Delta Air Lines Announces June Quarter 2022 Profit
Delta Air Lines (NYSE:DAL) reported strong financial results for the June quarter of 2022, with an operating revenue of $13.8 billion and a 11.0% operating margin. The airline generated nearly $2 billion in free cash flow and recorded earnings per share of $1.15. Looking ahead, Delta expects double-digit operating margins for the September quarter and aims for over $7 adjusted EPS and $4 billion in free cash flow for 2024. Key drivers include robust demand recovery, especially in domestic and international markets, and effective cost management amidst rising fuel prices.
- Operating revenue of $13.8 billion, a 10% increase year-over-year.
- First quarter of double-digit operating margin since 2019 at 11.0%.
- Generated nearly $2 billion in free cash flow.
- Adjusted EPS of $1.44, reflecting a strong recovery.
- Domestic corporate sales were ~80% recovered versus 2019.
- Plan to achieve over $7 adjusted EPS and $4 billion in free cash flow by 2024.
- Operating income decreased by 29% compared to the June quarter of 2019.
- Operating expenses rose by 21% sequentially, totaling $12.3 billion.
- Fuel expense surged 41% year-over-year, impacting profitability.
Good progress in restoring operational reliability to Delta's leading standards in July
Generated double digit June quarter operating margin
Expect double digit operating margin in September quarter and meaningful full year profitability
On track to achieve 2024 targets of over
ATLANTA, July 13, 2022 /PRNewswire/ -- Delta Air Lines (NYSE:DAL) today reported financial results for the June quarter 2022 and provided its outlook for the September 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
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$19.6 billion
*Includes cash and cash equivalents, short-term investments and undrawn revolving credit facilities
September Quarter Outlook1
3Q22 Forecast | |
Capacity2 | Down |
Total Revenue2 | Up |
CASM-Ex2 | Up ~ |
Fuel Price ($/gal) | |
Operating Margin | |
Gross Capital Expenditures | ~ |
Adjusted Net Debt | ~ |
1 | Non-GAAP measures, except for Capacity; Refer to Non-GAAP reconciliations for 3Q19 comparison figures |
2 | Compared to September quarter 2019 |
Fuel price guidance is based on prices as of July 8th, including Brent at
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
- 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.
GAAP | $ | % | ||
($ in millions except per share and unit costs) | 2Q22 | 2Q19 | ||
Operating income | 1,519 | 2,128 | (609) | (29) % |
Pre-tax income | 1,033 | 1,907 | (874) | (46) % |
Net income | 735 | 1,443 | (708) | (49) % |
Diluted earnings per share | 1.15 | 2.21 | (1.06) | (48) % |
Operating margin | 11.0 % | 17.0 % | (6.0) pts | (35) % |
Operating revenue | 13,824 | 12,536 | 1,288 | 10 % |
Total revenue per available seat mile (TRASM) (cents) | 23.47 | 17.47 | 6.00 | 34 % |
Operating expense | 12,305 | 10,408 | 1,897 | 18 % |
Operating cash flow | 2,535 | 3,268 | (733) | (22) % |
Capital expenditures | 958 | 1,559 | (601) | (39) % |
Cost per available seat mile (CASM) (cents) | 20.89 | 14.51 | 6.38 | 44 % |
Fuel expense | 3,223 | 2,291 | 932 | 41 % |
Average fuel price per gallon | 3.74 | 2.08 | 1.66 | 80 % |
Total debt and finance lease obligations | 24,839 | 9,990 | 14,849 | NM |
Adjusted | $ | % | ||
($ in millions except per share and unit costs) | 2Q22 | 2Q19 | ||
Operating income | 1,445 | 2,140 | (695) | (32) % |
Pre-tax income | 1,222 | 1,998 | (776) | (39) % |
Net income | 921 | 1,533 | (612) | (40) % |
Diluted earnings per share | 1.44 | 2.35 | (0.91) | (39) % |
Operating margin | 11.7 % | 17.2 % | (5.5) pts | (32) % |
Operating revenue | 12,311 | 12,448 | (137) | (1) % |
TRASM (cents) | 20.90 | 17.35 | 3.55 | 20 % |
Operating expense | 10,866 | 10,308 | 558 | 5 % |
Free cash flow | 1,608 | 2,175 | (567) | (26) % |
Gross capital expenditures | 864 | 1,618 | (754) | (47) % |
Non-fuel cost | 7,516 | 7,516 | — | — % |
Non-fuel unit cost (CASM-Ex) (cents) | 12.76 | 10.47 | 2.29 | 22 % |
Fuel expense | 3,296 | 2,274 | 1,022 | 45 % |
Average fuel price per gallon | 3.82 | 2.07 | 1.75 | 85 % |
Adjusted net debt | 19,578 | 9,347 | 10,231 | NM |
About Delta Air Lines More than 4,000 Delta Air Lines (NYSE: DAL) flights take off every day, connecting people across more than 275 destinations on six continents with a commitment to industry-leading customer service, safety and innovation. As the leading global airline, Delta's mission is to create opportunities, foster understanding and expand horizons by connecting people and communities to each other and their potential.
