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UPDATING AND REPLACING

Delta Air Lines Sept. Quarter Profit News Release

Statistical Summary Table (Unaudited)

 

 

Delta Air Lines (NYSE:DAL) is updating and replacing one table exhibit in a press release issued at 7 a.m. ET this morning, “Delta Air Lines Announces 2018 September Quarter Profit.”

The Company is updating and replacing the Statistical Summary Table (Unaudited) to correct the line previously labeled as “CASM-Ex, including profit sharing – see Note A (cents)” as “CASM-Ex – see Note A (cents).”

The fully corrected Statistical Summary Table (Unaudited) is as follows:

Updated Statistical Summary chart

A fully updated version of the “Delta Air Lines Announces 2018 September Quarter Profit” news release is as follows:

 

Delta Air Lines (NYSE:DAL) today reported financial results for the September quarter 2018. Highlights of those results, including both GAAP and adjusted metrics, are below and incorporated here.

Adjusted pre-tax income for the September quarter 2018 was $1.6 billion, and adjusted earnings per share were $1.80, at the high end of guidance. Adjusted earnings per share were up 16 percent compared to the prior year quarter, driven by revenue momentum, tax reform benefits and a four percent lower share count. Results reflect a $30 million negative impact from Hurricane Florence.

“Our solid eight percent revenue growth, combined with flat non-fuel unit cost performance, helped offset 85 percent of the $655 million fuel cost increase in the quarter. These achievements are a testament to the strength of the Delta business model and the hard work of the Delta people, and I am pleased to recognize their performance with an additional $395 million toward 2018 profit sharing,” said Ed Bastian, Delta’s Chief Executive Officer. “Our commercial momentum and improved cost trajectory give us confidence that we are on a path to deliver continued top-line growth and expand margins as we move into 2019."

Revenue Environment

Delta’s adjusted operating revenue of $11.8 billion for the September quarter improved eight percent, or $912 million versus the prior year. This quarterly revenue result marks a record for the company, driven by improvements across Delta’s business, including a nearly 20 percent increase in premium product ticket revenues and double-digit percentage increases in cargo, loyalty and Maintenance, Repair and Overhaul revenue.

Total unit revenues excluding refinery sales (TRASM) increased 4.3 percent during the period driven by strong demand and improving yields. Foreign exchange benefit of approximately half a point was offset by the impact of Hurricane Florence.

“We generated record revenues in the September quarter on strong demand across the business and a favorable yield environment. In the December quarter we expect total unit revenue growth of three to five percent, driving full year revenue growth to eight percent, the high end of our guidance,” said Glen Hauenstein, Delta’s President. “The benefits of our brand, industry-leading network, and relentless focus on the customer are driving revenue growth, improving margins and accelerating the pace of our recapture of higher fuel costs.”

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December Quarter 2018

Despite an expected 30 percent increase in fuel price, Delta expects pre-tax margins to stabilize in the December quarter driven by continued top-line growth and improving cost performance.

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Cost Performance

Total adjusted operating expenses for the September quarter increased $1.0 billion versus the prior year quarter, with more than half of the increase driven by higher fuel prices.

CASM-Ex was flat for the September quarter 2018 compared to the prior year period, a three-point improvement from the June quarter. Efficiency gains successfully offset cost pressures from higher revenue-related costs and product and employee investments.

“The September quarter marked an important inflection point in changing our non-fuel cost trajectory, and we expect to deliver on our full-year target of one to two percent non-fuel unit cost growth,” said Paul Jacobson, Delta’s Chief Financial Officer. “Continued focus on cost control, along with incremental efficiency gains from refleeting and One Delta, give us confidence in our ability to keep our non-fuel unit cost growth below two percent next year.”

Adjusted fuel expense increased $655 million, or 35 percent, relative to September quarter 2017. Delta’s adjusted fuel price per gallon for the September quarter was $2.22, which includes $12 million of benefit from the refinery.

Adjusted non-operating expense improved by $30 million versus the prior year, driven primarily by pension expense favorability. The company expects 2018 full-year adjusted non-operating expense to be approximately $300 million, representing a $160 million improvement over prior year due to favorable interest and pension expenses, offsetting reduced partner earnings due to higher fuel.

Adjusted tax expense declined $221 million for the September quarter primarily due to the reduction in Delta’s book tax rate from 34 percent to 23 percent.

