ATLANTA, Jan. 15, 2019 /PRNewswire/ -- Delta Air Lines
(NYSE:DAL) today reported financial results for the December
quarter and full year 2018. Highlights of those results,
including both GAAP and adjusted metrics, are below and
incorporated here.
Adjusted pre-tax income for the December quarter 2018 was
$1.2 billion driven by over
$700 million of revenue growth,
allowing the company to fully recapture the $508 million increase in adjusted fuel expense
and produce an 11 percent adjusted pre-tax margin. Adjusted
earnings per share increased by 42 percent year over year to
$1.30.
For the full year, adjusted pre-tax income was $5.1 billion, a $137
million decrease relative to 2017 as the company overcame
approximately 90 percent of the $2
billion increase in fuel expense. Full year adjusted
earnings per share were $5.65, up 19
percent compared to the prior year as the company recognized
benefits from tax reform and a four percent lower share count.
"2018 was a successful year for Delta with record operational
reliability, increasing customer satisfaction, and solid financial
results in the face of higher fuel costs. Delta people are
the foundation of our success and I am honored to recognize their
efforts with $1.3 billion in profit
sharing for 2018," said Ed Bastian,
Delta's chief executive officer. "As we move into 2019, we
expect to drive double-digit earnings growth through higher
revenues, maintaining a cost trajectory below inflation, and the
modest benefit from lower fuel costs. Margin expansion is a
business imperative and we remain confident in our full-year
earnings guidance of $6 to
$7 per share."
Revenue Environment
Delta's adjusted operating revenue of $10.7 billion for the December quarter improved
7.5 percent, or $747 million versus
the prior year. Total unit revenues excluding refinery sales
(TRASM, adjusted) increased 3.2 percent during the period driven by
healthy leisure and corporate demand offsetting an approximately
0.5 point headwind from unfavorable foreign exchange rates.
For the full year, adjusted operating revenue grew to nearly
$44 billion, up eight percent versus
prior year on an increasingly diverse revenue base, with 52 percent
of revenues from premium products and non-ticket sources.
Premium product ticket revenues increased 14 percent along with
double-digit percentage increases from cargo, loyalty, and
Maintenance, Repair and Overhaul revenue.
"Delta's strong brand momentum was evident across the business
with positive unit revenue growth in all geographic entities for
the full year, a record revenue premium to the industry, and
double-digit revenue growth from premium products and non-ticket
sources," said Glen Hauenstein,
Delta's president. "Our March quarter adjusted unit revenue
growth is expected to be flat to up two percent including impacts
from the timing of Easter, increasing currency headwinds, and the
ongoing government shutdown."
|
|
|
|
|
Increase
(Decrease)
|
|
|
|
|
4Q18 versus
4Q17
|
Revenue
|
|
4Q18
($M)
|
|
Change
YoY
|
Unit
Revenue
|
Yield
|
Capacity
|
Domestic
|
$
|
7,066
|
|
7.7%
|
2.6%
|
2.7%
|
5.0%
|
Atlantic
|
|
1,328
|
|
7.2%
|
4.1%
|
1.9%
|
3.0%
|
Latin
America
|
|
659
|
|
3.6%
|
1.0%
|
2.1%
|
2.6%
|
Pacific
|
|
594
|
|
1.0%
|
(0.2)%
|
2.5%
|
1.2%
|
Total
Passenger
|
$
|
9,647
|
|
6.9%
|
2.7%
|
2.8%
|
4.1%
|
Cargo
Revenue
|
|
214
|
|
5.4%
|
|
|
|
Other
Revenue
|
|
881
|
|
(12.3)%
|
|
|
|
Total
Revenue
|
$
|
10,742
|
|
5.0%
|
0.9%
|
|
|
Third Party
Refinery Sales
|
|
(11)
|
|
|
|
|
|
Total Revenue,
adjusted
|
$
|
10,731
|
|
7.5%
|
3.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March Quarter 2019 Guidance
For the March quarter, Delta expects to deliver four to six
percent total adjusted revenue growth and non-fuel unit cost growth
below inflation.