Delta's more than 80,000 employees believe our customers should not have to choose between seeing the world and saving the planet. Delta is working toward more sustainable aviation by leveraging existing solutions and technologies, investing in the future of sustainable aviation fuel and actively engaging with next-generation solutions.
Our people lead the way in delivering a world-class customer experience, and we're continuing to ensure the future of travel is personalized, enjoyable and stress-free. Our people's genuine and enduring motivation is to make every customer feel welcomed and respected across every point of their journey with us.
Forward Looking Statements
Statements made in this press release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, should be considered "forward-looking statements" under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees or promised outcomes and should not be construed as such. 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, goals, aspirations, commitments and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the material adverse effect that the COVID-19 pandemic has had on our business; the impact of incurring significant debt in response to the pandemic; failure to comply with the financial and other covenants in our financing agreements; the possible effects of accidents involving our aircraft or aircraft of our airline partners; breaches or lapses in the security of technology systems on which we rely and of the data stored within them, as well as compliance with ever-evolving global privacy and security regulatory obligations; disruptions in our information technology infrastructure; our dependence on technology in our operations; our commercial relationships with airlines in other parts of the world and the investments we have in certain of those airlines; the effects of a significant disruption in the operations or performance of third parties on which we rely; failure to realize the full value of intangible or long-lived assets; labor issues; the effects of weather, natural disasters and seasonality on our business; changes in the cost of aircraft fuel; extended disruptions in the supply of aircraft fuel, including from Monroe Energy, LLC ("Monroe"), a wholly-owned subsidiary of Delta; failure or inability of insurance to cover a significant liability at Monroe's Trainer refinery; failure to comply with existing and future environmental regulations to which Monroe's refinery operations are subject, including costs related to compliance with renewable fuel standard regulations; our ability to retain senior management and other key employees, and to maintain our company culture; significant damage to our reputation and brand, including from exposure to significant adverse publicity or inability to achieve certain sustainability goals; the effects of terrorist attacks, geopolitical conflict or security events; competitive conditions in the airline industry; extended interruptions or disruptions in service at major airports at which we operate or significant problems associated with types of aircraft or engines we operate; the effects of extensive government regulation we are subject to; the impact of environmental regulation, including but not limited to increased regulation to reduce emissions and other risks associated with climate change, and the cost of compliance with more stringent environmental regulations; and unfavorable economic or political conditions in the markets in which we operate or volatility in currency exchange rates.
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, 2021 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of the date of this press release, and which we undertake no obligation to update except to the extent required by law.
