Delta Air Lines today reported financial results for the second quarter 2022 and provided its outlook for the third quarter 2022.  Highlights of the June quarter 2022 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.

“I would like to thank our entire team for their outstanding work during a challenging operating environment for the industry as we work to restore our best-in-class reliability.  Their performance coupled with strong demand drove nearly $2 billion of free cash flow as well as profitability in the first half of the year, and we are accruing profit sharing, marking a great milestone for our people,” said Ed Bastian, Delta’s chief executive officer.  “For the September quarter, we expect an adjusted operating margin of 11 to 13 percent, supporting our outlook for meaningful full year profitability.”

June Quarter 2022 GAAP Financial Results 

• Operating revenue of $13.8 billion
• Operating income of $1.5 billion with operating margin of 11.0 percent
• Earnings per share of $1.15
• Operating cash flow of $2.5 billion
• Total debt and finance lease obligations of $24.8 billion

June Quarter 2022 Adjusted Financial Results 

• Operating revenue of $12.3 billion, 99 percent recovered versus June quarter 2019 on 82 percent capacity restoration
• Operating income of $1.4 billion with operating margin of 11.7 percent, the first quarter of double-digit margin since 2019
• Earnings per share of $1.44
• Free cash flow of $1.6 billion after investing $864 million into the business
• Payments on debt and finance lease obligations of $1.0 billion
• $13.6 billion in liquidity* and adjusted net debt of $19.6 billion

*Includes cash and cash equivalents, short-term investments and undrawn revolving credit facilities

September Quarter Outlook¹

Fuel price guidance is based on prices as of July 8th, including Brent at $107 per barrel, cracks at $41 per barrel and $0.27 per gallon refinery contribution.

June Quarter Revenue Environment and Outlook

“With growing demand across our network in the June quarter, we recaptured higher fuel prices and delivered adjusted revenue recovery of 99 percent with unit revenues up 20.5 percent versus 2019.  We also delivered another record quarter of American Express co-brand remuneration, up 35 percent from the June quarter 2019, reflecting growing brand preference and further diversification of our revenue base,” said Glen Hauenstein, Delta’s president.  “With sustained strength in bookings, we expect September quarter revenue to be up 1 to 5 percent compared to 2019 with total unit revenue growth improving sequentially.”

• Domestic continues to lead recovery with international accelerating: Domestic passenger revenue was 3 percent higher and international passenger revenue was 81 percent recovered compared to the June quarter 2019. Revenue in Latin America and Transatlantic both exceeded 2019 levels in the month of June and the pace of recovery in the Pacific saw meaningful improvement, driven by Korea and Australia re-openings and the easing of restrictions in Japan.
• Business recovery progressing: Domestic corporate sales* for the quarter were ~80 percent recovered versus 2019, up 25 points compared to the March quarter. International corporate sales* for the quarter were ~65 percent recovered versus 2019, up 30 points compared to the March quarter, driven by outsized improvement in Transatlantic. Recent corporate survey results show positive expectations for business travel in the September quarter, including optimism around international travel given the elimination in June of the pre-departure test requirement for flights to the U.S.
• Premium products outperforming Main Cabin: Premium product revenue recovery outpaced Main Cabin across all markets. Premium and other diversified revenue streams, including Loyalty, Cargo and MRO, comprised 54 percent of total revenues.
• Strong American Express remuneration: Received $1.4 billion in the quarter, up 35 percent compared to the June quarter 2019 and on track to surpass $5 billion for the full year. Co-brand spend was up 43 percent and co-brand card acquisitions were up 15 percent compared to the June quarter 2019.
• Cargo records best ever June quarter performance; MRO approaches 2019 levels: Cargo revenue was $272 million, a 46 percent increase compared to the same period in 2019. MRO revenue in the June quarter was $178 million, restored to 85 percent of 2019 levels.

*Corporate sales include tickets sold to corporate contracted customers, including tickets for travel during and beyond the referenced time period

June Quarter Cost Performance and Outlook

“Our June quarter non-fuel unit cost performance of up 22 percent compared to 2019 was impacted by lower capacity, higher selling-related expenses and investments in operational reliability,” said Dan Janki, Delta’s chief financial officer.  “We remain confident in our ability to meaningfully improve our unit costs as we fully scale the network and return our operations to Delta’s high standards. In the near-term, as we prioritize restoring reliability, our full year non-fuel unit cost will remain higher than our previous plan by approximately 8 points on 5 points less capacity.”

