0.04
|
|
1.8
|
%
|
Non-operating
expense
|
195
|
|
126
|
|
69
|
|
54.8
|
%
|
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.
- Delta serves nearly 200
million people every year, taking customers across its
industry-leading global network to more than 300 destinations in
over 50 countries.
- Headquartered in Atlanta,
Delta offers more than 5,000 daily
departures and as many as 15,000 affiliated departures including
the premier SkyTeam alliance, of which Delta is a founding member.
- Through its innovative alliances with Aeromexico, Air
France-KLM, Alitalia, China Eastern,
GOL, Korean Air, Virgin Atlantic, Virgin Australia and WestJet,
Delta is bringing more choice and
competition to customers worldwide.
- Delta operates significant
hubs and key markets at airports in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los
Angeles, Mexico City,
Minneapolis/St. Paul, New York-JFK
and LaGuardia, Paris-Charles de
Gaulle, Salt Lake City, São
Paulo, Seattle, Seoul-Incheon and
Tokyo-Narita.
- Delta has been recognized as a
Fortune's top 50 Most Admired Companies in addition to being named
the most admired airline for the eighth time in nine years.
Additionally, Delta has ranked
No.1 in the Business Travel News Annual Airline survey for an
unprecedented eight consecutive years and named one of Fast
Company's Most Innovative Companies Worldwide for two consecutive
years.
- As an employer, Delta has been
regularly awarded top honors from organizations like Glassdoor and
recognized as a top workplace for women and members of the
military. Delta CEO Ed Bastian was
named among the "World's Greatest Leaders" by Fortune magazine in
2018.
- More about Delta can be found
on the Delta News Hub as well as delta.com, via
@DeltaNewsHub on Twitter and Facebook.com/delta.
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
April 10, 2019, and which we have no
current intention to update.
DELTA AIR LINES,
INC.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
|
(in millions, except
per share data)
|
2019
|
2018
|
$
Change
|
%
Change
|
Operating
Revenue:
|
|
|
|
|
Passenger
|
$
|
9,254
|
|
$
|
8,765
|
|
$
|
489
|
|
6
|
%
|
Cargo
|
192
|
|
202
|
|
(10)
|
|
(5)
|
%
|
Other
|
1,026
|
|
1,001
|
|
25
|
|
2
|
%
|
Total
operating revenue
|
10,472
|
|
9,968
|
|
504
|
|
5
|
%
|
|
|
|
|
|
Operating
Expense:
|
|
|
|
|
Salaries and related
costs
|
2,639
|
|
2,584
|
|
55
|
|
2
|
%
|
Aircraft fuel and
related taxes
|
1,978
|
|
1,856
|
|
122
|
|
7
|
%
|
Regional carriers
expense, excluding fuel
|
893
|
|
838
|
|
55
|
|
7
|
%
|
Contracted
services
|
632
|
|
544
|
|
88
|
|
16
|
%
|
Depreciation and
amortization
|
615
|
|
603
|
|
12
|
|
2
|
%
|
Aircraft maintenance
materials and outside repairs
|
476
|
|
435
|
|
41
|
|
9
|
%
|
Passenger commissions
and other selling expenses
|
427
|
|
427
|
|
—
|
|
—
|
%
|
Landing fees and
other rents
|
419
|
|
389
|
|
30
|
|
8
|