 

Cash Flow and Shareholder Returns

Delta generated $1.5 billion of operating cash flow and $655 million of free cash flow during the quarter, after the investment of $865 million primarily for aircraft purchases and modifications.

For the September quarter, Delta returned $566 million to shareholders, comprised of $325 million of share repurchases and $241 million in dividends.

 

Strategic Highlights

In the September quarter, Delta achieved a number of milestones across its five key strategic pillars.

Culture and People

• Received certification as a great workplace by the independent analysts at Great Place to Work for a third straight year, with 93 percent of employees proud to work for Delta, reiterating the importance of the Delta culture.

• Earned a spot in the transportation section of the Dow Jones Sustainability North America Index for the eighth consecutive year, as the first airline to offer carbon offsets to customers and the only airline to cap emissions at 2012 levels through purchase of carbon offsets.

Operational Reliability

• Delivered 97 days of zero system cancellations across the combined mainline and Delta Connection operations on a year-to-date basis, up 46 days from 2017 and exceeding the previous full-year record in the first nine months of the year.

• Achieved industry-leading operational performance with mainline on-time performance (A0) of 71.5 percent year-to-date; and top baggage performance as measured in the latest Department of Transportation report.

Network and Partnerships

• Achieved major milestones in the Delta/Korean joint venture including the completion of pricing harmonization, co-location of teams in Seoul and Atlanta, and broad alignment of commercial strategy.

• Signed a definitive agreement with WestJet that, after regulatory approval, will create a transborder joint venture serving more than 30 cities, which covers over 95 percent of U.S.-Canadian demand, providing enhanced offerings and more choice for customers.

• Continued Delta's global and domestic expansion with the announcement of plans to expand access to London-Heathrow and Paris-Charles de Gaulle from key hubs and gateways including Detroit, Los Angeles, New York-JFK, and Portland, Ore; new Boston to Lisbon service; new Tampa to Amsterdam service; additional frequency to Tel Aviv from New York-JFK; and, new Honolulu service from Detroit.

Customer Experience and Loyalty

• Installed seat-back entertainment on its 600th aircraft, more than any airline in the world, giving more customers than ever convenient access to free in-flight entertainment on Delta Studio.

• Announced the launch of the first biometric terminal in the United States, transforming the customer journey with a seamless travel experience through the Maynard H. Jackson International Terminal in Atlanta.

• Launched personalized company sites to allow individual corporate travelers to stay up to date on benefits they receive through their company’s Corporate Sales Agreement with Delta.

Investment Grade Balance Sheet

• Received reaffirmation of an investment-grade credit rating by S&P Ratings, showing the confidence of the market in the sustainability and durability of the company. 

 

September Quarter Results

Special items for the quarter consist primarily of mark-to-market adjustments on refinery fuel hedges and unrealized gains/losses on investments.

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About Delta

Delta Air Lines serves more than 180 million customers each year. In 2018, Delta was named to Fortune’s top 50 Most Admired Companies in addition to being named the most admired airline for the seventh time in eight years. Additionally, Delta has ranked No.1 in the Business Travel News Annual Airline survey for an unprecedented seven consecutive years. With an industry-leading global network, Delta and theDelta Connection carriers offer service to 324 destinations in 57 countries on six continents. Headquartered in Atlanta, Delta employs more than 80,000 employees worldwide and operates a mainline fleet of more than 800 aircraft. The airline is a founding member of the SkyTeamglobal alliance and participates in the industry’s leading transatlantic joint venture with Air France-KLM and Alitalia as well as a joint venture with Virgin Atlantic. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with key hubs and markets including AmsterdamAtlanta, BostonDetroitLos Angeles, Mexico City, Minneapolis/St. PaulNew York-JFK and LaGuardiaLondon-HeathrowParis-Charles de GaulleSalt Lake City, São Paulo, Seattle, Seoul, and Tokyo-Narita. Delta has invested billions of dollars in airport facilities, global products and services, and technology to enhance the customer experience in the air and on the ground. Additional information is available on the Delta News Hub, as well as delta.com, Twitter @DeltaNewsHub andFacebook.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 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 availability of aircraft fuel; 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 party regional carriers; 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, 2017 and our Form 10-Q for the quarterly period ended March 31, 2018. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of October 11, 2018, and which we have no current intention to update.

 

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Updated Statistical Summary chart

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English

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