DELTA AIR LINES, INC. | |||||||||
Consolidated Statements of Operations | |||||||||
(Unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
(in millions, except per share data) | 2022 | 2019 | $ Change | % Change | 2022 | 2019 | $ Change | % Change | |
Operating Revenue: | |||||||||
Passenger | $ 10,958 | $ 11,368 | $ (410) | (4) % | $ 17,865 | $ 20,622 | $ (2,757) | (13) % | |
Cargo | 272 | 186 | 86 | 46 % | 561 | 378 | 183 | 48 % | |
Other | 2,594 | 982 | 1,612 | NM | 4,747 | 2,008 | 2,739 | NM | |
Total operating revenue | 13,824 | 12,536 | 1,288 | 10 % | 23,173 | 23,008 | 165 | 1 % | |
Operating Expense: | |||||||||
Salaries and related costs | 2,955 | 2,847 | 108 | 4 % | 5,782 | 5,579 | 203 | 4 % | |
Aircraft fuel and related taxes | 3,223 | 2,291 | 932 | 41 % | 5,315 | 4,269 | 1,046 | 25 % | |
Ancillary businesses and refinery | 1,718 | 316 | 1,402 | NM | 3,100 | 667 | 2,433 | NM | |
Contracted services | 791 | 731 | 60 | 8 % | 1,544 | 1,440 | 104 | 7 % | |
Depreciation and amortization | 510 | 713 | (203) | (28) % | 1,016 | 1,328 | (312) | (23) % | |
Landing fees and other rents | 546 | 548 | (2) | — % | 1,050 | 1,072 | (22) | (2) % | |
Regional carrier expense | 528 | 542 | (14) | (3) % | 1,018 | 1,079 | (61) | (6) % | |
Aircraft maintenance materials and outside repairs | 522 | 434 | 88 | 20 % | 988 | 910 | 78 | 9 % | |
Passenger commissions and other selling expenses | 526 | 597 | (71) | (12) % | 838 | 1,071 | (233) | (22) % | |
Passenger service | 369 | 340 | 29 | 9 % | 644 | 628 | 16 | 3 % | |
Aircraft rent | 127 | 107 | 20 | 19 % | 249 | 209 | 40 | 19 % | |
Profit sharing | 54 | 518 | (464) | (90) % | 54 | 739 | (685) | (93) % | |
Other | 436 | 424 | 12 | 3 % | 840 | 869 | (29) | (3) % | |
Total operating expense | 12,305 | 10,408 | 1,897 | 18 % | 22,438 | 19,860 | 2,578 | 13 % | |
Operating Income | 1,519 | 2,128 | (609) | (29) % | 735 | 3,148 | (2,413) | (77) % | |
Non-Operating Expense: | |||||||||
Interest expense, net | (269) | (75) | (194) | NM | (543) | (158) | (385) | NM | |
Equity method results | (12) | (17) | 5 | (29) % | (12) | (71) | 59 | (83) % | |
Gain/(loss) on investments, net | (221) | (82) | (139) | NM | (368) | 18 | (386) | NM | |
Loss on extinguishment of debt | (41) | — | (41) | NM | (66) | — | (66) | NM | |
Pension and related benefit/(expense) | 73 | (17) | 90 | NM | 145 | (32) | 177 | NM | |
Miscellaneous, net | (16) | (30) | 14 | (47) % | (58) | (52) | (6) | 12 % | |
Total non-operating expense, net | (486) | (221) | (265) | NM | (902) | (295) | (607) | NM | |
Income/(Loss) Before Income Taxes | 1,033 | 1,907 | (874) | (46) % | (167) | 2,853 | (3,020) | NM | |
Income Tax (Provision)/Benefit | (298) | (464) | 166 | (36) % | (38) | (680) | 642 | (94) % | |
Net Income/(Loss) | $ 735 | $ 1,443 | $ (708) | (49) % | $ (205) | $ 2,173 | $ (2,378) | NM | |
Basic Earnings/(Loss) Per Share | $ 1.15 | $ 2.22 | $ (0.32) | $ 3.30 | |||||
Diluted Earnings/(Loss) Per Share | $ 1.15 | $ 2.21 | $ (0.32) | $ 3.29 | |||||
Basic Weighted Average Shares Outstanding | 638 | 650 | 638 | 658 | |||||
Diluted Weighted Average Shares Outstanding | 641 | 652 | 638 | 660 | |||||
DELTA AIR LINES, INC. | |||||||||
Passenger Revenue | |||||||||
(Unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
(in millions) | 2022 | 2019 | $ Change | % Change | 2022 | 2019 | $ Change | % Change | |
Ticket - Main cabin | $ 5,664 | $ 5,911 | $ (247) | (4) % | $ 9,111 | $ 10,591 | $ (1,480) | (14) % | |
Ticket - Premium products | 4,109 | 4,058 | 51 | 1 % | 6,648 | 7,366 | (718) | (10) % | |
Loyalty travel awards | 744 | 751 | (7) | (1) % | 1,287 | 1,442 | (155) | (11) % | |
Travel-related services | 441 | 648 | (207) | (32) % | 819 | 1,223 | (404) | (33) % | |
Total passenger revenue | $ 10,958 | $ 11,368 | $ (410) | (4) % | $ 17,865 | $ 20,622 | $ (2,757) | (13) % | |
DELTA AIR LINES, INC. | |||||||||
Other Revenue | |||||||||
(Unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
(in millions) | 2022 | 2019 | $ Change | % Change | 2022 | 2019 | $ Change | % Change | |