%
|
Ancillary businesses
and refinery
|
351
|
|
493
|
|
(142)
|
|
(29)
|
%
|
Passenger
service
|
271
|
|
263
|
|
8
|
|
3
|
%
|
Profit
sharing
|
220
|
|
188
|
|
32
|
|
17
|
%
|
Aircraft
rent
|
102
|
|
94
|
|
8
|
|
9
|
%
|
Other
|
429
|
|
410
|
|
19
|
|
5
|
%
|
Total operating
expense
|
9,452
|
|
9,124
|
|
328
|
|
4
|
%
|
|
|
|
|
|
Operating
Income
|
1,020
|
|
844
|
|
176
|
|
21
|
%
|
|
|
|
|
|
Non-Operating
Expense:
|
|
|
|
|
Interest expense,
net
|
(83)
|
|
(92)
|
|
9
|
|
(10)
|
%
|
Unrealized gain on
investments, net
|
100
|
|
18
|
|
82
|
|
NM
|
Miscellaneous,
net
|
(91)
|
|
(38)
|
|
(53)
|
|
NM
|
Total non-operating
expense, net
|
(74)
|
|
(112)
|
|
38
|
|
(34)
|
%
|
|
|
|
|
|
Income Before
Income Taxes
|
946
|
|
732
|
|
214
|
|
29
|
%
|
|
|
|
|
|
Income Tax
Provision
|
(216)
|
|
(175)
|
|
(41)
|
|
23
|
%
|
|
|
|
|
|
Net
Income
|
$
|
730
|
|
$
|
557
|
|
$
|
173
|
|
31
|
%
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
1.10
|
|
$
|
0.79
|
|
|
|
Diluted Earnings
Per Share
|
$
|
1.09
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
Basic Weighted
Average Shares Outstanding
|
665
|
|
704
|
|
|
|
Diluted Weighted
Average Shares Outstanding
|
667
|
|
706
|
|
|
|
|
|
|
|
|
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
|
|
|
|
March
31,
|
|
|
(in
millions)
|
2019
|
2018
|
$
Change
|
%
Change
|
Ticket- Main
cabin
|
$
|
4,721
|
|
$
|
4,622
|
|
$
|
99
|
|
2
|
%
|
Ticket- Business
cabin and premium products
|
3,267
|
|
3,031
|
|
236
|
|
8
|
%
|
Loyalty travel
awards
|
692
|
|
618
|
|
74
|
|
12
|
%
|
Travel-related
services
|
574
|
|
494
|
|
80
|
|
16
|
%
|
Total passenger
revenue
|
$
|
9,254
|
|
$
|
8,765
|
|
$
|
489
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DELTA AIR LINES,
INC.
|
Other
Revenue
|
(Unaudited)
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
|
(in
millions)
|
2019
|
2018
|
$
Change
|
%
Change
|
Loyalty
program
|
$
|
474
|
|
$
|
347
|
|
$
|
127
|
|
37
|
%
|
Ancillary businesses
and refinery
|
369
|
|
521
|
|
(152)
|
|
(29)
|
%
|
Miscellaneous
|
183
|
|
133
|
|
50
|
|
38
|
%
|
Total other
revenue
|
$
|
1,026
|
|
$
|
1,001
|
|
$
|
25
|
|
2
|
%
|
|
|
|
|
|
DELTA AIR LINES,
INC.
|
Total
Revenue
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(Decrease)
|
|
|
|
|
1Q19 versus
1Q18
|
Revenue
|
|
1Q19
($M)
|
|
Change
YoY
|
Unit
Revenue
|
Yield
|
Capacity
|
Domestic
|
$
|
6,713
|
|
6.9%
|
0.9%
|
0.9%
|
5.9%
|
Atlantic
|
|
1,103
|
|
3.0%
|
(2.6)%
|
(2.3)%
|
5.8%
|
Latin
America
|
|
855
|
|
3.0%
|
2.4%
|
2.9%
|
0.5%
|
Pacific
|
|
583
|
|
—%
|
(2.8)%
|
(1.5)%
|
2.9%
|
Total
Passenger
|
$
|
9,254
|
|
5.6%
|
0.6%
|
0.8%
|
5.0%
|
Cargo
Revenue
|
|
192
|
|
(4.9)%
|
|
|
|
Other
Revenue
|
|
1,026
|
|
2.5%
|
|
|
|
Total
Revenue
|
$
|
10,472
|
|
5.1%
|
0.1%
|
|
|
Third Party
Refinery Sales
|
|
(48)
|
|
|
|
|
|
Total Revenue,
adjusted
|
$
|
10,424
|
|
7.5%
|
2.4%
|
|
|
|
|
|
|
|
|
|
|
DELTA AIR LINES,
INC.