• Operating expense of $12.3 billion and total adjusted operating expense of $10.9 billion in the June quarter, both increased 21 percent sequentially
• Adjusted non-fuel costs of $7.5 billion were up 10 percent sequentially, primarily driven by higher capacity
• Compared to the June quarter 2019, adjusted non-fuel CASM was 22 percent higher on 18 percent less capacity
• Adjusted fuel price of $3.82 per gallon was up 37 percent sequentially. Compared to the June quarter 2019, market prices were up 94 percent
• Refinery operating income of $269 million resulted in a 31¢ per gallon benefit to our adjusted fuel price per gallon
• Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.6, a 4.2 percent improvement versus 2019

June Quarter Balance Sheet, Cash and Liquidity

“In the June quarter, we repaid $1 billion of gross debt after delivering strong profitability and generating free cash flow ahead of our expectations,” Janki said.  “We remain committed to achieving investment-grade metrics and a return on invested capital in the mid-teens over the next 3 years.”

• Adjusted net debt of $19.6 billion; Weighted average interest rate of 4.3 percent with 84 percent fixed rate debt and 16 percent variable rate debt
• Payments on debt and finance lease obligations of $1.0 billion, bringing the first half total to $2.4 billion
• Free cash flow of $1.6 billion with operating cash flow of $2.5 billion and gross capital expenditures of $864 million
• Air Traffic Liability ended June at $9.9 billion, up $805 million compared to March
• Liquidity of $13.6 billion, including $2.8 billion in undrawn revolver capacity

Other June Quarter Highlights

Operational Reliability

• Took decisive action to improve resilience and restore operational reliability for our customers and employees, including schedule adjustments for the remainder of the year, implementation of earlier boarding procedures and addition of operational buffers
• July performance is off to a good start, with an average month-to-date completion factor of 99.2 percent and 84 percent of flights arriving within 14 minutes of scheduled arrival time
• Updated airport procedures, including earlier domestic boarding and schedule modifications at the company’s largest hubs to help drive more on-time departures and successful connections
• Reactivated Peach Corps, providing employees from the corporate offices the opportunity to step away from daily work routines to assist frontline colleagues while supporting Delta’s operation and customers

Culture and People

• To reward Delta people for their dedication and excellence, implemented a 4 percent base pay increase for eligible scale and merit employees globally on May 1
• Recorded a profit-sharing accrual, which is expected to pay out to Delta employees in February 2023 to recognize their commitment to serving our people, customers and communities
• Introduced industry-only boarding premium pay for flight attendants, marking continued investment in our operational performance
• Recognized as the No. 1 corporate blood drive sponsor with the American Red Cross for the fifth consecutive year
• Resumed The Delta Air Lines Foundation Matching Gifts to Education program, matching Delta employee and retiree donations to accredited, eligible educational institutions

Customer Experience and Loyalty

• Welcomed record number of new SkyMiles and American Express co-brand cardholders to our programs
• Celebrated the openings of Delta’s Terminal 3 at LAX in April followed by Terminal C at LGA in June, featuring the company’s two largest Delta Sky Clubs in the system, part of Delta’s $12 billion investment in multi-year transformation projects at airport hubs across the country
• In partnership with American Express, launched a first-of-its-kind, limited-edition Reserve credit card made with airplane metal of a retired Boeing 747
• Welcomed the first A321neo into service while taking delivery of two additional A321neos, one A220-300, one A330-900 and five gently used 737-900ERs
• Enhanced premium offering with new domestic First Class seat on the A321neo, with larger, improved privacy space, more stowage for personal items and enhanced memory-foam seat cushions in all cabins
• In partnership with Misapplied Sciences, launched PARALLEL REALITY™ beta experience at DTW, a groundbreaking technology allowing customers to simultaneously see personalized content tailored to their unique journey on a single digital screen
• As part of Delta’s commitment to create a values-led experience, added onboard snack and beverage options from small businesses, global suppliers, and woman- and LGBTQ+-led brands
• Introduced new in-flight entertainment from MasterClass, a streaming platform offering exclusive access to select classes, alongside hit movies, bingeable TV shows and curated audio playlists