Refinery | $ 1,514 | $ 40 | $ 1,474 | NM | $ 2,700 | $ 89 | $ 2,611 | NM | |
Loyalty program | 650 | 484 | 166 | 34 % | 1,221 | 958 | 263 | 27 % | |
Ancillary businesses | 206 | 290 | (84) | (29) % | 416 | 610 | (194) | (32) % | |
Miscellaneous | 224 | 168 | 56 | 33 % | 410 | 351 | 59 | 17 % | |
Total other revenue | $ 2,594 | $ 982 | $ 1,612 | NM | $ 4,747 | $ 2,008 | $ 2,739 | NM | |
DELTA AIR LINES, INC. | |||||||
Total Revenue | |||||||
(Unaudited) | |||||||
Increase (Decrease) | |||||||
2Q22 vs 2Q19 | |||||||
Revenue | 2Q22 ($M) | Change | Unit Revenue | Yield | Capacity | ||
Domestic | $ | 8,318 | 3 % | 16 % | 14 % | (11) % | |
Atlantic | 1,701 | (9) % | 10 % | 13 % | (17) % | ||
Latin America | 745 | (1) % | 10 % | 13 % | (10) % | ||
Pacific | 194 | (70) % | 16 % | 54 % | (74) % | ||
Total Passenger | $ | 10,958 | (4) % | 17 % | 18 % | (18) % | |
Cargo Revenue | 272 | 46 % | |||||
Other Revenue | 2,594 | NM | |||||
Total Revenue | $ | 13,824 | 10 % | 34 % | |||
Third Party Refinery Sales | (1,514) | ||||||
Total Revenue, adjusted | $ | 12,311 | (1) % | 20 % | |||
DELTA AIR LINES, INC. | |||||||||
Statistical Summary | |||||||||
(Unaudited) | |||||||||
Three Months Ended | Six Months Ended | ||||||||
June 30, | June 30, | ||||||||
2022 | 2019 | Change | 2022 | 2019 | Change | ||||
Revenue passenger miles (millions) | 51,519 | 63,173 | (18) | % | 90,218 | 114,790 | (21) | % | |
Available seat miles (millions) | 58,903 | 71,754 | (18) | % | 110,713 | 134,169 | (17) | % | |
Passenger mile yield (cents) | 21.27 | 18.00 | 18 | % | 19.80 | 17.96 | 10 | % | |
Passenger revenue per available seat mile (cents) | 18.60 | 15.84 | 17 | % | 16.14 | 15.37 | 5 | % | |
Total revenue per available seat mile (cents) | 23.47 | 17.47 | 34 | % | 20.93 | 17.15 | 22 | % | |
TRASM, adjusted - see Note A (cents) | 20.90 | 17.35 | 20 | % | 18.49 | 17.01 | 9 | % | |
Cost per available seat mile (cents) | 20.89 | 14.51 | 44 | % | 20.27 | 14.80 | 37 | % | |
CASM-Ex - see Note A (cents) | 12.76 | 10.47 | 22 | % | 12.98 | 10.95 | 19 | % | |
Passenger load factor | 87 % | 88 % | (1) | pt | 81 % | 86 % | (5) | pts | |
Fuel gallons consumed (millions) | 863 | 1,099 | (22) | % | 1,613 | 2,061 | (22) | % | |
Average price per fuel gallon | $ 3.74 | $ 2.08 | 80 | % | $ 3.29 | $ 2.07 | 59 | % | |
Average price per fuel gallon, adjusted - see Note A | $ 3.82 | $ 2.07 | 85 | % | $ 3.34 | $ 2.06 | 62 | % | |
DELTA AIR LINES, INC. | ||
Consolidated Statements of Cash Flows | ||
(Unaudited) | ||
Three Months Ended | ||
June 30, | ||
(in millions) | 2022 | 2019 |
Cash Flows From Operating Activities: | ||
Net income | $ 735 | $ 1,443 |
Depreciation and amortization | 510 | 713 |
Changes in air traffic liability | 805 | 17 |
Changes in balance sheet and other, net | 485 | 1,095 |
Net cash provided by operating activities | 2,535 | 3,268 |
Cash Flows From Investing Activities: | ||
Property and equipment additions: | ||
Flight equipment, including advance payments | (603) | (1,166) |
Ground property and equipment, including technology | (355) | (393) |
Purchase of short-term investments | (248) | — |
Redemption of short-term investments | 943 | — |
Other, net | 112 | (3) |
Net cash used in investing activities | (152) | (1,562) |
Cash Flows From Financing Activities: | ||
Payments on debt and finance lease obligations | (952) | (1,165) |
Repurchase of common stock | — | (268) |
Cash dividends | — | (229) |
Other, net | (14) | — |
Net cash used in by financing activities | (966) | (1,662) |
Net Increase in Cash, Cash Equivalents and Restricted Cash Equivalents | 1,417 | 44 |
Cash, cash equivalents and restricted cash equivalents at beginning of period | 8,135 | 2,985 |
Cash, cash equivalents and restricted cash equivalents at end of period | $ 9,552 | $ 3,029 |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the total of the same such amounts shown above: | ||
Current assets: | ||
Cash and cash equivalents | $ 9,221 | $ 2,009 |
Restricted cash included in prepaid expenses and other | 154 | 127 |