|
Statistical
Summary
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
March
31,
|
|
|
2019
|
2018
|
Change
|
Revenue passenger
miles (millions)
|
51,617
|
|
49,276
|
|
4.8
|
%
|
Available seat miles
(millions)
|
62,416
|
|
59,453
|
|
5.0
|
%
|
Passenger mile yield
(cents)
|
17.93
|
|
17.79
|
|
0.8
|
%
|
Passenger revenue per
available seat mile (cents)
|
14.83
|
|
14.74
|
|
0.6
|
%
|
Total revenue per
available seat mile (cents)
|
16.78
|
|
16.77
|
|
0.1
|
%
|
TRASM, adjusted - see
Note A (cents)
|
16.70
|
|
16.31
|
|
2.4
|
%
|
Operating cost per
available seat mile (cents)
|
15.14
|
|
15.35
|
|
(1.4)
|
%
|
CASM-Ex - see Note A
(cents)
|
11.06
|
|
11.08
|
|
(0.2)
|
%
|
Passenger load
factor
|
82.7
|
%
|
82.9
|
%
|
(0.2)
|
pts
|
Fuel gallons consumed
(millions)
|
962
|
|
936
|
|
2.8
|
%
|
Average price per
fuel gallon
|
$
|
2.06
|
|
$
|
1.98
|
|
4.0
|
%
|
Average price per
fuel gallon, adjusted - see Note A
|
$
|
2.05
|
|
$
|
2.01
|
|
1.8
|
%
|
Number of aircraft in
fleet, end of period
|
1,039
|
|
1,017
|
|
22
|
|
|
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
|
|
|
March
31,
|
|
(in
millions)
|
2019
|
2018
|
|
Cash Flows From
Operating Activities:
|
|
|
|
Net income
|
$
|
730
|
|
$
|
557
|
|
|
Depreciation and
amortization
|
615
|
|
603
|
|
|
Deferred income
taxes
|
219
|
|
168
|
|
|
Pension,
postretirement and postemployment payments greater than
expense
|
3
|
|
(551)
|
|
|
Changes in air
traffic liability
|
1,938
|
|
1,869
|
|
|
Changes in profit
sharing
|
(1,069)
|
|
(876)
|
|
|
Other working capital
changes, net
|
(485)
|
|
(398)
|
|
|
Net cash provided by
operating activities
|
1,951
|
|
1,372
|
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
Property and
equipment additions:
|
|
|
|
Flight equipment, including
advance payments
|
(1,059)
|
|
(991)
|
|
|
Ground property and
equipment, including technology
|
(301)
|
|
(274)
|
|
|
Net redemptions of
short-term investments
|
206
|
|
300
|
|
|
Other, net
|
49
|
|
38
|
|
|
Net cash used in
investing activities
|
(1,105)
|
|
(927)
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
Payments on long-term
debt and capital lease obligations
|
(1,285)
|
|
(244)
|
|
|
Repurchases of common
stock
|
(1,325)
|
|
(325)
|
|
|
Cash
dividends
|
(233)
|
|
(217)
|
|
|
Proceeds from
short-term obligations
|
1,750
|
|
—
|
|
|
Proceeds from
long-term obligations
|
500
|
|
—
|
|
|
Other, net
|
(16)
|
|
(30)
|
|
|
Net cash used in
financing activities
|
(609)
|
|
(816)
|
|
|
|
|
|
|
Net Increase
(Decrease) in Cash, Cash Equivalents and Restricted
Cash
|
237
|
|
(371)
|
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
2,748
|
|
1,853
|
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
2,985
|
|
$
|
1,482
|
|
|
|
|
|
|
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
|
$
|
1,910
|
|
$
|
1,447
|
|
|
Restricted cash included in
prepaid expenses and other
|
57
|
|
35
|
|
|
Other
assets:
|
|
|
|
Cash restricted for airport
construction
|
1,018
|
|
—
|
|
|
Total cash, cash
equivalents and restricted cash
|
$
|
2,985
|
|
$
|
1,482
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
(in
millions)
|
2019
|
|
2018
|
ASSETS
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,910
|
|
|
$
|
1,565
|
|
|
Accounts receivable,
net
|
3,154
|
|
|
2,314
|
|
|
Fuel
inventory
|
601
|
|
|
592
|
|
|
Expendable parts and
supplies inventories, net
|
470
|
|
|
463
|
|
|
Prepaid expenses and
other
|
1,061
|
|
|
1,406
|
|
|
Total current
assets
|
7,196
|
|
|
6,340
|
|
|
|
|
|
|
Property and
Equipment, Net:
|
|
|
|
|
Property and
equipment, net
|
29,139
|
|
|
28,335
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
Operating lease
right-of-use assets
|
6,036
|
|
|
5,994
|
|
|
Goodwill
|
9,781
|
|
|
9,781
|
|
|
Identifiable
intangibles, net
|
4,827
|
|
|
4,830
|
|
|
Cash restricted for
airport construction
|
1,018
|
|
|
1,136
|
|
|
Other noncurrent
assets
|
3,844
|
|
|
3,850
|
|
|
Total other
assets
|
25,506
|
|
|
25,591
|
|
Total
assets
|
$
|
61,841
|
|
|
$
|
60,266
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
|
Current maturities of
long-term debt and finance leases
|
$
|
3,055
|
|
|
$
|
1,518
|
|
|
Current maturities of
operating leases
|
941
|
|
|
955
|
|
|
Air traffic
liability
|
6,600
|
|
|
4,661