|
1Q19
Forecast
|
Earnings per
share
|
$0.70 -
$0.90
|
Pre-tax
margin
|
6.5% -
8.5%
|
Fuel price, including
taxes, settled hedges and refinery impact
|
$1.95 -
$2.05
|
TRASM, adjusted
(year-over-year)
|
Flat - up
2%
|
CASM - Excluding fuel
and profit sharing (year-over-year)
|
Up 1% - 2%
|
System Capacity
(year-over-year)
|
Up ~4%
|
See Note A for
information about reconciliation of projected non-GAAP financial
measures
|
Total adjusted
revenue and TRASM, adjusted above exclude refinery sales and DAL
Global Services
|
Cost Performance
Total adjusted operating expenses for the December quarter
increased $803 million versus the
prior year quarter, with more than half of the increase driven by
higher fuel prices and profit sharing.
CASM-Ex was down 0.5 percent for the December quarter 2018
compared to the prior year period, the strongest cost performance
for the year. For the full year, CASM-Ex increased 1.4
percent, marking an important inflection in the company's cost
trajectory with increasing benefits from efficiency initiatives,
Delta's fleet transformation and strong performance from operating
units.
Adjusted fuel expense increased $508
million, or 27 percent, relative to December quarter
2017. Delta's adjusted fuel price per gallon for the December
quarter was $2.42 which includes a
16 cent headwind from the
Monroe refinery and inventory
pre-purchases. For the full year, adjusted fuel expense
increased $2.1 billion, or 29 percent
versus prior year.
Adjusted non-operating expense for the quarter improved by
$258 million versus the prior year,
driven primarily by pension expense favorability and the DAL Global
Services transaction (see below for more detail). For the
full year, adjusted non-operating expense improved by $360 million versus the prior year.
"In 2018, we successfully returned to our long-term target
of keeping non-fuel unit cost growth below two percent, with
December quarter non-fuel unit costs declining 0.5
percent," said Paul Jacobson,
Delta's chief financial officer. "With solid momentum from our
fleet transformation and One Delta efforts, we have confidence
in our path to one percent non-fuel unit cost growth in 2019."
Cash Flow and Shareholder Returns
Delta generated $1.3 billion of
adjusted operating cash flow and $45
million of free cash flow during the quarter. For the
full year, Delta generated $6.9
billion of adjusted operating cash flow and $2.3 billion of free cash flow.
The company invested $4.7 billion
into the business in 2018 including $1.3
billion in the December quarter. This enabled delivery
of 68 new aircraft in 2018, including five Airbus A350s and four
Airbus A220s. The company's ongoing fleet transformation is
driving higher customer satisfaction, premium seat growth, and
improved cost efficiency.
During the December quarter, Delta returned $563 million to shareholders, comprised of
$325 million of share repurchases and
$238 million in dividends. For
the full year, Delta returned $2.5
billion to shareholders, comprised of $1.6 billion of share repurchases and
$909 million in dividends.
Strategic Highlights
In 2018, Delta achieved a number of milestones across its five
key strategic pillars.
Culture and People
- Received the Glassdoor Employee's Choice Award for the fourth
consecutive year, based entirely on input provided by employees,
reiterating the importance of the Delta culture.
- Announced sustainability improvements including removal of a
variety of single-use plastic items from Delta's aircraft and
clubs, eliminating more than 300,000 pounds in plastic waste
annually.
- Contributed over $50 million to
the communities we serve as part of Delta's commitment to give
back at least 1% of net profits to charitable organizations.
Operational Reliability
- Delivered 143 days of zero system cancellations across the
combined mainline and Delta Connection operations on a full year
basis, up from 90 days in 2017.
- Achieved industry-leading operational performance with mainline
on-time performance (A14) of 85.7 percent for the year; and top
legacy carrier baggage performance as measured in the latest
Department of Transportation report.
- Recognized by FlightGlobal as the 'Most On-time North
American Mainline Airline,' 'Most On-time North American Network
Airline,' and 'Most On-time International Mainline Airline.'