Other assets: | ||
Restricted cash included in other noncurrent assets | 177 | 893 |
Total cash, cash equivalents and restricted cash equivalents | $ 9,552 | $ 3,029 |
DELTA AIR LINES, INC. | ||||
Consolidated Balance Sheets | ||||
(Unaudited) | ||||
June 30, | December 31, | |||
(in millions) | 2022 | 2021 | ||
ASSETS | ||||
Current Assets: | ||||
Cash and cash equivalents | $ 9,221 | $ 7,933 | ||
Short-term investments | 1,549 | 3,386 | ||
Accounts receivable, net | 3,093 | 2,404 | ||
Fuel inventory, expendable parts and supplies inventories, net | 1,734 | 1,098 | ||
Prepaid expenses and other | 1,716 | 1,119 | ||
Total current assets | 17,313 | 15,940 | ||
Property and Equipment, Net: | ||||
Property and equipment, net | 30,519 | 28,749 | ||
Other Assets: | ||||
Operating lease right-of-use assets | 7,189 | 7,237 | ||
Goodwill | 9,753 | 9,753 | ||
Identifiable intangibles, net | 5,997 | 6,001 | ||
Equity investments | 1,771 | 1,712 | ||
Deferred income taxes, net | 1,219 | 1,294 | ||
Other noncurrent assets | 1,044 | 1,773 | ||
Total other assets | 26,973 | 27,770 | ||
Total assets | $ 74,805 | $ 72,459 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Liabilities: | ||||
Current maturities of debt and finance leases | $ 1,936 | $ 1,782 | ||
Current maturities of operating leases | 726 | 703 | ||
Air traffic liability | 9,664 | 6,228 | ||
Accounts payable | 5,353 | 4,240 | ||
Accrued salaries and related benefits | 2,565 | 2,457 | ||
Loyalty program deferred revenue | 2,994 | 2,710 | ||
Fuel card obligation | 1,100 | 1,100 | ||
Other accrued liabilities | 1,986 | 1,746 | ||
Total current liabilities | 26,324 | 20,966 | ||
Noncurrent Liabilities: | ||||
Debt and finance leases | 22,903 | 25,138 | ||
Noncurrent air traffic liability | 250 | 130 | ||
Pension, postretirement and related benefits | 5,654 | 6,035 | ||
Loyalty program deferred revenue | 4,763 | 4,849 | ||
Noncurrent operating leases | 7,006 | 7,056 | ||
Other noncurrent liabilities | 4,094 | 4,398 | ||
Total noncurrent liabilities | 44,670 | 47,606 | ||
Commitments and Contingencies | ||||
Stockholders' Equity: | 3,811 | 3,887 | ||
Total liabilities and stockholders' equity | $ 74,805 | $ 72,459 | ||
Note A: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below. Reconciliations may not calculate due to rounding.
Delta sometimes uses information ("non-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Under the Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The tables below show reconciliations of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures.
Forward Looking Projections. Delta is not able to reconcile forward looking non-GAAP financial measures without unreasonable effort because the adjusting items such as those used in the reconciliations below will not be known until the end of the period and could be significant.
Adjustments. These reconciliations include certain adjustments to GAAP measures, that are directly related to the impact of COVID-19 and our response. These adjustments are made to provide comparability between the reported periods, if applicable, as indicated below:
Restructuring charges. During 2020, we recorded restructuring charges for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic. In the June quarter 2022 and six months ended June 2022, we recognized
Loss on extinguishment of debt. This adjustment relates to early termination of a portion of our debt.
We also regularly adjust certain GAAP measures for the following items, if applicable, for the reasons indicated below:
Third-party refinery sales. Refinery sales to third parties, and related expenses, are not related to our airline segment. Excluding these sales therefore provides a more meaningful comparison of our airline operations to the rest of the airline industry.
Delta Private Jets adjustment. Because we combined Delta Private Jets with Wheels Up in January 2020, we have excluded the impact of Delta Private Jets from 2019 results for comparability.
