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Delta Air Lines Reports 2009 Financial Results

Jan 26, 2010

ATLANTA, Jan. 26 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL) today reported financial results for the December quarter and full year 2009.  Key points include:

  • Delta's net loss excluding special items(1) for the December 2009 quarter was $225 million, or $0.27 per share.  This result is $285 million better than the prior year quarter on a combined basis(2) excluding special items.  
  • Delta's net loss was $25 million, or $0.03 per share, for the December 2009 quarter.
  • Delta's net loss for 2009 was $1.2 billion, including $169 million in special items.  Excluding special items and $1.4 billion of fuel hedge losses, Delta's net profit for 2009 was $291 million.
  • Delta ended 2009 with $5.4 billion in unrestricted liquidity, a $400 million increase year over year.
  • Delta continued its successful integration of Northwest Airlines and received approval from the Federal Aviation Administration for a single operating certificate at year end.

 

(Logo: http://www.newscom.com/cgi-bin/prnh/20090202/DELTALOGO )

"2009 was a difficult year by any measure and my thanks go out to the Delta people for their hard work through this challenging time," said Richard Anderson, Delta's chief executive officer.  "As a result of the strategic pieces we put in place in 2009 and the strong momentum of our merger integration, Delta is now positioned to capitalize on the economic recovery under way and expects to generate positive RASM improvements each month of this year."  

Revenue Environment

Delta's operating revenue on a GAAP basis grew 1% to $6.8 billion in the December 2009 quarter compared to the prior year period as a result of its merger with Northwest.  On a combined basis, total operating revenue declined nearly $1 billion, or 12%, and total unit revenue (RASM) declined 5% in the December 2009 quarter compared to the 2008 quarter.

 

 

(in millions)

4Q09

4Q08

Incr

 

4Q09

4Q08

Incr

 

 

GAAP

GAAP

(Decr)

 

GAAP

Combined

(Decr)

 

Passenger

$      5,779

$      5,735

1%

 

$      5,779

$      6,657

(13)%

 

Cargo

           253

           230

10%

 

           253

           285

(11)%

 

Other, net

           773

           748

3%

 

           773

           826

(6)%

 

Total Operating Revenue

$      6,805

$      6,713

1%

 

$      6,805

$      7,768

(12)%

 

 

 

 

 

 

 

 

 

 

 

 

 

On a combined basis:

  • Total operating revenue declined 12% in the December 2009 quarter versus the prior year quarter due to the global economic recession.
  • Passenger revenue decreased 13%, or $878 million, compared to the prior year period on an 8% capacity reduction.  Passenger unit revenue (PRASM) declined 5%, driven by a 7% decline in yield and a 1 point improvement in load factor.
  • Cargo revenue declined 11%, or $32 million, reflecting lower yields.  Freighter capacity was 19% lower year over year due to Delta's decision to end all dedicated freighter flying by the end of 2009.
  • Other, net revenue declined 6%, or $53 million, primarily due to declines in administrative service charges which were partially offset by increased baggage fees.

 

Comparisons of revenue-related statistics are as follows:

 

 

 

 

 

 

Increase (Decrease)

 

 

 

 

 

4Q09 (GAAP) versus 4Q08 (Combined)

 

 

 

4Q09 ($M)

 

Change

Unit

 

 

 

Passenger Revenue

GAAP

 

YOY

Revenue

Yield

Capacity

 

 

Domestic

$      2,670

 

(12.7)%

(8.0)%

(6.6)%

(5.1)%

 

 

Atlantic

        1,014

 

(19.7)%

0.2%

(7.2)%

(19.8)%

 

 

Latin America

           294

 

(5.4)%

(8.4)%

(11.8)%

3.6%

 

 

Pacific

           491

 

(22.9)%

(14.6)%

(14.4)%

(9.8)%

 

 

Total mainline

        4,469

 

(15.2)%

(6.6)%

(7.8)%

(9.2)%

 

 

Regional

        1,310

 

(5.6)%

(3.7)%

(5.4)%

(2.0)%

 

 

Consolidated

$      5,779

 

(13.2)%

(5.4)%

(6.6)%

(8.2)%

 

 

 

 

 

 

 

 

 

 

 

 

 

"Our revenue performance this quarter showed indications of economic recovery with increased corporate travel demand, strong load factors and sequential RASM improvement each month," said Ed Bastian, Delta's president.  "With initiatives in place to broaden our network through new alliances, invest $1 billion in our fleet and product and reallocate our global fleet under our single operating certificate, we have built the foundation for further RASM improvement this year."  

Cost Performance

In the December 2009 quarter, Delta's operating expense on a GAAP basis decreased approximately $1 billion year over year primarily due to lower restructuring and merger-related items.  Excluding special items, operating expense decreased $1.2 billion due to lower fuel expense, reduced capacity, productivity improvements and merger benefits in the December 2009 quarter compared to the prior year period on a combined basis.  These cost reductions were partially offset by investments in Delta's product, increased employee wages and higher pension expense.

On a combined basis:

  • Consolidated unit cost (CASM(3)), excluding fuel expense and special items, increased 7% year over year in the December 2009 quarter as the pace of capacity reductions exceeded the benefits from cost reduction initiatives and merger synergies.
  • Non-operating expense excluding special items decreased $55 million, or 15%, in the December 2009 quarter primarily due to lower foreign exchange losses.

 

"Delta's strong financial foundation and unmatched merger benefits allowed us to keep our full year unit costs contained and grow our unrestricted liquidity to $5.4 billion," said Hank Halter, chief financial officer.  "We are well positioned for 2010 with more than 50% of our debt maturities already addressed and plans to keep our non-fuel unit costs flat to 2009."

