Delta Air Lines (Atlanta) today reported its financial results for the September 2015 (third) quarter, including adjusted net income of $1.4 billion or $1.74 per diluted share, up 45% from the September quarter of 2014.
Copyright Photo: Michael B. Ing/AirlinersGallery.com. Formerly painted in AirTran Airways’ Atlanta Falcons special scheme, Boeing 717-2BD N891AT (msn 55043) now flies for Delta, leased from Southwest Airlines.
Delta Air Lines (Atlanta) has opened up additional Boeing 717 routes and markets according to Airline Route. The former AirTran Airways 717s are leased from Southwest Airlines.
Abilene (April 1)
Augusta (April 1)
Dallas (Love Field) (October 13)
Fayettevile (April 1)
Gainesville (April 1)
Grand Rapids (April 1)
Houston (Busch Intercontinental) (April 1)
Lexington (April 5)
Memphis (April 5)
Mobile (April 1)
Myrtle Beach (April 1)
Tri Cities (June 5)
Wichita (June 7)
Austin (May 2)
Buffalo (June 5)
Chicago (Midway) (March 31)
Green Bay (April 8)
Houston (Bush Intercontinental) April 9
Indianapolis (June 5)
Kansas City (April 1)
Nashville (June 5)
New York (JFK) (September 2)
New York (LaGuardia) (September 2)
Philadelphia (April 8)
Traverse City (May 2)
From New York (JFK):
Boston (September 2)
Tampa (September 2)
From New York (LaGuardia):
Miami (September 2)
Tampa (September 2)
From Los Angeles:
Austin (June 6)
Copyright Photo: Tony Storck/AirlinersGallery.com. Formerly painted in the special Atlanta Falcons livery, ex AirTran Airways Boeing 717-2BD N891AT (msn 55043) is now in full Delta colors and lands at Baltimore/Washington.
Delta Air Lines (Atlanta) today reported financial results for the December 2013 (fourth) quarter. Key points include:
Delta’s net income for the December 2013 quarter was $558 million, or $0.65 per diluted share, excluding special items1.
Delta’s net income for 2013 was $2.7 billion, excluding special items, a $1.1 billion increase over 2012.
Delta’s GAAP net income was $8.5 billion, or $9.89 per diluted share, for the December 2013 quarter and $10.5 billion for 2013. These results include an $8.0 billion non-cash gain associated with the reversal of the company’s tax valuation allowance.
2013 results include $506 million in profit sharing expense, including $119 million in the December quarter, recognizing Delta employees’ contributions toward meeting the company’s financial goals.
Delta generated nearly $5 billion of operating cash flow and $2.1 billion of free cash flow in 2013, allowing the company to reduce its adjusted net debt at the end of 2013 to $9.4 billion, contribute an incremental $250 million above required funding to its defined benefit pension plans, and return $350 million to shareholders through a combination of $100 million of dividends and $250 million of share repurchases.
Delta’s operating revenue improved 6 percent, or $474 million, in the December 2013 quarter compared to the December 2012 quarter. Traffic increased 2.0 percent on a 2.9 percent increase in capacity.
Passenger revenue increased 6.1 percent, or $451 million, compared to the prior year period. Passenger unit revenue (PRASM) increased 3.0 percent year over year with a 4.0 percent improvement in yield.
Cargo revenue decreased 1.0 percent, or $3 million, as higher freight volumes partially offset declining freight yields.
Other revenue increased 2.8 percent, or $26 million, driven by higher SkyMiles revenue.
Comparisons of revenue-related statistics are as follows:
4Q13 versus 4Q12
Total operating expense in the quarter increased 1.5 percent, or $125 million, year-over-year driven by higher volume and revenue-related expenses; the impact of operational, service and employee investments; and $56 million higher profit sharing expense. These cost increases were partially offset by lower fuel expense and the savings from Delta’s structural cost initiatives.
Non-operating expense declined by $116 million as a result of prior year special items for early debt extinguishment and lower interest expense from debt reduction. These items were partially offset by a $17 million negative impact from changes in foreign exchange rates.
Consolidated unit cost excluding fuel expense, profit sharing and special items (CASM-Ex2), was 1.4 percent higher in the December 2013quarter on a year-over-year basis, driven by the impact of wage increases and operational and service investments. GAAP consolidated CASM decreased 1.4 percent.
Fuel expense, excluding mark-to-market adjustments, declined $91 million as a result of lower market fuel prices and better settled hedge performance. Delta’s average fuel price3 was $3.05 per gallon for the December quarter, which includes $0.06 in settled hedge gains. On a GAAP basis, fuel expense for the December quarter decreased $186 million year-over-year, driven by lower market fuel prices and mark-to-market gains on hedges in the current quarter.
Operations at the Trainer refinery produced a $46 million loss for the December quarter and a $116 million loss for the full year. While lower crack spreads pressured results at the refinery, they also reduced market jet fuel prices and helped lower Delta’s overall fuel expense.