|
|
|
Accounts
payable
|
3,214
|
|
|
2,976
|
|
|
Accrued salaries and
related benefits
|
2,037
|
|
|
3,287
|
|
|
Loyalty program
deferred revenue
|
3,013
|
|
|
2,989
|
|
|
Fuel card
obligation
|
1,066
|
|
|
1,075
|
|
|
Other accrued
liabilities
|
1,397
|
|
|
1,117
|
|
|
Total current
liabilities
|
21,323
|
|
|
18,578
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term debt and
finance leases
|
7,710
|
|
|
8,253
|
|
|
Pension,
postretirement and related benefits
|
9,086
|
|
|
9,163
|
|
|
Loyalty program
deferred revenue
|
3,611
|
|
|
3,652
|
|
|
Noncurrent operating
leases
|
5,805
|
|
|
5,801
|
|
|
Other noncurrent
liabilities
|
1,395
|
|
|
1,132
|
|
|
Total noncurrent
liabilities
|
27,607
|
|
|
28,001
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
12,911
|
|
|
13,687
|
|
Total liabilities and
stockholders' equity
|
$
|
61,841
|
|
|
$
|
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 mark-to-market ("MTM")
adjustments and settlements on fuel hedge contracts, the MTM
adjustments recorded by our equity method investees, Virgin
Atlantic and Aeroméxico, unrealized gains/losses on our equity
investments accounted for at fair value, and the DGS sale to
determine pre-tax income and net income, adjusted. We include the
income tax effect of adjustments when presenting net income,
adjusted.
MTM adjustments and
settlements. 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' 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 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 historical results for
comparability.
|
Three Months
Ended
|
|
Three Months
Ended
|
|
March 31,
2019
|
|
March 31,
2019
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
946
|
|
|
$
|
(216)
|
|
|
$
|
730
|
|
|
$
|
1.09
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
8
|
|
|
(2)
|
|
|
6
|
|
|
|
Equity investment MTM
adjustments
|
(21)
|
|
|
5
|
|
|
(16)
|
|
|
|
Unrealized gain/loss on
investments
|
(100)
|
|
|
20
|
|
|
(80)
|
|
|
|
Total
adjustments
|
(114)
|
|
|
23
|
|
|
(91)
|
|
|
(0.13)
|
|
Non-GAAP
|
$
|
832
|
|
|
$
|
(193)
|
|
|
$
|
639
|
|
|
$
|
0.96
|
|
Year-over-year
change
|
|
|
|
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
March 31,
2018
|
|
March 31,
2018
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
732
|
|
|
$
|
(175)
|
|
|
$
|
557
|
|
|
$
|
0.79
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(27)
|
|
|
12
|
|
|
(15)
|
|
|
|
Equity investment MTM
adjustments
|
3
|
|
|
(1)
|
|
|
2
|
|
|
|
Unrealized gain/loss on
investments
|
(18)
|
|
|
7
|
|
|
(11)
|
|
|
|
DGS sale
adjustment
|
(7)
|
|
|
2
|
|
|
(5)
|
|
|
|
Total
adjustments
|
(49)
|
|
|
20
|
|
|
(29)
|
|
|
(0.04)
|
|
Non-GAAP
|
$
|
683
|
|
|
$
|
(154)
|
|
|
$
|
529
|
|
|
$
|
0.75
|
|
|
|
|
|
|
|
|
|
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)
|
|
March 31,
2019
|
|
March 31,
2018
|
|
Change
|
Operating
revenue
|
$
|
10,472
|
|
|
$
|
9,968
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
Third-party refinery
sales
|
(48)
|
|
|
(213)
|
|
|
|
DGS sale
adjustment
|
—
|
|
|
(59)
|
|
|
|
Operating revenue,
adjusted
|
$
|
10,424
|
|
|
$
|
9,696
|
|
|
7.5
|
%
|
Year-over-year
change
|
$
|
728
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March 31,
2019
|
|
March 31,
2018
|
|
Change
|
TRASM
(cents)
|
16.78
|
|
|
16.77
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
Third-party refinery
sales
|
(0.08)
|
|
|
(0.36)
|
|
|
|
DGS sale
adjustment
|
—
|
|
|
(0.10)
|
|
|
|
TRASM,
adjusted
|
16.70
|
|
|
16.31
|
|
|
2.4
|
%
|
|
|
|
|
|
|
|
|
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 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
|
|
|
|
|
|
|
March 31,
2019
|
|
March 31,
2018
|
|
Change
|
CASM
(cents)
|
15.14
|
|
|
15.35
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
(3.17)
|
|
|
(3.12)
|
|
|
|
Ancillary businesses and
refinery
|
(0.56)
|
|
|
(0.83)
|
|
|
|
Profit sharing
|
(0.35)
|
|
|
(0.32)
|
|
|
|
CASM-Ex
|
11.06
|
|
|
11.08
|
|
|
(0.2)
|
%
|
|
|
|
|
|
|
|
|
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 purchases (redemptions) of
short-term investments. Net purchases (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, net,
to provide investors a better understanding of the company's free
cash flow core to operations.