Fuel Price and Related Hedges

Delta hedged 40% of its fuel consumption for the December 2009 quarter, for an average fuel price(4) of $2.17 per gallon.  The table below represents the fuel hedges Delta had in place as of Jan. 22, 2010:

 

 

 

1Q10

2Q10

3Q10

4Q10

 

Call options

23%

17%

6%

3%

 

Collars

6%

5%

3%

0%

 

Swaps

18%

9%

2%

0%

 

Total

47%

31%

11%

3%

 

 

 

 

 

 

 

Average crude call strike

$   67

$   72

$   87

$   91

 

Average crude collar cap

75

83

83

-

 

Average crude collar floor

64

72

73

-

 

Average crude swap

  77

  79

  80

-

 

 

 

 

 

 

 

 

 

 

Liquidity Position

As of Dec. 31, 2009, Delta had $5.4 billion in unrestricted liquidity, including $4.7 billion in cash and short-term investments and $685 million in undrawn revolving credit facilities.  Operating cash flow during the December 2009 quarter was negative $75 million, reflecting the pre-tax loss and the seasonal declines in air traffic liability.

During the quarter, the company completed a total of $1.1 billion in financing transactions, including $689 million from the 2009-1 EETC offering to refinance 27 aircraft (of which $347 million remains in escrow), $150 million from the issuance of unsecured municipal bonds and $250 million in new revolving credit facilities.  Northwest's $300 million undrawn revolving credit facility terminated on its scheduled maturity date.  Debt and capital lease payments for the December 2009 quarter totaled $628 million, which included repaying the original financing for five aircraft in the 2009-1 EETC.  

Capital expenditures during the quarter were approximately $175 million, which included $136 million for investments in aircraft, parts and modifications.

Company Highlights

In 2009, Delta continued to position itself as the world's No. 1 airline, with an ongoing commitment to employees, customers and communities.  Key accomplishments include:

  • Paying more than $65 million in 2009 in employee Shared Rewards for achieving operational performance goals;
  • Achieving more than $700 million in synergy benefits in 2009 from its merger with Northwest, with an incremental $600 million expected in 2010;  
  • Receiving final authorization from the Federal Aviation Administration for Delta and Northwest to fly under a single operating certificate and merging Delta and Northwest into a single legal entity;
  • Resolving union representation and seniority integration for aircraft maintenance technicians, other Technical Operations employee groups, dispatchers and meteorologists and scheduling an election for simulator technicians to vote on IAM representation;
  • Implementing an expanded trans-Atlantic alliance with Air France-KLM, which will result in more flight choices, frequencies, convenient flight schedules, competitive fares and harmonized services for customers;
  • Completing the integration and re-branding of 247 airport facilities worldwide;
  • Improving the quality and consistency of Delta's product by painting more than 300 pre-merger Northwest aircraft in the Delta livery, installing Wi-Fi on more than 346 aircraft, refurbishing the interiors of approximately 90 percent of the pre-merger Northwest mainline fleet and harmonizing onboard products and services worldwide;
  • Announcing plans to invest $1 billion through mid-2013 to enhance the customer experience and improve fleet efficiency with installation of flat-bed BusinessElite seats, expanded in-flight entertainment, additional First Class service on regional jets and new Sky Club lounges;
  • Creating the world's largest airline loyalty program by merging the Northwest WorldPerks program into Delta SkyMiles and announcing the 2010 SkyMiles Medallion program offering frequent flyers new, industry-leading benefits, including a Diamond level status and rollover Medallion Qualification Miles;
  • Reaching a definitive agreement with US Airways to exchange slots and airport facilities at New York's LaGuardia and Washington's Reagan National airports, subject to regulatory approval, which will enable Delta to serve an additional two million customers at LaGuardia annually without added congestion;
  • Partnering with the City of Atlanta to reach an agreement to extend Delta's lease at Hartsfield-Jackson Atlanta International Airport through 2017 to maintain the airport's position as the leading airport in the world;
  • Receiving recognition for industry-leading products and services, including "Best Frequent Flyer Program," "Best Airline Web Site" and "Best Airport Lounge" from Business Traveler magazine and receiving the "Extra Mile Award" from Budget Travel magazine for the re-launch of Delta's Red Coat program; and
  • Contributing cash and in-kind donations to charities around the globe, including sponsoring Habitat for Humanity builds in six U.S. cities and Thailand, partnering with the American Red Cross for Haiti relief and continuing a long-standing partnership with the Breast Cancer Research Foundation.

 

Special Items

Delta recorded special items totaling a net $200 million credit in the December 2009 quarter, including:

  • $121 million in merger-related expenses; and
  • a $321 million non-cash tax benefit related to the impact of fuel hedges in other comprehensive income.

 

Delta recorded special items totaling $1 billion in charges in the December 2008 quarter, including:

  • $970 million in merger-related items;
  • a $20 million write-down in the value of auction rate securities; and
  • an $18 million charge related to facilities closure.

 

March 2010 Quarter Guidance

Delta's projections for the March 2010 quarter are below.

 

 

 

1Q 2010 Forecast

 

 

 

 

Fuel price, including taxes and hedges

$ 2.22

 

Operating margin

Breakeven

 

Capital expenditures

$ 400 million

 

Total liquidity as of Mar. 31, 2010

$ 5.6 billion

 

 

 

 

 

1Q 2010 Forecast (compared to 1Q 2009)

 

 

 

 

Consolidated unit costs - excluding fuel expense

Flat to up 2%

 

Mainline unit costs - excluding fuel expense

Flat to up 2%

 

 

 

 

System capacity

Down 3 – 5 %

 

    Domestic

Down 1 – 3 %

 

    International

Down 5 – 7 %

 

 

 

 

Mainline capacity

Down 3 – 5 %

 

    Domestic

Down 2 – 4 %

 

    International

Down 5 – 7 %

 

 

 

 

 

 

 

Other Matters

Included with this press release are Delta's unaudited Consolidated Statements of Operations for the three and twelve months ended Dec. 31, 2009 and 2008; a statistical summary for those periods; selected balance sheet data as of Dec. 31, 2009 and Dec. 31, 2008; and a reconciliation of certain non-GAAP financial measures.