Network and Partnerships
- Continued Delta's global and domestic expansion with the
announcement of new routes in the December quarter including
Boston-Edinburgh, Boston-Lisbon, Minneapolis/St. Paul-Mexico City, and Minneapolis/St. Paul-Shanghai, pending governmental
approvals.
Customer Experience and Loyalty
- Debuted the first U.S. biometric airport terminal at the
Maynard H. Jackson International Terminal in Atlanta, allowing customers flying direct to
an international destination on Delta, Aeromexico, Air France-KLM,
or Virgin Atlantic Airways to use facial recognition technology
from curb to gate.
- Ranked as the No. 1 U.S. airline by the corporate travel
community in the Business Travel News Airline Survey for a historic
eighth consecutive year, sweeping all 10 categories.
- Experienced double-digit growth in co-brand spend, helping
drive $3.4 billion of incremental
value from Delta's American Express relationship for the full
year. New card acquisitions reached 1 million for the second
year in a row and Delta expanded new SkyMiles Members by a record
number in one year.
Investment Grade Balance Sheet
- Established a long-term leverage ratio target of 1.5x to 2.5x
adjusted debt to EBITDAR, which should allow Delta to maintain
investment grade ratings through a business cycle. At year
end 2018, Delta achieved a 1.9x adjusted debt to EBITDAR
ratio.
DAL Global Services Transaction
On December 21, 2018, Delta
completed a transaction combining DAL Global Services (DGS) with a
subsidiary of Argenbright Holdings. Delta retained a 49
percent equity stake in the combined company. As a result of
the transaction, Delta recognized an approximately $90 million gain in non-operating expense in the
December quarter.
For the full year 2018, DGS operations contributed four cents to Delta's earnings per share, after
adjusting for profit sharing. In 2019, Delta will recognize
49 percent of the combined entity's income in operating
expense. The year over year impact on earnings, margins, and
non-fuel unit costs are expected to be immaterial. For
guidance purposes, DGS revenues will be excluded in year-over-year
calculations for unit and total revenue to reflect core revenue
trends in the business. In 2018, DGS contributed
approximately $60 million in revenue
per quarter.
Lease Accounting
In the December quarter, Delta early adopted the new lease
accounting standard. The new standard requires leases to be
recorded on the balance sheet as lease liabilities with
corresponding right-of-use assets. The effects of the new
standard will be reflected as of January 1,
2018 by recasting prior quarters in the company's 2018 Form
10-K. This adoption resulted in the recognition of
approximately $6 billion in
incremental lease liabilities and right-of-use assets on the
balance sheet.
In addition, the adoption increased full year 2018 pre-tax
income by approximately $50 million
after adjusting for profit sharing, a six
cent impact to full year earnings per share. The
impact on the December quarter was immaterial and there is no year
over year impact on 2019.
December Quarter and Full Year Results
Adjusted results were primarily impacted by unrealized
gains/losses on investments.
|
GAAP
|
Adjusted
|
GAAP
|
Adjusted
|
($ in millions except
per share and unit costs)
|
4Q18
|
4Q17
|
4Q18
|
4Q17
|
FY18
|
FY17
|
FY18
|
FY17
|
Pre-tax
income
|
1,344
|
1,044
|
1,182
|
980
|
5,151
|
5,500
|
5,113
|
5,250
|
Net income
|
1,019
|
299
|
890
|
652
|
3,935
|
3,205
|
3,917
|
3,442
|
Diluted earnings per
share
|
1.49
|
0.42
|
1.30
|
0.92
|
5.67
|
4.43
|
5.65
|
4.76
|
Operating
revenue
|
10,742
|
10,229
|
10,731
|
9,984
|
44,438
|
41,138
|
43,890
|
40,636
|
Fuel
expense
|
2,327
|
1,802
|
2,360
|
1,852
|
9,020
|
6,756
|
9,073
|
7,015
|
Pre-tax
margin
|
12.5%
|
10.2%
|
11.0%
|
9.8%
|
11.6%
|
13.4%
|
11.6%
|
12.9%
|
Total unit revenues
(TRASM/TRASM, adjusted)
|
17.18
|
17.03
|
17.16
|
16.62
|
16.87
|
16.18
|
16.66
|
15.98
|
Operating
expense
|
9,652
|
9,067
|
9,673
|
8,870
|
39,174
|
35,172
|
38,679
|
34,929
|
Consolidated unit
cost (CASM/CASM-Ex)
|
15.44
|
15.10
|
10.74
|
10.79
|
14.87
|
13.83
|
10.31
|
10.17
|
Average fuel price
per gallon
|
2.39
|
1.88
|
2.42
|
1.93
|
2.20
|
1.68
|
2.21
|
1.74
|
Non-operating
income/(expense)
|
254
|
(118)
|
124
|
(134)
|
(113)
|
(466)
|
(98)
|
(457)
|
Operating cash
flow
|
1,245
|
1,891
|
1,252
|
1,736
|
7,014
|
5,023
|
6,899
|
6,793
|
About Delta
Delta Air Lines (NYSE: DAL) is the U.S. global airline leader in
products, services, innovation, reliability and customer
experience. Powered by its 80,000 people around the world, Delta
continues to invest billions in its people, improving the air
travel experience and generating industry-leading shareholder
returns.