Environmental, Social and Governance

• Published our 2021 Environmental, Social and Governance (ESG) Report, sharing the latest data and insight into the company’s efforts to advance its purpose of connecting people with opportunity while expanding the understanding of the planet and the people within it
• Leveraged existing infrastructure to accept a batch of sustainable aviation fuel for a Delta flight from New York’s LGA and support the scaling of lower carbon intensity fuels
• Participated in the SkyTeam Alliance’s Sustainable Flight Challenge, an initiative where partner airlines share learnings and innovations with the common goal of reducing the industry’s carbon footprint
• Launched new skills-first career development program establishing a long-term goal of filling 25 percent of corporate management roles with talent in frontline roles and removing career barriers of four-year degrees, supporting economic equity through access to higher-earning jobs across the company
• Joined forces with the Responsible Business Initiative for Justice (RBIJ) to launch Unlock Potential, a program that helps drive economic and social mobility for young people disconnected from education or employment, to create meaningful career opportunities for at-risk young adults

June Quarter Results

June quarter results have been adjusted primarily for the unrealized losses on investments, loss on extinguishment of debt and third-party refinery sales as described in the reconciliations in Note A.

Delta Air Lines aircraft slide show (Airbus):

Delta Air Lines’ CEO Ed Bastian apologized to its customers for its recent cancellations as its pilots picket and complain about the overwhelming amount of overtime flying.

Booming demand and staff shortages, especially pilots, is causing a lot of the cancellations. Weather also plays a major role.

Bastian has called this period the most challenging period in the airline’s history.

Delta is providing more flexibility to customers for changing their travel plans ahead of the busy July Fourth holiday travel weekend.

The global airline has issued a systemwide fare difference travel waiver for July 1-4, which allows customers to rebook their trip around potentially challenging weekend travel days – with no fare difference or change fees, as long as customers travel between the same origin and destination. Customers can adjust their travel plans via My Trips or the Fly Delta app. Rebooked travel needs to take place by July 8, 2022.

Delta sent this message to its SkyMiles members:

The summer travel season is well underway, and I share the excitement of so many of you who are returning to the skies as restrictions lift and entire regions of the world reopen. At the same time, I know many of you may have experienced disruptions, sometimes significant, in your travels as we build our operation back from the depths of 2020 while accommodating a record level of demand.

If you’ve encountered delays and cancellations recently, I apologize. We’ve spent years establishing Delta as the industry leader in reliability, and though the majority of our flights continue to operate on time, this level of disruption and uncertainty is unacceptable. You choose to invest your time, resources and loyalty with Delta and you’ve rightly come to expect a world-class experience on every flight, and that includes the best reliability in the business.

Despite the historic challenges facing our industry, Delta’s team of 75,000+ professionals around the globe remain focused on providing the very best care for you and your loved ones. I want to thank them for their continued professionalism, resilience and the truly outstanding service they continue to deliver on a daily basis. Thanks to their efforts, so far in June we’ve flown over 96% of our scheduled departures, with more than 80% of our flights arriving within 14 minutes of their scheduled arrival time. I’m proud of the work of our team in the face of the many obstacles we’re up against as air travel re-emerges and even prouder of our determination to reduce cancellations and further minimize delays.

RESTORING RELIABILITY

Things won’t change overnight, but we’re on a path towards a steady recovery. Steps we’ve taken include offering more flexibility for your travel plans and adjusting our summer schedule so that when challenges do occur, we can bounce back faster. Crews are being scheduled with more buffer room to help us absorb and adjust when factors like summer thunderstorms disrupt the operation. And as always, we’re issuing travel waivers ahead of inclement weather, enabling you to easily rebook travel if needed without worry.

At the same time, airport procedures are being updated, including earlier boarding to help ensure on-time departures and schedule changes at our largest connecting hub in Atlanta to help manage the volume of customers at the airport. And we’ve activated our Peach Corps, a program that brings in hundreds of employees from our corporate offices to the airports in Atlanta and New York to assist with check-in, baggage drop-off, airport wayfinding, using kiosks, serving you at our Delta Sky Clubs and other helpful tasks.

We’ve accelerated our hiring as well, bringing on around 15,000 new employees since the start of 2021. That includes a record number of Reservations and Care specialists, pilots, flight attendants, aircraft maintenance technicians and more – overall we’re hiring several hundred new Delta team members every week to assist you and help ensure a reliable, comfortable experience on Delta when you fly.