About Delta

Delta Air Lines, the world's No. 1 airline, serves more than 160 million passengers each year. With its unsurpassed global network, Delta and the Delta Connection carriers offer service to 368 destinations in 66 countries on six continents. Delta employs more than 70,000 employees worldwide and operates a mainline fleet of nearly 800 aircraft. A founding member of the SkyTeam global alliance, Delta participates in the industry's leading trans-Atlantic joint venture with Air France KLM. Including its worldwide alliance partners, Delta offers customers more than 16,000 daily flights, with hubs in Amsterdam, Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Paris-Charles de Gaulle, Salt Lake City and Tokyo-Narita. The airline's service includes the SkyMiles frequent flier program, the world's largest airline loyalty program; the award-winning BusinessElite service; and more than 50 Delta Sky Clubs in airports worldwide. Customers can check in for flights, print boarding passes, check bags and flight status at delta.com.

Endnotes

(1) Note A to the attached Consolidated Statements of Operations provides a reconciliation of non-GAAP financial measures used in this release and provides the reasons management uses those measures.

(2) Delta's financial results under generally accepted accounting principles (GAAP) include the results of Northwest Airlines for the periods following the completion of the merger, which occurred on Oct. 29, 2008. Unless otherwise indicated, Delta presents financial results on a GAAP basis, which reflects both Delta and Northwest financial results for the December 2009 quarter.  Under GAAP, Delta does not include in its financial results the results of Northwest prior to the completion of the merger.  This impacts the comparability of Delta's financial statements under GAAP for the December 2009 and 2008 quarters.  In this press release, Delta presents its financial results for the December 2008 quarter under GAAP as well as on a "combined basis".  "Combined basis" means the company combines the financial results of Delta and Northwest as if the merger had occurred prior to the beginning of the applicable period.  Delta's financial results on a combined basis for the December 2008 quarter include the financial results of Northwest for the period Oct. 1, 2008 through Dec. 31, 2008.  Delta believes presenting this financial information on a combined basis provides a more meaningful basis for comparing Delta's year-over-year financial performance than the GAAP financial information.

(3) Delta excludes from consolidated unit cost ancillary businesses which are not related to the generation of a seat mile, including aircraft maintenance and staffing services which Delta provides to third parties, Delta's dedicated freighter operations and Delta's vacation wholesale operations (MLT). Similarly, Delta excludes from passenger unit revenues, and includes in other revenue, revenues Delta received for providing aircraft maintenance and staffing services to third parties, freighter operations and MLT.  Management believes these classifications provide a more consistent and comparable reflection of Delta's consolidated operations.

(4) Delta's December 2009 quarter average fuel price of $2.17 per gallon reflects the consolidated cost per gallon for mainline and regional operations, including contract carrier operations, net of fuel hedge impact.

Forward-looking Statements

Statements in this news 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 effects of the global recession; the effects of the global financial crisis; the impact of posting collateral in connection with our fuel hedge contracts;  the impact that our indebtedness will have on our financial and operating activities and our ability to incur additional debt; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; the ability to realize the anticipated benefits of our merger with Northwest; the integration of the Delta and Northwest workforces; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in its operations; our ability to retain management and key employees; the ability of our credit card processors to take significant holdbacks in certain circumstances; the effects of terrorist attacks; and competitive conditions in the airline industry.  

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 Quarterly Report on Form 10-Q for the period ended September 30, 2009.  Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of January 26, 2010, and which we have no current intention to update.

 

 

DELTA AIR LINES, INC.

 

Consolidated Statements of Operations

 

(Unaudited)

 

 

 

Three Months Ended Dec. 31,

 

$ Change

 

% Change

 

(in millions, except per share data)

2009

 

2008(1)

 

H(L)

 

H(L)

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue:

 

 

 

 

 

 

 

 

 

Passenger:

 

 

 

 

 

 

 

 

 

   Mainline

$       4,469

 

$       4,528

 

$        (59)

 

(1)%

 

 

   Regional carriers

         1,310

 

         1,207

 

        103

 

9%

 

 

 Total passenger revenue

         5,779

 

         5,735

 

           44

 

1%

 

 

Cargo

            253

 

            230

 

          23

 

10%

 

 

Other, net

            773

 

            748

 

         25

 

3%

 

 

 Total operating revenue

         6,805

 

         6,713

 

         92

 

1%

 

 

 

 

 

 

 

 

 

 

 

Operating Expense:

 

 

 

 

 

 

 

 

 

Aircraft fuel and related taxes

         1,706

 

         2,294

 

       (588)

 

(26)%

 

 

Salaries and related costs

         1,687

 

         1,391

 

         296

 

21%

 

 

Contract carrier arrangements(2)

            941

 

            930

 

      11

 

1%

 

 

Contracted services

            419

 

            346

 

      73

 

21%

 

 

Depreciation and amortization

            384

 

            374

 

      10

 

3%

 

 

Aircraft maintenance materials and outside repairs

            284

 

            333

 

         (49)

 

(15)%

 

 

Passenger commissions and other selling expenses

            336

 

            298

 

      38

 

13%

 

 

Landing fees and other rents

            318

 

            268

 

      50

 

19%

 

 

Passenger service

            161

 

            129

 

      32

 

25%

 

 

Aircraft rent

            117

 

            106

 

      11

 

10%

 

 

Restructuring and merger-related items

            121

 

            987

 

       (866)

 

(88)%

 