- Delta serves nearly 200 million people every year, taking
customers across its industry-leading global network to more than
300 destinations in over 50 countries.
- Headquartered in Atlanta,
Delta offers more than 5,000 daily departures and as many as 15,000
affiliated departures including the premier SkyTeam alliance, of
which Delta is a founding member.
- Through its innovative alliances with Aeromexico, Air
France-KLM, Alitalia, China Eastern,
GOL, Korean Air, Virgin Atlantic, Virgin Australia and WestJet,
Delta is bringing more choice and competition to customers
worldwide.
- Delta operates significant hubs and key markets at airports in
Amsterdam, Atlanta, Boston, Detroit, Los
Angeles, Mexico City,
Minneapolis/St. Paul, New York-JFK
and LaGuardia, London-Heathrow, Paris-Charles de Gaulle, Salt Lake City, São Paulo, Seattle, Seoul-Incheon and Tokyo-Narita.
- Delta has been recognized as a 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 eight consecutive years and for 2018 was named one of
Fast Company's Most Innovative Companies Worldwide.
- As an employer, Delta has been regularly awarded top honors
from organizations like Glassdoor and recognized as a top workplace
for women and members of the military. Delta CEO Ed Bastian was named among the "World's Greatest
Leaders" by Fortune magazine in 2018.
- More about Delta can be found on the Delta News Hub as well as
delta.com, via @DeltaNewsHub on Twitter and
Facebook.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 January 15,
2019, and which we have no current intention to update.
DELTA AIR LINES,
INC.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Year
Ended
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
(in millions, except
per share data)
|
2018
|
2017
|
$
Change
|
%
Change
|
|
2018
|
2017
|
$
Change
|
%
Change
|
Operating
Revenue:
|
|
|
|
|
|
|
|
|
|
Passenger
|
$
|
9,647
|
|
$
|
9,022
|
|
$
|
625
|
|
7%
|
|
$
|
39,755
|
|
$
|
36,947
|
|
$
|
2,808
|
|
8%
|
Cargo
|
214
|
|
203
|
|
11
|
|
5%
|
|
865
|
|
744
|
|
121
|
|
16%
|
Other
|
881
|
|
1,004
|
|
(123)
|
|
(12)%
|
|
3,818
|
|
3,447
|
|
371
|
|
11%
|
Total
operating revenue
|
10,742
|
|
10,229
|
|
513
|
|
5%
|
|
44,438
|
|
41,138
|
|
3,300
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
Operating
Expense:
|
|
|
|
|
|
|
|
|
|
Salaries and related
costs
|
2,739
|
|
2,532
|
|
207
|
|
8%
|
|
10,743
|
|
10,058
|
|
685
|
|
7%
|
Aircraft fuel and
related taxes
|
2,327
|
|
1,802
|
|
525
|
|
29%
|
|
9,020
|
|
6,756
|
|
2,264
|
|
34%
|
Regional carriers
expense, excluding fuel