MTM adjustments and settlements on hedges. Mark-to-market ("MTM") adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period, and therefore we remove this impact to allow investors to better understand and analyze our core performance. Settlements represent cash received or paid on hedge contracts settled during the applicable period.
MTM adjustments on investments. Unrealized gains/losses result from our equity investments that are accounted for at fair value in non-operating expense. The gains/losses are driven by changes in stock prices, foreign currency fluctuations and other valuation techniques for investments in companies without publicly-traded shares. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.
Equity investment MTM adjustments. We adjust for our proportionate share of our equity method investee, Virgin Atlantic's, hedge portfolio MTM adjustments (recorded in non-operating expense) to allow investors to understand and analyze our core operational performance in the periods shown.
Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to better understand and analyze our non-fuel costs and year-over-year financial performance.
Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
Operating Revenue, adjusted and Total Revenue Per Available Seat Mile ("TRASM"), adjusted | ||||||||
Three Months Ended | 2Q22 vs 2Q19 | |||||||
(in millions) | June 30, 2022 | September 30, 2019 | June 30, 2019 | |||||
Operating revenue | $ 13,824 | $ 12,560 | $ 12,536 | |||||
Adjusted for: | ||||||||
Third-party refinery sales | (1,514) | (6) | (40) | |||||
Delta Private Jets adjustment | — | (47) | (49) | |||||
Operating revenue, adjusted | $ 12,311 | $ 12,507 | $ 12,448 | (1) % | ||||
Three Months Ended | 2Q22 vs 2Q19 | |||||||
June 30, 2022 | June 30, 2019 | |||||||
TRASM (cents) | 23.47 | 17.47 | ||||||
Adjusted for: | ||||||||
Third-party refinery sales | (2.57) | (0.06) | ||||||
Delta Private Jets adjustment | — | (0.07) | ||||||
TRASM, adjusted | 20.90 | 17.35 | 20.5 % | |||||
Six Months Ended | ||||||||
June 30, 2022 | June 30, 2019 | Change | ||||||
TRASM (cents) | 20.93 | 17.15 | ||||||
Adjusted for: | ||||||||
Third-party refinery sales | (2.44) | (0.07) | ||||||
Delta Private Jets adjustment | — | (0.07) | ||||||
TRASM, adjusted | 18.49 | 17.01 | 9 % | |||||
Operating Income, adjusted | ||
Three Months Ended | ||
(in millions) | June 30, 2022 | June 30, 2019 |
Operating Income | $ 1,519 | $ 2,128 |
Adjusted for: | ||
Restructuring charges | (1) | — |
MTM adjustments and settlements on hedges | (73) | 10 |
Delta Private Jets adjustment | — | 1 |
Operating Income, adjusted | $ 1,445 | $ 2,140 |
Operating Margin, adjusted | |||
Three Months Ended | |||
June 30, 2022 | June 30, 2019 | ||
Operating margin | 11.0 % | 17.0 % | |
Adjusted for: | |||
MTM adjustments and settlements on hedges | (0.5) | 0.1 | |
Third-party refinery sales | 1.3 | 0.1 | |
Operating margin, adjusted | 11.7 % | 17.2 % | |
Pre-Tax Income, Net Income, and Diluted Earnings per Share, adjusted | |||||
Three Months Ended | Three Months Ended | ||||
June 30, 2022 | June 30, 2022 | ||||
Pre-Tax | Income | Net | Earnings | ||
(in millions, except per share data) | Income | Tax | Income | Per Diluted Share | |
GAAP | $ 1,033 | $ (298) | $ 735 | $ 1.15 | |
Adjusted for: | |||||
Restructuring charges | (1) | ||||
Loss on extinguishment of debt | 41 | ||||
MTM adjustments and settlements on hedges | (73) | ||||
MTM adjustments on investments | 221 | ||||
Non-GAAP | $ 1,222 | $ (300) | $ 921 | $ 1.44 | |
Three Months Ended | Three Months Ended | ||||
June 30, 2019 | June 30, 2019 | ||||
Pre-Tax | Income | Net | Earnings | ||
(in millions, except per share data) | Income | Tax | Income | Per Diluted Share | |
GAAP | $ 1,907 | $ (464) | $ 1,443 | $ 2.21 | |
Adjusted for: | |||||
MTM adjustments and settlements on hedges | 10 | ||||
Equity investment MTM adjustments | (2) | ||||
MTM adjustments on investments | 82 | ||||
Delta Private Jets adjustment | 1 | ||||
Non-GAAP | $ 1,998 | $ (465) | $ 1,533 | $ 2.35 | |
Free Cash Flow. We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Free cash flow is also used internally as a component of our 2022 incentive compensation program. Free cash flow is defined as net cash from operating activities and net cash from investing activities, adjusted for (i) net redemptions of short-term investments, (ii) strategic investments and related, (iii) net cash flows related to certain airport construction projects and other, (iv) financed aircraft acquisitions and (v) other items that are not representative of our core operations, such as our pension funding. These adjustments are made for the following reasons:
Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.