 

Other

            377

 

            354

 

      23

 

6%

 

 

 Total operating expense

         6,851

 

         7,810

 

       (959)

 

(12)%

 

 

 

 

 

 

 

 

 

 

 

Operating Loss

            (46)

 

       (1,097)

 

           1,051

 

(96)%

 

 

 

 

 

 

 

 

 

 

 

Other (Expense) Income:

 

 

 

 

 

 

 

 

 

Interest expense

          (327)

 

          (277)

 

         (50)

 

18%

 

 

Interest income

                4

 

              19

 

         (15)

 

(79)%

 

 

Miscellaneous, net

              14

 

            (83)

 

      97

 

NM

 

 

 Total other expense, net

          (309)

 

          (341)

 

      32

 

(9)%

 

 

 

 

 

 

 

 

 

 

 

Loss Before Income Taxes

          (355)

 

       (1,438)

 

       1,083

 

(75)%

 

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit

            330

 

                -

 

              330

 

NM

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$          (25)

 

$     (1,438)

 

$     1,413

 

(98)%

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Share

$       (0.03)

 

$       (2.11)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Weighted Average

 

 

 

 

 

 

 

 

 

Shares Outstanding

            830

 

            682

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Pursuant to GAAP, results for the December 2008 quarter presented in this table reflect Delta standalone and Northwest from Oct. 30, 2008  through Dec. 31, 2008. See Note A for a representation of "Combined" results for the three months ended Dec. 31, 2008, which includes Northwest results for that period.

 

(2) Contract carrier arrangements expense includes $249 million and $301 million for the three months ended Dec. 31, 2009 and 2008, respectively, for aircraft fuel and related taxes.

 

 

 

 

 

 

 

 

 

 

 

 

 

 




 

 

DELTA AIR LINES, INC.

 

Consolidated Statements of Operations

 

(Unaudited)

 

 

 

Year Ended Dec. 31,

 

$ Change

 

% Change

 

(in millions, except per share data)

2009

 

2008(1)

 

H(L)

 

H(L)

 

 

 

 

 

 

 

 

 

 

 

Operating Revenue:

 

 

 

 

 

 

 

 

 

Passenger:

 

 

 

 

 

 

 

 

 

   Mainline

$        18,522   

 

$        15,137   

 

$         3,385   

 

22%

 

 

   Regional carriers

5,285   

 

4,446   

 

839   

 

19%

 

 

 Total passenger revenue

23,807   

 

19,583   

 

4,224   

 

22%

 

 

Cargo

788   

 

686   

 

102   

 

15%

 

 

Other, net

3,468   

 

2,428   

 

1,040   

 

43%

 

 

 Total operating revenue

28,063   

 

22,697   

 

5,366   

 

24%

 

 

 

 

 

 

 

 

 

 

 

Operating Expense:

 

 

 

 

 

 

 

 

 

Aircraft fuel and related taxes

7,384   

 

7,346   

 

38   

 

1%

 

 

Salaries and related costs

6,838   

 

4,329   

 

2,509   

 

58%

 

 

Contract carrier arrangements(2)

3,823   

 

3,766   

 

57   

 

2%

 

 

Contracted services

1,595   

 

1,062   

 

533   

 

50%

 

 

Depreciation and amortization

1,536   

 

1,266   

 

270   

 

21%

 

 

Aircraft maintenance materials and outside repairs

1,434   

 

1,169   

 

265   

 

23%

 

 

Passenger commissions and other selling expenses

1,405   

 

1,030   

 

375   

 

36%

 

 

Landing fees and other rents

1,289   

 

787   

 

502   

 

64%

 

 

Passenger service

638   

 

440   

 

198   

 

45%

 

 

Aircraft rent

480   

 

307   

 

173   

 

56%

 

 

Impairment of goodwill and other intangible assets

-   

 

7,296   

 

(7,296)  

 

NM

 

 

Restructuring and merger-related items

407   

 

1,131   

 

(724)  

 

(64)%

 

 

Other

1,558   

 

1,082   

 

476   

 

44%

 

 

 Total operating expense

28,387   

 

31,011   

 

(2,624)  

 

(8)%

 

 

 

 

 

 

 

 

 

 

 

Operating Loss

(324)  

 

(8,314)  

 

7,990   

 

(96)%

 

 

 

 

 

 

 

 

 

 

 

Other (Expense) Income:

 

 

 

 

 

 

 

 

 

Interest expense

(1,278)  

 

(705)  

 

(573)  

 

81%

 

 

Interest income

27   

 

92   

 

(65)  

 

(71)%

 

 

Loss on extinguishment of debt

(83)  

 

-   

 

(83)  

 

NM

 

 

Miscellaneous, net

77   

 

(114)  

 

191   

 

NM

 

 

 Total other expense, net

(1,257)  

 

(727)  

 

(530)  

 

73%

 

 

 

 

 

 

 

 

 

 

 

Loss Before Income Taxes

(1,581)  

 

(9,041)  

 

7,460   

 

(83)%

 

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit

344   

 

119   

 

225   

 

NM

 

 

 

 

 

 

 

 

 

 

 

Net Loss

$        (1,237)  

 

$        (8,922)  

 

$         7,685   

 

(86)%

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Loss per Share

$          (1.50)  

 

$        (19.08)  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and Diluted Weighted Average

 

 

 

 

 

 

 

 

 

Shares Outstanding

827   

 

468   

 

 

 

 

 

(1) Pursuant to GAAP, results for the year ended December 2008 presented in this table reflect Delta standalone for the year ended Dec. 31, 2008 and Northwest from Oct. 30, 2008 through Dec. 31, 2008.

(2) Contract carrier arrangements expense includes $907 million and $1.7 billion for the years ended Dec. 31, 2009 and 2008, respectively, for aircraft fuel and related taxes.