|
851
|
|
877
|
|
(26)
|
|
(3)%
|
|
3,438
|
|
3,466
|
|
(28)
|
|
(1)%
|
Depreciation and
amortization
|
570
|
|
583
|
|
(13)
|
|
(2)%
|
|
2,329
|
|
2,222
|
|
107
|
|
5%
|
Contracted
services
|
529
|
|
535
|
|
(6)
|
|
(1)%
|
|
2,175
|
|
2,108
|
|
67
|
|
3%
|
Passenger commissions
and other selling expenses
|
468
|
|
457
|
|
11
|
|
2%
|
|
1,941
|
|
1,827
|
|
114
|
|
6%
|
Ancillary businesses
and refinery
|
299
|
|
520
|
|
(221)
|
|
(43)%
|
|
1,695
|
|
1,495
|
|
200
|
|
13%
|
Landing fees and
other rents
|
408
|
|
375
|
|
33
|
|
9%
|
|
1,662
|
|
1,501
|
|
161
|
|
11%
|
Aircraft maintenance
materials and outside repairs
|
341
|
|
377
|
|
(36)
|
|
(10)%
|
|
1,575
|
|
1,591
|
|
(16)
|
|
(1)%
|
Profit
sharing
|
311
|
|
262
|
|
49
|
|
19%
|
|
1,301
|
|
1,065
|
|
236
|
|
22%
|
Passenger
service
|
286
|
|
274
|
|
12
|
|
4%
|
|
1,178
|
|
1,123
|
|
55
|
|
5%
|
Aircraft
rent
|
103
|
|
92
|
|
11
|
|
12%
|
|
394
|
|
351
|
|
43
|
|
12%
|
Other
|
420
|
|
381
|
|
39
|
|
10%
|
|
1,723
|
|
1,609
|
|
114
|
|
7%
|
Total operating
expense
|
9,652
|
|
9,067
|
|
585
|
|
6%
|
|
39,174
|
|
35,172
|
|
4,002
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
1,090
|
|
1,162
|
|
(72)
|
|
(6)%
|
|
5,264
|
|
5,966
|
|
(702)
|
|
(12)%
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Income/(Expense):
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(67)
|
|
(99)
|
|
32
|
|
(32)%
|
|
(311)
|
|
(396)
|
|
85
|
|
(21)%
|
Unrealized
gain/(loss) on investments, net
|
184
|
|
—
|
|
184
|
|
NM
|
|
14
|
|
—
|
|
14
|
|
NM
|
Miscellaneous,
net
|
137
|
|
(19)
|
|
156
|
|
NM
|
|
184
|
|
(70)
|
|
254
|
|
NM
|
Total non-operating
income/(expense), net
|
254
|
|
(118)
|
|
372
|
|
NM
|
|
(113)
|
|
(466)
|
|
353
|
|
(76)%
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
1,344
|
|
1,044
|
|
300
|
|
29%
|
|
5,151
|
|
5,500
|
|
(349)
|
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Provision
|
(325)
|
|
(745)
|
|
420
|
|
(56)%
|
|
(1,216)
|
|
(2,295)
|
|
1,079
|
|
(47)%
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
|
1,019
|
|
$
|
299
|
|
$
|
720
|
|
NM
|
|
$
|
3,935
|
|
$
|
3,205
|
|
$
|
730
|
|
23%
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
|
1.50
|
|
$
|
0.42
|
|
|
|
|
$
|
5.69
|
|
$
|
4.45
|
|
|
|
Diluted Earnings
Per Share
|
$
|
1.49
|
|
$
|
0.42
|
|
|
|
|
$
|
5.67
|
|
$
|
4.43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted
Average Shares Outstanding
|
680
|
|
707
|
|
|
|
|
691
|
|
720
|
|
|
|
Diluted Weighted
Average Shares Outstanding
|
683
|
|
711
|
|
|
|
|
694
|
|
723
|
|
|
|
DELTA AIR LINES,
INC.