Strategic investments and related. Cash flows related to our investments in and related transactions with other airlines are included in our GAAP investing activities. We adjust for this activity because it provides a more meaningful comparison to our airline industry peers.
Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operations in the periods shown.
Financed aircraft acquisitions. This adjustment reflects aircraft deliveries that are leased as capital expenditures. The adjustment is based on their original contractual purchase price or an estimate of the aircraft's fair value and provides a more meaningful view of our investing activities.
Pension funding. Cash flows from pension funding are reported within operating activities in GAAP results. We adjust for this item to better illustrate the cash from our core operations.
Three Months Ended | |||||
(in millions) | June 30, 2022 | June 30, 2019 | |||
Net cash provided by operating activities | $ 2,535 | $ 3,268 | |||
Net cash used in investing activities | (152) | (1,562) | |||
Adjusted for: | |||||
Net redemptions of short-term investments | (695) | — | |||
Strategic investments and related | (105) | 89 | |||
Net cash flows related to certain airport construction projects and other | 94 | 54 | |||
Financed aircraft acquisitions | (69) | (174) | |||
Pension funding | — | 500 | |||
Free cash flow | $ 1,608 | $ 2,175 | |||
Six Months Ended | |||||
(in millions) | June 30, 2022 | ||||
Net cash provided by operating activities | $ 4,306 | ||||
Net cash used in investing activities | (901) | ||||
Adjusted for: | |||||
Net redemptions of short-term investments | (1,815) | ||||
Strategic investments and related | 2 | ||||
Net cash flows related to certain airport construction projects and other | 282 | ||||
Financed aircraft acquisitions | (69) | ||||
Free cash flow | $ 1,805 | ||||
Gross Capital Expenditures. We adjust capital expenditures for the following items to determine gross capital expenditures for the reasons described below:
Financed aircraft acquisitions. This adjusts capital expenditures to reflect aircraft deliveries that are leased as capital expenditures. The adjustment is based on their original contractual purchase price or an estimate of the aircraft's fair value and provides a more meaningful view of our investing activities.
Net cash flows related to certain airport construction projects. Cash flows related to certain airport construction projects are included in capital expenditures. We have adjusted for these items because management believes investors should be informed that a portion of these capital expenditures from airport construction projects are either funded with restricted cash specific to these projects or reimbursed by a third party.
Three Months Ended | |||
(in millions) | June 30, 2022 | June 30, 2019 | |
Flight equipment, including advance payments | $ 603 | $ 1,166 | |
Ground property and equipment, including technology | 355 | 393 | |
Adjusted for: | |||
Financed aircraft acquisitions | 69 | 174 | |
Net cash flows related to certain airport construction projects | (163) | (116) | |
Gross capital expenditures | $ 864 | $ 1,618 | |
Adjusted Net Debt. Delta uses adjusted total debt, including aircraft rent, in addition to adjusted debt and finance leases, to present estimated financial obligations. Delta reduces adjusted total debt by cash, cash equivalents and short-term investments, and LGA restricted cash, resulting in adjusted net debt, to present the amount of assets needed to satisfy the debt. Management believes this metric is helpful to investors in assessing the company's overall debt profile.