 

 

 

 

 

 

 

 

 

 

 



 

 

DELTA AIR LINES, INC.

 

Selected Balance Sheet Data

 

 

 

 

 

 

 

Dec. 31,

 

Dec. 31,

 

(in millions)

 

2009

 

2008

 

 

 

(Unaudited)

 

 

 

Cash and cash equivalents

 

$      4,607

 

$     4,255

 

Short-term investments

 

71

 

212

 

Restricted cash and cash equivalents (short-term and long-term)

 

444

 

453

 

Total assets

 

43,581

 

45,084

 

Total debt and capital leases, including current maturities

 

17,198

 

16,571

 

Total stockholders' equity

 

274

 

874

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

DELTA AIR LINES, INC.

 

 

 

Combined Statistical Summary (1)

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Dec. 31,

 

 

 

 

 

 

 

 

2009

 

2008 Combined(1)

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

 

Revenue Passenger Miles (millions)(2)

 

43,559   

 

46,848   

 

(7.0)%

 

 

 

 

Available Seat Miles (millions)(2)

 

53,324   

 

58,098   

 

(8.2)%

 

 

 

 

Passenger Mile Yield(2)

 

13.27   

¢

14.21   

¢

(6.6)%

 

 

 

 

Passenger Revenue per Available Seat Mile (PRASM)(2)

 

10.84   

¢

11.46   

¢

(5.4)%

 

 

 

 

Operating Cost Per Available Seat Mile (CASM)(2)

 

12.52   

¢

15.89   

¢

(21.2)%

 

 

 

 

    CASM excluding Special Items(2) - See Note A

 

12.29   

¢

13.24   

¢

(7.2)%

 

 

 

 

 

    CASM excluding Special Items and Fuel Expense and

    Related Taxes (2) (3) - See Note A

8.68   

¢

8.11   

¢

7.0%

 

 

 

 

Passenger Load Factor (2)

 

81.7   

%

80.6   

%

1.1   

pts

 

 

 

Fuel Gallons Consumed (millions)(2)

 

902   

 

976   

 

(7.6)%

 

 

 

 

 

Average Price Per Fuel Gallon, Net of Hedging Activity (2)

 

$            2.17   

 

$            3.12   

 

(30.4)%

 

 

 

 

Number of Aircraft in Fleet, End of Period

 

983   

 

1,023   

 

(40)  

Aircraft

 

 

 

Full-Time Equivalent Employees, End of Period

 

81,106   

 

84,306   

 

(3.8)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mainline:

 

 

 

 

 

 

 

 

 

 

Revenue Passenger Miles (millions)

 

37,537   

 

40,810   

 

(8.0)%

 

 

 

 

Available Seat Miles (millions)

 

45,582   

 

50,194   

 

(9.2)%

 

 

 

 

Operating Cost Per Available Seat Mile (CASM)

 

11.44   

¢

15.25   

¢

(25.0)%

 

 

 

 

    CASM excluding Special Items - See Note A

 

11.18   

¢

12.22   

¢

(8.5)%

 

 

 

 

 

    CASM excluding Special Items and Fuel Expense and

    Related Taxes - See Note A

 

7.80   

¢

7.20   

¢

8.3%

 

 

 

 

Fuel Gallons Consumed (millions)

 

728   

 

789   

 

(7.7)%

 

 

 

 

 

Average Price Per Fuel Gallon, Net of Hedging Activity

 

$            2.17   

 

$            3.67   

 

(40.9)%

 

 

 

 

Number of Aircraft in Fleet, End of Period

 

740   

 

767   

 

(27)  

Aircraft

 

 

 

 

 

 

1 Data presented reflects operations for both Delta and Northwest for the December 2008 quarter.

 

 

2 Data presented includes operations under our contract carrier arrangements.

 

 

3 Excludes $249 million and $301 million for the three months ended Dec. 31, 2009 and 2008, respectively, for fuel expense incurred under contract carrier arrangements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DELTA AIR LINES, INC.

 

Combined Statistical Summary (1)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended Dec. 31,

 

 

 

 

 

 

 

2009

 

2008 Combined(1)

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated:

 

 

 

 

 

 

 

 

 

Revenue Passenger Miles (millions)(2)

 

188,943   

 

202,726   

 

(6.8)%

 

 

 

Available Seat Miles (millions)(2)

 

230,331   

 

246,164   

 

(6.4)%

 

 

 

Passenger Mile Yield(2)

 

12.60   

¢

14.65   

¢

(14.0)%

 

 

 

Passenger Revenue per Available Seat Mile (PRASM)(2)

 

10.34   

¢

12.07   

¢

(14.3)%

 

 

 

Operating Cost Per Available Seat Mile (CASM)(2)

 

12.01   

¢

18.92   

¢

(36.5)%

 

 

 

    CASM excluding Special Items(2) - See Note A

 

11.83   

¢

13.37   

¢

(11.5)%

 

 

 

 

    CASM excluding Special Items and Fuel Expense and

    Related Taxes(2) (3) - See Note A

8.28   

¢

7.98   

¢

3.8%

 

 

 

Passenger Load Factor (2)

 

82.0   

%

82.4   

%

(0.4)  

pts

 

 

Fuel Gallons Consumed (millions)(2)

 

3,853   

 

4,158   

 

(7.3)%

 

 

 

 

Average Price Per Fuel Gallon, Net of Hedging Activity (2)

 

$    2.15   

 

$    3.29   

 

(34.7)%

 

 

 

Number of Aircraft in Fleet, End of Period

 

983   

 

1,023   

 

(40)  

Aircraft

 

 

Full-Time Equivalent Employees, End of Period

 

81,106   

 

84,306   

 

(3.8)%

 

 

 

 