And we’re continuing to engage with the Federal Aviation Administration on improving processes for air traffic management, which will help minimize delays and cancellations due to inclement weather.

The environment we’re navigating today is unlike anything we’ve ever faced, but Delta is no stranger to challenging times, and our commitment to you is as strong as ever. We won’t stop until we’ve made things right, and we’ll never stop improving for you.

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We’re excited to see you returning to the skies, and every flight is an opportunity to earn your loyalty and trust anew. On behalf of our global team, I want to thank you for your patience and understanding as we work throughout the summer and beyond to get you to your destination safely and restore the world-class reliability that you deserve and have come to expect from Delta.

Delta aircraft photo gallery (Boeing):

Delta Air Lines made this announcement:

This June, Delta will have the honor of flying 30 World War II veterans on a charter flight to Normandy, France, for the annual commemoration of the 1944 D-Day invasion. These veterans will each be paired during their journey with current Delta employees who also served in the U.S. military.

The Delta charter flight, operated in partnership with community partner Best Defense Foundation, departs from Atlanta to Deauville, France, on June 1 for a week-long program of events that will include the official D-Day Commemoration on June 6 and unique dining experiences sponsored by Michelin.

“The mission of the Best Defense Foundation is ‘taking care of those who took care of us,’” said Donnie Edwards, Founder of Best Defense Foundation. “Through this amazing partnership with Delta Air Lines, we are able to accomplish this mission and provide these heroes with the opportunity to reconnect with their brothers, honor those who gave the ultimate sacrifice and celebrate the liberation of an ally.”

“This historic flight exemplifies the servant leadership of Delta people and the testament that ‘No One Better Connects the World,’” said Jim Graham, CEO – Endeavor and Executive Sponsor of Delta’s Veterans Business Resource Group. “The charter forges relationships as Delta veterans escort those who represent the Greatest Generation to the sites of the Normandy landings where they will be welcomed, celebrated and hosted by the people whose families were liberated on June 6, 1944.”

The unique charter – marking the first time a U.S. passenger airline will fly directly to Normandy – has its roots in the film “The Girl Who Wore Freedom,” a documentary depicting the annual D-Day commemorations in France that was added onboard last year to the Delta Studio.

“Throughout my work on the film, I hoped to have the opportunity to bring more veterans to this historic site, helping them to gain closure and letting them experience the immense gratitude of those who they helped to liberate,” said Christian Taylor, the film’s director. “There is no better tribute to ‘The Girl Who Wore Freedom’ than that our film inspired this return trip in partnership with the Best Defense Foundation, Delta Air Lines and Michelin, in honor of the 78th anniversary of D-Day.”

Pictured from left to right: Chuck Imhof – VP East Region and NY Sales; Florence Boucherie – Daughter of Dany Boucherie and Co-Producer of the film; Dany Patrix Boucherie – ‘The Girl Who Wore Freedom’; Donnie and Kathryn Edwards – President, Co Founders Best Defense Foundation; Virginie Durr – Enterprise Sales Manager; David Chapman – VP Government and Defense (Michelin); Christian Taylor – Film Director

Delta and SkyTeam partner, Air France, hosted a screening of the documentary on May 16 at the French Institute Alliance Française in New York ahead of the charter. Christian joined retired Col. David Chapman, V.P. – Government and Defense Sales for Michelin and former attaché to the U.S. Embassy in Paris, and Dany Patrix Boucherie, one of the central people featured in the film, for a Q&A session following the screening.

Dany Patrix Boucherie pictured far left

As ‘The Girl Who Wore Freedom,’ Dany is seen pictured as a child wearing a dress made from parachutes of the American soldiers who liberated her and her family 78 years ago. In a plan developed by Normandy native Virginie Durr, Manager – Enterprise Sales, and Veterans Business Resource Group President Kurt Robinson, Manager – Quality Control, Dany will be boarding the charter to return to Normandy alongside the World War II and Delta veterans.

Pictured from left to right: Dany Patrix Boucherie, WWII veteran Arthur Grabiner, Christian Taylor

With much of the company’s foundation being bolstered by World War II service members and pilots in the early days of its establishment, Delta remains committed to supporting veterans and active members of the military who serve our country. Today, over 9,000 Delta employees are veterans, with many of them continuing to serve in the Guard or Reserves. Delta’s Veterans Business Resource Group is made up of over 1,400 members and provides professional development, networking and community service opportunities for veterans and supporters of the military.