(in millions) | June 30, 2022 | June 30, 2019 | |
Debt and finance lease obligations | $ 24,839 | $ 9,990 | |
Plus: sale-leaseback financing liabilities | 2,208 | — | |
Plus: unamortized discount/(premium) and debt issue cost, net and other | 176 | (125) | |
Adjusted debt and finance lease obligations | $ 27,222 | $ 9,865 | |
Plus: 7x last twelve months' aircraft rent | 3,303 | 2,874 | |
Adjusted total debt | $ 30,525 | $ 12,739 | |
Less: cash, cash equivalents and short-term investments | (10,771) | (2,009) | |
Less: LGA restricted cash | (177) | (1,383) | |
Adjusted net debt | $ 19,578 | $ 9,347 |
Adjusted Non-Fuel Cost and Non-Fuel Unit Cost or Cost per Available Seat Mile, ("CASM-Ex") | ||||||||
Three Months Ended | 2Q22 vs 2Q19 % Change | |||||||
(in millions) | June 30, 2022 | March 31, 2022 | June 30, 2019 | |||||
Operating Expense | $ 12,305 | $ 10,131 | $ 10,408 | |||||
Adjusted for: | ||||||||
Restructuring charges | 1 | 5 | — | |||||
Aircraft fuel and related taxes | (3,223) | (2,092) | (2,291) | |||||
Third-party refinery sales | (1,514) | (1,187) | (40) | |||||
Profit sharing | (54) | — | (518) | |||||
Delta Private Jets adjustment | — | — | (42) | |||||
Non-Fuel Cost | $ 7,516 | $ 6,858 | $ 7,516 | — % | ||||
Three Months Ended | 2Q22 vs 2Q19 % Change | |||||||
June 30, 2022 | September 30, 2019 | June 30, 2019 | ||||||
CASM (cents) | 20.89 | 13.85 | 14.51 | |||||
Adjusted for: | ||||||||
Aircraft fuel and related taxes | (5.47) | (2.96) | (3.19) | |||||
Third-party refinery sales | (2.57) | (0.01) | (0.06) | |||||
Profit sharing | (0.09) | (0.68) | (0.72) | |||||
Delta Private Jets adjustment | — | (0.05) | (0.06) | |||||
CASM-Ex | 12.76 | 10.15 | 10.47 | 22 % | ||||
Six Months Ended | ||||||||
June 30, 2022 | June 30, 2019 | Change | ||||||
CASM (cents) | 20.27 | 14.80 | ||||||
Adjusted for: | ||||||||
Restructuring charges | 0.01 | — | ||||||
Aircraft fuel and related taxes | (4.80) | (3.18) | ||||||
Third-party refinery sales | (2.44) | (0.07) | ||||||
Profit sharing | (0.05) | (0.55) | ||||||
Delta Private Jets adjustment | — | (0.06) | ||||||
CASM-Ex | 12.98 | 10.95 | 19 % | |||||
Operating Expense, adjusted | ||||
Three Months Ended | ||||
(in millions) | June 30, 2022 | March 31, 2022 | June 30, 2019 | |
Operating expense | $ 12,305 | $ 10,131 | $ 10,408 | |
Adjusted for: | ||||
Restructuring charges | 1 | 5 | — | |
MTM adjustments and settlements on hedges | 73 | 4 | (10) | |
Third-party refinery sales | (1,514) | (1,187) | (40) | |
Delta Private Jets adjustment | — | — | (50) | |
Operating expense, adjusted | $ 10,866 | $ 8,954 | $ 10,308 | |
Total Fuel expense, adjusted and Average fuel price per gallon, adjusted | |||||||||
Average Price Per Gallon | |||||||||
Three Months Ended | Three Months Ended | ||||||||
June 30, | March 31, | June 30, | June 30, | March 31, | June 30, | ||||
(in millions, except per gallon data) | 2022 | 2022 | 2019 | 2022 | 2022 | 2019 | |||
Total fuel expense | $ 3,223 | $ 2,092 | $ 2,291 | $ 3.74 | $ 2.79 | $ 2.08 | |||
Adjusted for: | |||||||||
MTM adjustments and settlements on hedges | 73 | 4 | (10) | 0.08 | 0.01 | (0.01) | |||
Delta Private Jets adjustment | — | — | (8) | — | — | (0.01) | |||
Total fuel expense, adjusted | $ 3,296 | $ 2,097 | $ 2,274 | $ 3.82 | $ 2.79 | $ 2.07 | |||
Average Price Per Gallon | |||||||||
Six Months Ended | Six Months Ended | ||||||||
June 30, | June 30, | June 30, | June 30, | ||||||
(in millions, except per gallon data) | 2022 | 2019 | 2022 | 2019 | |||||
Total fuel expense | $ 5,315 | $ 4,269 | $ 3.29 | $ 2.07 | |||||
Adjusted for: | |||||||||
MTM adjustments and settlements on hedges | 77 | (17) | 0.05 | (0.01) | |||||
Delta Private Jets adjustment | (15) | — | (0.01) | ||||||
Total fuel expense, adjusted | $ 5,392 | $ 4,237 | $ 3.34 | $ 2.06 | |||||
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SOURCE Delta Air Lines
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