 

 

 

 

 

 

 

 

Mainline:

 

 

 

 

 

 

 

 

 

Revenue Passenger Miles (millions)

 

163,706   

 

177,361   

 

(7.7)%

 

 

 

Available Seat Miles (millions)

 

197,723   

 

213,447   

 

(7.4)%

 

 

 

Operating Cost Per Available Seat Mile (CASM)

 

11.04   

¢

18.52   

¢

(40.4)%

 

 

 

    CASM excluding Special Items - See Note A

 

10.84   

¢

12.15   

¢

(10.8)%

 

 

 

 

    CASM excluding Special Items and Fuel Expense and

    Related Taxes - See Note A

 

7.40   

¢

7.11   

¢

4.1%

 

 

 

Fuel Gallons Consumed (millions)

 

3,106   

 

3,393   

 

(8.5)%

 

 

 

 

Average Price Per Fuel Gallon, Net of Hedging Activity

 

$    2.23   

 

$    3.40   

 

(34.4)%

 

 

 

Number of Aircraft in Fleet, End of Period

 

740   

 

767   

 

(27)  

Aircraft

 

 

 

 

 

 

 

 

1 Data presented reflects operations for both Delta and Northwest for the year ended Dec. 31, 2008.

 

 

2 Data presented includes operations under our contract carrier arrangements.

 

 

3 Excludes $907 million and $1.7 billion for the years ended Dec. 31, 2009 and 2008, respectively, for fuel expense incurred under contract carrier arrangements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Operating Expense Reclassifications

Delta reclassified certain prior period operating expense amounts to conform to our current period presentation.  These reclassifications do not impact total operating expense, net income, or other key financial metrics in any period.  We reclassified travel and incidental expenses, primarily crew meals and lodging expenses, from salaries and related costs to other operating expenses.  This reclassification more closely aligns the statements of operations to that of the airline industry.  We also reclassified expenses associated with the cost incurred to provide services to third-party connection carriers.  

 

 

 

 

4Q08

 

1Q09

 

2Q09

 

3Q09

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

 

 

 

 

 

 

 

 

OPERATING EXPENSE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and related costs

 

$  (164)

 

$  (161)

 

$  (168)

 

$  (172)

 

Contracted services

 

(24)

 

(26)

 

(22)

 

(25)

 

Other

 

188 

 

187 

 

190 

 

197 

 

Total operating expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note A: The following tables show reconciliations of non-GAAP financial measures.  The reasons Delta uses these measures are described below.

 
 
-- Delta completed its merger with Northwest Airlines on Oct. 29, 2008. 
   Accordingly, Delta's financial results under GAAP for 2009 include 
   the results of Northwest Airlines for the period Jan. 1, 2009 
   through Dec. 31, 2009.
 
   Under GAAP, Delta does not include in its financial results the 
   results of Northwest Airlines prior to the merger. Accordingly, 
   Delta's financial results under GAAP for the December 2008 quarter 
   include the results of Northwest Airlines from Oct. 30, 2008 through 
   Dec. 31, 2008. This impacts the comparability of Delta's financial 
   statements under GAAP for the December 2009 and 2008 quarters.
 
   Delta presents its financial results for the December 2008 quarter 
   under GAAP as well as on a "combined basis."   "Combined basis" 
   means the company combines the financial results of Delta and 
   Northwest as if the merger had occurred prior to the beginning of 
   the applicable period. Delta believes presenting this financial 
   information on a combined basis provides a more meaningful basis for 
   comparing Delta's year-over-year financial performance than the GAAP 
   financial information.
 
   This press release also includes guidance for the March 2010 quarter.
   Delta is unable to reconcile certain forward-looking projections to 
   GAAP, including projected consolidated cost per available seat mile 
   (CASM) and Mainline non-fuel CASM, as the nature or amount of 
   special items cannot be estimated at this time.
 
-- Delta excludes special items and fuel hedge losses because 
   management believes the exclusion of these items is helpful to 
   investors to evaluate the company's recurring operational 
   performance.
 
-- Delta excludes non-cash mark-to-market (MTM) adjustments related to 
   fuel hedges settling in future periods in order to present financial 
   results related to operations in the period shown.    
 
-- Delta presents consolidated and Mainline CASM excluding fuel expense 
   and related taxes because management believes the volatility in fuel 
   prices impacts the comparability of year-over-year financial 
   performance.
 
-- Consolidated and Mainline CASM excludes ancillary businesses not 
   associated with the generation of a seat mile. These businesses 
   include expenses related to Delta's providing maintenance and 
   staffing services to third parties, dedicated freighter operations 
   and Delta's vacation wholesale operations. 
 
-- Delta presents net capital expenditures because management believes 
   this metric is helpful to investors to evaluate the company's 
   investing activities.
 
-- Delta presents total debt and capital lease payments because 
   management believes this metric is helpful to investors to evaluate 
   the company's debt-related activities. 
 

 

 

DELTA AIR LINES, INC.