Net cash flows related to
certain airport construction projects. Management believes
investors should be informed that 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)
|
|
|
March 31,
2019
|
Net cash provided by
operating activities
|
|
$
|
1,951
|
|
Net cash used in
investing activities
|
|
(1,105)
|
|
Adjustments:
|
|
|
Net redemptions of
short-term investments
|
|
(206)
|
|
Net cash flows related to
certain airport construction projects and other
|
120
|
|
Total free cash
flow
|
|
$
|
760
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
March 31,
2019
|
Flight equipment,
including advance payments
|
|
$
|
1,059
|
|
Ground property and
equipment, including technology
|
|
301
|
|
Net cash flows
related to certain airport construction projects
|
|
(100)
|
|
Capital expenditures,
net
|
|
$
|
1,259
|
|
|
|
|
|
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
|
|
|
March
31,
|
(in
millions)
|
2019
|
2018
|
Operating
expense
|
$
|
9,452
|
|
$
|
9,124
|
|
Adjusted
for:
|
|
|
MTM adjustments and
settlements
|
(8)
|
|
27
|
|
Third-party refinery
sales
|
(48)
|
|
(213)
|
|
DGS sale
adjustment
|
—
|
|
(52)
|
|
Operating expense,
adjusted
|
$
|
9,396
|
|
$
|
8,886
|
|
Year-over-year
change
|
$
|
510
|
|
|
|
|
|
|
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
|
|
|
March
31,
|
|
|
March
31,
|
(in millions, except
per gallon data)
|
2019
|
2018
|
|
|
2019
|
2018
|
Fuel purchase
cost
|
$
|
1,936
|
|
$
|
1,927
|
|
|
|
$
|
2.01
|
|
$
|
2.06
|
|
Fuel hedge
impact
|
8
|
|
(27)
|
|
|
|
0.01
|
|
(0.03)
|
|
Refinery segment
impact
|
34
|
|
(44)
|
|
|
|
0.04
|
|
(0.05)
|
|
Total fuel
expense
|
$
|
1,978
|
|
$
|
1,856
|
|
|
|
$
|
2.06
|
|
$
|
1.98
|
|
MTM adjustments and
settlements
|
(8)
|
|
27
|
|
|
|
(0.01)
|
|
0.03
|
|
Total fuel expense,
adjusted
|
$
|
1,970
|
|
$
|
1,883
|
|
|
|
$
|
2.05
|
|
$
|
2.01
|
|
Change
year-over-year
|
$
|
87
|
|
|
|
|
|
|
Percent change
year-over-year
|
5
|
%
|
|
|
|
|
|
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)
|
March 31,
2019
|
March 31,
2018
|
Non-operating
expense
|
$
|
74
|
|
$
|
112
|
|
Adjusted
for:
|
|
|
Equity investment MTM
adjustments
|
21
|
|
(3)
|
|
Unrealized gain/loss on
investments
|
100
|
|
18
|
|
Non-operating
expense, adjusted
|
$
|
195
|
|
$
|
126
|
|
Change
year-over-year
|
$
|
69
|
|
|
|
|
|
|
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SOURCE Delta Air Lines