|
Passenger
Revenue
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Year
Ended
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
(in
millions)
|
2018
|
2017
|
$
Change
|
%
Change
|
|
2018
|
2017
|
$
Change
|
%
Change
|
Ticket- Main
cabin
|
$
|
5,056
|
|
$
|
4,885
|
|
$
|
171
|
|
4%
|
|
$
|
21,196
|
|
$
|
20,380
|
|
$
|
816
|
|
4%
|
Ticket- Business
cabin and premium products
|
3,380
|
|
3,059
|
|
321
|
|
10%
|
|
13,754
|
|
12,087
|
|
1,667
|
|
14%
|
Loyalty travel
awards
|
675
|
|
577
|
|
98
|
|
17%
|
|
2,651
|
|
2,403
|
|
248
|
|
10%
|
Travel-related
services
|
536
|
|
501
|
|
35
|
|
7%
|
|
2,154
|
|
2,077
|
|
77
|
|
4%
|
Total passenger
revenue
|
$
|
9,647
|
|
$
|
9,022
|
|
$
|
625
|
|
7%
|
|
$
|
39,755
|
|
$
|
36,947
|
|
$
|
2,808
|
|
8%
|
|
|
|
|
|
|
|
|
|
|
DELTA AIR LINES,
INC.
|
Other
Revenue
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Year
Ended
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
(in
millions)
|
2018
|
2017
|
$
Change
|
%
Change
|
|
2018
|
2017
|
$
Change
|
%
Change
|
Ancillary businesses
and refinery
|
$
|
327
|
|
$
|
541
|
|
$
|
(214)
|
|
(40)%
|
|
$
|
1,801
|
|
$
|
1,591
|
|
$
|
210
|
|
13%
|
Loyalty
program
|
384
|
|
330
|
|
54
|
|
16%
|
|
1,459
|
|
1,269
|
|
190
|
|
15%
|
Miscellaneous
|
170
|
|
133
|
|
37
|
|
28%
|
|
558
|
|
587
|
|
(29)
|
|
(5)%
|
Total other
revenue
|
$
|
881
|
|
$
|
1,004
|
|
$
|
(123)
|
|
(12)%
|
|
$
|
3,818
|
|
$
|
3,447
|
|
$
|
371
|
|
11%
|
|
|
|
|
|
|
|
|
|
|
Note: The prior
periods presented here have been recast to reflect adoption of
certain new accounting standards.
|
DELTA AIR LINES,
INC. Statistical
Summary (Unaudited)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
December
31,
|
|
|
December
31,
|
|
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Change
|
Revenue passenger
miles (millions)
|
53,241
|
|
51,180
|
|
4.0
|
%
|
|
225,243
|
|
217,712
|
|
3.5
|
%
|
Available seat miles
(millions)
|
62,523
|
|
60,060
|
|
4.1
|
%
|
|
263,365
|
|
254,325
|
|
3.6
|
%
|
Passenger mile yield
(cents)
|
18.12
|
|
17.63
|
|
2.8
|
%
|
|
17.65
|
|
16.97
|
|
4.0
|
%
|
Passenger revenue per
available seat mile (cents)
|
15.43
|
|
15.02
|
|
2.7
|
%
|
|
15.09
|
|
14.53
|
|
3.9
|
%
|
Total revenue per
available seat mile (cents)
|
17.18
|
|
17.03
|
|
0.9
|
%
|
|
16.87
|
|
16.18
|
|
4.3
|
%
|
TRASM, adjusted - see
Note A (cents)
|
17.16
|
|
16.62
|
|
3.2
|
%
|
|
16.66
|
|
15.98
|
|
4.3
|
%
|
Operating cost per
available seat mile (cents)
|
15.44
|
|
15.10
|
|
2.3
|
%
|
|
14.87
|
|
13.83
|
|
7.5
|
%
|
CASM-Ex - see Note A
(cents)
|
10.74
|
|
10.79
|
|
(0.5)
|
%
|
|
10.31
|
|
10.17
|
|
1.4
|
%
|
Passenger load
factor
|
85.2
|
%
|
85.2
|
%
|
—pts
|
|
85.5
|
%
|
85.6
|
%
|
(0.1)
pts
|
Fuel gallons consumed
(millions)
|
975
|
|
959
|
|
1.7
|
%
|
|
4,113
|
|
4,032
|
|
2.0
|
%
|
Average price per
fuel gallon
|
$
|
2.39
|
|
$
|
1.88
|
|
27.1
|
%
|
|
$
|
2.20
|
|
$
|
1.68
|
|
31.0
|
%
|
Average price per
fuel gallon, adjusted - see Note A
|
$
|
2.42
|
|
$
|
1.93
|
|
25.3
|
%
|
|
$
|
2.21
|
|
$
|
1.74
|
|
26.8
|
%
|
Number of aircraft in
fleet, end of period
|
1,025
|
|
999
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: The prior
periods presented here have been recast to reflect adoption of
certain new accounting standards. Except for number of aircraft in
fleet, consolidated data presented includes operations under
Delta's contract carrier arrangements.