 

 

 

 

 

 

 

 

Unaudited Combined Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

Dec. 31, 2008

 

Oct. 1, 2008 through

Oct. 29, 2008

 

Three Months Ended Dec. 31, 2008

 

(in millions)

Delta(1)

 

Northwest(1)

 

Special Items

 

Combined

 

 

 

 

 

 

 

 

 

 

 

OPERATING REVENUE:

 

 

 

 

 

 

 

 

 

Passenger:

 

 

 

 

 

 

 

 

 

Mainline

$ 4,528 

 

$ 741 

 

$       - 

 

$ 5,269 

 

 

Regional carriers

1,207 

 

181 

 

 

1,388 

 

 

Total passenger revenue

5,735 

 

922 

 

 

6,657 

 

 

Cargo

230 

 

55 

 

 

285 

 

 

Other, net

748 

 

78 

 

 

826 

 

 

 Total operating revenue

6,713 

 

1,055 

 

 

7,768 

 

OPERATING EXPENSE:

 

 

 

 

 

 

 

 

 

Aircraft fuel and related taxes

2,294 

 

750 

 

(301)

(2) 

2,743 

 

 

Salaries and related costs

1,391 

 

223 

 

(25)

(3) 

1,589 

 

 

Contract carrier arrangements

930 

 

81 

 

 

1,011 

 

 

Aircraft maintenance materials and outside repairs

333 

 

49 

 

 

382 

 

 

Contracted services

346 

 

65 

 

 

411 

 

 

Passenger commissions and other selling expenses

298 

 

72 

 

 

370 

 

 

Depreciation and amortization

374 

 

39 

 

 

413 

 

 

Landing fees and other rents

268 

 

40 

 

 

308 

 

 

Aircraft rent

106 

 

17 

 

 

123 

 

 

Passenger service

129 

 

20 

 

 

149 

 

 

Restructuring and merger-related items

987 

 

224 

 

(1,211)

(4) 

 

 

Other

354 

 

61 

 

 

415 

 

 

 Total operating expense

7,810 

 

1,641 

 

(1,537)

 

7,914 

 

 

 

 

 

 

 

 

 

 

 

OPERATING (LOSS) INCOME

(1,097)

 

(586)

 

1,537 

 

(146)

 

OTHER (EXPENSE) INCOME:

 

 

 

 

 

 

 

 

 

Interest expense

(277)

 

(39)

 

 

(316)

 

 

Interest income

19 

 

 

 

24 

 

 

Miscellaneous, net

(83)

 

(9)

 

20 

(5) 

(72)

 

 

 Total other expense, net

(341)

 

(43)

 

20 

 

(364)

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAXES

(1,438)

 

(629)

 

1,557 

 

(510)

 

INCOME TAX PROVISION

 

 

 

 

NET LOSS

$ (1,438)

 

$ (629)

 

$ 1,557 

 

$ (510)

 

 

Notes:

Combined Contract carrier arrangements expense includes $301 million for fuel expense incurred under these arrangements.

 

1  We reclassified prior period amounts to conform to current presentations

 

2  $301 million in out-of-period fuel hedges

 

3  $25 million of merger-related expenses

 

4  $1.2 billion in merger-related charges and $18 million in facilities restructuring

 

5  $20 million write-down in value of auction rate securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

Year

 

 

 

Ended

 

Ended

 

 

 

Dec. 31, 2009

 

Dec. 31, 2009

 

(in millions)

 

 

 

 

Net loss

$ (25)

 

$ (1,237)

 

Items excluded:

 

 

 

 

Restructuring and merger-related items

121 

 

407 

 

Loss on extinguishment of debt

 

83 

 

Income tax benefit related to other comprehensive income

(321)

 

(321)

 

 

Net loss excluding special items

$ (225)

 

$ (1,068)

 

Weighted average shares outstanding

830 

 

827 

 

Loss per share excluding special items

$ (0.27)

 

$ (1.29)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended

 

(in millions)

Dec. 31, 2009

 

Net loss excluding special items

$ (1,068)

 

Item excluded:

 

 

Fuel hedge losses

1,359 

 

Net income excluding special items and fuel hedge losses

$ 291 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP

 

(in millions)

Three Months Ended

Dec. 31, 2009

 

Operating expense

$ 6,851 

 

Items excluded:

 

 

MTM adjustments to fuel hedges settling in future periods

 

Restructuring and merger-related items

(121)

 

Operating expense excluding special items

$ 6,730 

 

 

 

 

 

 

 

 

 

 

 

 

Combined

 

 

 

Three Months

 

 

 

Ended

 

(in millions)

Dec. 31, 2008

 

Non-operating expense

$ 341 

 

Northwest results for the period Oct. 1 to Oct. 29, 2008

43 

 

Item excluded:

 

 

Write-down in value of auction rate securities

(20)

 

Non-operating expense excluding special items

$ 364 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

Ended

 

(in millions)

Dec. 31, 2009

 

Payment on long-term debt and capital lease obligations

$ (835)

 

Adjustments:

 

 

Aircraft purchases under seller financing

(293)

 

Paydown on credit facility

500 

 

Total debt and capital lease payments

$ (628)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

Ended

 

(in millions)

Dec. 31, 2009

 

Property and equipment additions (GAAP)

$ (470)

 

Adjustments:

 

 

Proceeds from sales of investments

11 

 

Proceeds from sales of flight equipment

14 

 

Aircraft purchases under seller financing

268 

 

Total capital expenditures

$ (177)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

 

 

Ended

 

(in millions)

Dec. 31, 2009

 

Property and equipment additions, flight equipment (GAAP)

$ (404)

 

Adjustment:

 

 

Aircraft purchases under seller financing

268 

 

Total investments in aircraft, parts and modifications

$ (136)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delta

 

Northwest

 

Combined

 

 

 

 

 

 

(in millions, except unit data)

 

Three Months Ended Dec. 31, 2008

 

Oct. 1, 2008 to

Oct. 29, 2008

 

Three Months Ended Dec. 31, 2008

 

Passenger Mile Yield

 

PRASM

 

 

Passenger and operating revenue

 

 

 

 

 

 

 

 

 

 

 

 

Domestic

 

$ 2,639

 

$ 420

 

$ 3,059

 

13.53

¢

11.31

¢

 

Atlantic

 

1,129

 

134

 

1,263

 

12.02

 

9.26

 

 

Latin America

 

308

 

2

 

310

 

13.67

 

10.10

 

 

Pacific

 

452

 

185

 

637

 

11.71

 

9.90

 

 

Total mainline

 