Cash from operations during the December 2013 quarter was $1.2 billion, driven by the company’s December quarter profit and working capital initiatives, which were partially offset by the normal seasonal decline in advance ticket sales. Cash from operations is net of a $250 million incremental contribution made by Delta to its defined benefit pension plans during the quarter. The company generated $260 millionof free cash flow.
Capital expenditures during the December 2013 quarter were $900 million, including $835 million in fleet investments and $16 million for the purchase of 4 aircraft off lease. During the quarter, Delta’s net debt maturities and capital leases were $335 million.
In the December quarter, the company returned $200 million to shareholders. On Nov. 26, the company paid $51 million to shareholders, which represents a $0.06 per share quarterly dividend. In addition, the company repurchased 5.5 million shares at an average price of$27.39 for a total of $150 million. The company has completed $250 million of the $500 million share repurchase plan authorized by Delta’s Board of Directors in May 2013.
Delta ended the quarter with adjusted net debt of $9.4 billion and the company has now achieved over $7.5 billion in net debt reduction since 2009. This debt reduction strategy produced a $28 million year-over-year reduction in interest expense in the December quarter and a $153 million reduction for 2013.
Reversal of Tax Valuation Allowance
Delta’s expectations for sustainable future profitability combined with its consistent and strong profitability over the past four years resulted in the reversal of the company’s tax valuation allowance in the December quarter. The reversal of the tax valuation allowance resulted in a non-cash net gain of $8.0 billion in the December quarter. Beginning in the March 2014 quarter, net income will be reduced to reflect a 39% tax rate; however, there will be no cash impact as Delta’s net operating loss carryforwards will offset cash taxes on more than $15 billion of future taxable income.
Delta recorded a $7.9 billion special items gain in the December 2013 quarter, including:
an $8.0 billion non-cash gain associated with the reversal of the Delta’s tax valuation allowance, as detailed above;
a $92 million mark-to-market gain on fuel hedges; and
a $160 million charge for facilities, fleet and other, including charges associated with Delta’s domestic fleet restructuring.
Delta recorded a $231 million special items charge in the December 2012 quarter, including:
a $122 million charge for facilities, fleet and other, including charges associated with the company’s domestic fleet restructuring;
a $106 million loss on early extinguishment of debt primarily due to the company’s Pacific route credit facility refinancing; and
a $3 million mark-to-market loss on fuel hedges.
March 2014Quarter Guidance
Following are Delta’s projections for the March 2014 quarter:
1Q 2014 Forecast
6 – 8%
Fuel price, including taxes, settled hedges and refinery impact
$2.97 – $3.02
$235 – $250 million
1Q 2014 Forecast(compared to 1Q 2013)
Consolidated unit costs – excluding fuel expense and profit sharing
Up 0.5 – 1.5%
Up 2 – 3%
Included with this press release are Delta’s unaudited Consolidated Statements of Operations for the three and twelve months ended Dec. 31, 2013 and 2012; a statistical summary for those periods; selected balance sheet data as of Dec. 31, 2013 and 2012; and a reconciliation of non-GAAP financial measures.
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.
CASM – Ex: In addition to fuel expense, profit sharing and special items, Delta believes excluding ancillary business costs is helpful to investors because ancillary business costs are not related to the generation of a seat mile. These businesses include aircraft maintenance and staffing services Delta provides to third parties and Delta’s vacation wholesale operations. The amounts excluded were $182 million and $185 million for the December 2013 and December 2012 quarters, respectively. Management believes this methodology provides a more consistent and comparable reflection of Delta’s airline operations.
Average fuel price per gallon: Delta’s December 2013 quarter average fuel price of $3.05 per gallon reflects the consolidated cost per gallon for mainline and regional operations, including contract carrier operations, and includes the impact of fuel hedge contracts with original maturity dates in the December 2013 quarter. On a GAAP basis, fuel price includes $92 million in fuel hedge mark-to-market adjustments recorded in periods other than the settlement period. The net refinery loss for the quarter was $46 million. See Note A for a reconciliation of average fuel price per gallon to the comparable GAAP metric.
Copyright Photo: Tony Storck/AirlinersGallery.com. Delta is adding leased Boeing 717s to the fleet. Formerly painted in the Atlanta Falcons special livery with AirTran Airways, Boeing 717-2BD N891AT (msn 55043) is now plying the skies with Delta. N891AT lands at Baltimore/Washington.
Boeing 717-2BD N891AT (msn 55043) "Falcon 1" taxies at Orlando in a typical summer rain storm. Copyright Photo: PRNewsFoto/AirTran Airways.
AirTran Airways (Orlando and Atlanta) yesterday (October 13) officially unveiled the Atlanta Falcons logojet dubbed “Falcon 1”. AirTran intends to also paint logojets for the Baltimore Ravens and the Indianapolis Colts also of the NFL. Ironically AirTran does not fly the football team (its planes are too small). Instead the Atlanta Falcons charter larger aircraft from Delta Air Lines!