Delta veterans were selected from Delta’s Veterans Business Resource Group to participate in this charter, with several having personal connections to the cause. Capt. Dan Bauer will be honoring his grandfather, who served as a B-24 Pilot in the Army Air Corps in World War II and who inspired him to become an Air Force pilot. With the opportunity to attend the D-Day Commemoration in Normandy, Dan can bring his family story full circle in service of others who have served.

“We are meeting, connecting and sharing camaraderie with these incredible veterans and making this more than just a journey back to the battlefield,” said Dan. “Delta leads by example by putting the people, resources and most importantly the soul into making this truly amazing event a reality.”

Captain Pat McCormick with WWII veteran Tom Rice

Delta Air Lines has announced it will cut around 100 flights a day, primarily in the U.S. and Latin America.

The cuts will be from July 1 through August 7 during the busy summer schedule.

The airline stated:

“Weather and air traffic control, vendor staffing, increased COVID case rates contributing to higher-than-planned unscheduled absences in some work groups – are resulting in an operation that isn’t consistently up to the standards Delta has set for the industry in recent years.”

Delta aircraft photo gallery (Boeing);

Delta Air Lines has made this announcement:

The latest addition to Delta’s fleet, the A321neo, lifted off from Boston Logan International Airport Friday morning (May 20), bound for San Francisco International Airport. Customers on the inaugural flight were the first to experience an  improved cabin experience throughout – including an industry-leading domestic First Class seat – and flew with confidence that their trans-continental journey is more fuel-efficient.

The inaugural flight takes off as Delta continues to grow as Boston’s No. 1 global airline, offering the most flights and seats of any carrier. This summer, Delta will operate up to 150 daily nonstop flights from Boston to over 50 destinations, a more than 10% increase in capacity since our pre-pandemic height in October 2019. By mid-August, Delta will serve each of Boston’s 20 most popular markets nonstop, including new service to five additional destinations: Tel Aviv (TLV), Athens (ATH), Baltimore (BWI), Denver (DEN) and San Diego (SAN).

“Delta’s A321neo product will deliver a superior premium travel experience for our customers in Boston and around the country,” said Mahendra Nair, Delta’s S.V.P. – Fleet and TechOps Supply Chain. “The introduction of this state-of-the-art, more fuel-efficient aircraft to our fleet is also an important commitment on our Flight to Net Zero, our journey to decarbonize aviation.”

The aircraft’s comfortable cabin configuration features thoughtful touches throughout, including a new domestic First Class seat design with larger, improved privacy space, a sturdier tray table, and more stowage space for personal items, as well as enhanced memory-foam seat cushions in all cabins.

Customers can enjoy Delta’s industry-leading seatback entertainment on board, with the airline introducing an expanded library of content on A321neos with 50% more hit movies, TV shows and music than other aircraft in its fleet.

Fast-streaming Wi-Fi is available for purchase, and power ports are available at each seat, along with spacious overhead bins and state-of-the-art HEPA cabin air filtration systems throughout.

Delta’s newest fleet helps to reinforce the company’s position as an industry leader in environmental sustainability. Powered by Pratt & Whitney GTF™ engines, Delta’s A321neo offers 20% better fuel efficiency over Delta’s current A321ceos.

In addition to San Francisco, Delta will operate A321neo flights between Delta’s hub at Boston Logan International bound for San Diego (SAN) and Denver (DEN) starting July 11, and on select trips to Seattle (SEA) beginning July 20.

Delta’s A321neos can seat 194 customers, with 20 in First Class, 42 in Delta Comfort+ and 132 in the Main Cabin. The new model will be deployed primarily across Delta’s extensive domestic network, complementing the Airbus A321ceo fleet of more than 125 aircraft.

Delta has purchase commitments for a total of 155 A321neos and is scheduled to take delivery of these aircraft through 2027, many from the Airbus U.S. Manufacturing Facility in Mobile, Alabama. Delta now has 233 new aircraft purchase commitments, including both widebody and narrowbody jets – reinforcing Delta’s strategic fleet objectives to boost operational simplification and drive productivity.