4,528

 

741

 

5,269

 

12.91

 

10.50

 

 

   Regional carriers

 

1,207

 

181

 

1,388

 

22.99

 

17.56

 

 

Total passenger revenue

 

5,735

 

922

 

6,657

 

14.21

 

11.46

 

 

Cargo

 

230

 

55

 

285

 

 

 

 

 

 

Other, net

 

748

 

78

 

826

 

 

 

 

 

 

 Total operating revenue

 

$ 6,713

 

$ 1,055

 

$ 7,768

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Delta

 

Northwest

 

Combined

 

 

 

 

 

 

(in millions, except unit data)

 

Year Ended Dec. 31, 2008

 

Jan. 1, 2008 to

Oct. 29, 2008

 

Year Ended Dec. 31, 2008

 

Passenger Mile Yield

 

PRASM

 

 

Passenger revenue

 

$ 19,583

 

$ 10,125

 

$ 29,708

 

14.65

¢

12.07

¢

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

Three Months Ended Dec. 31,

 

 

 

 

2009

 

2008

 

 

 

 

 

GAAP

 

Combined

 

 

 

(in millions, except per cent data)

 

 

 

 

 

 

CASM

12.85 

¢

16.27 

¢

 

 

Ancillary businesses

(0.33)

 

(0.38)

 

 

 

CASM excluding items not related

 

 

 

 

 

 

    to generation of a seat mile

12.52 

¢

15.89 

¢

 

 

Items excluded:

 

 

 

 

 

 

Restructuring and merger-related items

(0.23)

 

(2.13)

 

 

 

MTM adjustments to fuel hedges settling in future periods

 

(0.52)

 

 

 

CASM excluding special items

12.29 

¢

13.24 

¢

 

 

Fuel expense and related taxes

(3.61)

 

(5.13)

 

 

 

CASM excluding fuel expense

 

 

 

 

 

 

    and related taxes and special items

8.68 

¢

8.11 

¢

 

 

ASMs

53,324 

 

58,098 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

Three Months Ended Dec. 31,

 

 

 

 

2009

 

2008

 

 

 

 

 

GAAP

 

Combined

 

 

 

(in millions, except per cent data)

 

 

 

 

 

 

Consolidated operating expense

$ 6,851 

 

$ 9,451 

 

 

 

Less regional carriers operating expense

(1,460)

 

(1,551)

 

 

 

Mainline operating expense

$ 5,391 

 

$ 7,900 

 

 

 

Mainline CASM

11.83 

¢

15.74 

¢

 

 

Ancillary businesses

(0.39)

 

(0.49)

 

 

 

Mainline CASM excluding items not related

 

 

 

 

 

 

    to generation of a seat mile

11.44 

¢

15.25 

¢

 

 

Items excluded:

 

 

 

 

 

 

Restructuring and merger-related items

(0.26)

 

(2.43)

 

 

 

MTM adjustments to fuel hedges settling in future periods

 

(0.60)

 

 

 

Mainline CASM excluding special items

11.18 

¢

12.22 

¢

 

 

Fuel expense and related taxes

(3.38)

 

(5.02)

 

 

 

Mainline CASM excluding fuel expense

 

 

 

 

 

 

    and related taxes and special items

7.80 

¢

7.20 

¢

 

 

ASMs

45,582 

 

50,194 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

Year Ended Dec. 31,

 

 

 

 

2009

 

2008

 

 

 

 

GAAP

 

Combined

 

 

(in millions, except per cent data)

 

 

 

 

 

CASM

12.32 

¢

19.40 

¢

 

Ancillary businesses

(0.31)

 

(0.48)

 

 

CASM excluding items not related

 

 

 

 

 

  to generation of a seat mile

12.01 

¢

18.92 

¢

 

Items excluded:

 

 

 

 

 

Impairment of goodwill and other assets

 

(4.79)

 

 

Restructuring and merger-related items

(0.18)

 

(0.59)

 

 

MTM adjustments to fuel hedges settling in future periods

 

(0.17)

 

 

CASM excluding special items

11.83 

¢

13.37 

¢

 

Fuel expense and related taxes

(3.55)

 

(5.39)

 

 

CASM excluding fuel expense

 

 

 

 

 

  and related taxes and special items

8.28 

¢

7.98 

¢

 

ASMs

230,331 

 

246,164 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended Dec. 31,

 

 

 

 

2009

 

2008

 

 

 

 

GAAP

 

Combined

 

 

(in millions, except per cent data)

 

 

 

 

 

Consolidated operating expense

$ 28,387 

 

$ 47,758 

 

 

Less regional carriers operating expense

(5,807)

 

(6,993)

 

 

Mainline operating expense

$ 22,580 

 

$ 40,765 

 

 

Mainline CASM

11.42 

¢

19.10 

¢

 

Ancillary businesses

(0.38)

 

(0.58)

 

 

Mainline CASM excluding items not related

 

 

 

 

 

  to generation of a seat mile

11.04 

¢

18.52 

¢

 

Items excluded:

 

 

 

 

 

Impairment of goodwill and other assets

 

(5.52)

 

 

Restructuring and merger-related items

(0.20)

 

(0.66)

 

 

MTM adjustments to fuel hedges settling in future periods

 

(0.19)

 

 

Mainline CASM excluding special items

10.84 

¢

12.15 

¢

 

Fuel expense and related taxes

(3.44)

 

(5.04)

 

 

Mainline CASM excluding fuel expense

 

 

 

 

 

  and related taxes and special items

7.40 

¢

7.11 

¢

 

ASMs

197,723 

 

213,447 

 

 

 

 

 

 

 

 

 

 

 



 

 

CONTACT: Investor Relations, +1-404-715-2170, or Corporate Communications, +1-404-715-2554

 

 


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