|
DELTA AIR LINES,
INC.
Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
December
31,
|
|
(in
millions)
|
2018
|
2017
|
|
Cash Flows From
Operating Activities:
|
|
|
|
Net income
|
$
|
1,019
|
|
$
|
299
|
|
|
Depreciation and
amortization
|
570
|
|
583
|
|
|
Deferred income
taxes
|
504
|
|
725
|
|
|
Pension,
postretirement and postemployment payments greater than
expense
|
(113)
|
|
(28)
|
|
|
Changes in air
traffic liability
|
(873)
|
|
(658)
|
|
|
Changes in profit
sharing
|
311
|
|
262
|
|
|
Other working capital
changes, net
|
(173)
|
|
708
|
|
|
Net cash provided by
operating activities
|
1,245
|
|
1,891
|
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
Property and
equipment additions:
|
|
|
|
Flight equipment, including
advance payments
|
(871)
|
|
(798)
|
|
|
Ground property and
equipment, including technology
|
(492)
|
|
(362)
|
|
|
Purchase of equity
investments
|
—
|
|
(450)
|
|
|
Net redemptions of
short-term investments
|
276
|
|
132
|
|
|
Other, net
|
67
|
|
173
|
|
|
Net cash used in
investing activities
|
(1,020)
|
|
(1,305)
|
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
Payments on long-term
debt and capital lease obligations
|
(312)
|
|
(439)
|
|
|
Repurchases of common
stock
|
(325)
|
|
(325)
|
|
|
Cash
dividends
|
(238)
|
|
(216)
|
|
|
Proceeds from
long-term obligations
|
621
|
|
450
|
|
|
Other, net
|
129
|
|
280
|
|
|
Net cash used in
financing activities
|
(125)
|
|
(250)
|
|
|
|
|
|
|
Net Increase in
Cash, Cash Equivalents and Restricted Cash
|
100
|
|
336
|
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
2,648
|
|
1,517
|
|
|
Cash, cash
equivalents and restricted cash at end of period
|
$
|
2,748
|
|
$
|
1,853
|
|
|
|
|
|
|
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
|
$
|
1,565
|
|
$
|
1,814
|
|
|
Restricted cash included in
prepaid expenses and other
|
47
|
|
39
|
|
|
Other
assets:
|
|
|
|
Cash restricted for airport
construction
|
1,136
|
|
—
|
|
|
Total cash, cash
equivalents and restricted cash
|
$
|
2,748
|
|
$
|
1,853
|
|
|
|
|
|
|
Note: The prior
periods presented here have been recast to reflect adoption of
certain new accounting standards.
|
|
DELTA AIR LINES,
INC.
Consolidated Balance Sheets
(Unaudited)
|
|
|
December
31,
|
|
December
31,
|
(in
millions)
|
2018
|
|
2017
|
ASSETS
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,565
|
|
|
$
|
1,814
|
|
|
Short-term
investments
|
203
|
|
|
825
|
|
|
Accounts receivable,
net
|
2,310
|
|
|
2,377
|
|
|
Fuel
inventory
|
704
|
|
|
916
|
|
|
Expendable parts and
supplies inventories, net
|
463
|
|
|
413
|
|
|
Prepaid expenses and
other
|
1,250
|
|
|
1,499
|
|
|
Total current
assets
|
6,495
|
|
|
7,844
|
|
|
|
|
|
|
Property and
Equipment, Net:
|
|
|
|
|
Property and
equipment, net
|
28,354
|
|
|
26,563
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
Operating lease
right-of-use assets
|
5,979
|
|
|
—
|
|
|
Goodwill
|
9,781
|
|
|
9,794
|
|
|
Identifiable
intangibles, net
|
4,829
|
|
|
4,847
|
|
|
Cash restricted for
airport construction
|
1,136
|
|
|
—
|
|
|
Deferred income
taxes, net
|
83
|
|
|
1,354
|
|
|
Other noncurrent
assets
|
3,613
|
|
|
3,309
|
|
|
Total other
assets
|
25,421
|
|
|
19,304
|
|
Total
assets
|
$
|
60,270
|
|
|
$
|
53,711
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
|
Current maturities of
long-term debt and finance leases
|
$
|
1,523
|
|
|
$
|
2,242
|
|
|
Current maturities of
operating leases
|
960
|
|
|
—
|
|
|
Air traffic
liability
|
4,661
|
|
|
4,364
|
|
|
Accounts
payable
|
3,130
|
|
|
3,674
|
|
|
Accrued salaries and
related benefits
|
3,287
|
|
|
3,022
|
|
|
Frequent flyer
deferred revenue
|
2,989
|
|
|
2,762
|
|
|
Fuel card
obligation
|
1,075
|
|
|
1,067
|
|
|
Other accrued
liabilities
|
1,129
|
|
|
1,868
|
|
|
Total current liabilities
|
18,754
|
|
|
18,999
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term debt and
finance leases
|
8,270
|
|
|
6,592
|
|
|
Pension,
postretirement and related benefits
|
9,176
|
|
|
9,810
|
|
|
Frequent flyer
deferred revenue
|
3,652
|
|
|
3,559
|
|
|
Noncurrent operating
leases
|
5,770
|
|
|
—
|
|
|
Other noncurrent
liabilities
|
971
|
|
|
2,221
|
|
|
Total noncurrent
liabilities
|
27,839
|
|
|
22,182
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
Stockholders'
Equity:
|
13,677
|
|
|
12,530
|
|
Total liabilities and
stockholders' equity
|
$
|
60,270
|
|
|
$
|
53,711
|
|
|
|
|
|
|
Note: The prior
periods presented here have been recast to reflect adoption of
certain new accounting standards.
|
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 U.S. 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. The Company is not able to
reconcile forward looking non-GAAP financial measures 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.
Pre-tax Income and Net Income, adjusted. We adjust
pre-tax income and net income for mark-to-market ("MTM")
adjustments and settlements on fuel hedge contracts, the MTM
adjustments recorded by our equity method investees, Virgin
Atlantic and Aeroméxico, and unrealized gains/losses on our equity
investments accounted for at fair value, to determine pre-tax
income and net income, adjusted. We include the income tax effect
of adjustments when presenting net income, adjusted.
MTM adjustments and
settlements. 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. Settlements represent cash received or paid on hedge
contracts settled during the period.
Equity investment MTM
adjustments. We record our proportionate share of
earnings/loss from our equity investments in Virgin Atlantic and
Aeroméxico in non-operating expense. We adjust for our equity
method investees' MTM adjustments to allow investors to better
understand and analyze our core operational performance in the
periods shown.
Unrealized gain/loss on
investments. We record the unrealized gains/losses on our
equity investments accounted for at fair value in non-operating
expense. Adjusting for these gains/losses allows investors to
better understand and analyze our core operational performance in
the periods shown.
Tax reform charge. As a
result of the Tax Cuts and Jobs Act of 2017, Delta recognized a
one-time charge in the December 2017
quarter from the revaluation of its deferred tax assets and
liabilities. We adjust for this charge to allow investors to
understand and analyze the company's core operational performance
in the periods shown.
|
Three Months
Ended
|
|
Three Months
Ended
|
|
December 31,
2018
|
|
December 31,
2018
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
1,344
|
|
|
$
|
(325)
|
|
|
$
|
1,019
|
|
|
$
|
1.49
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(33)
|
|
|
7
|
|
|
(26)
|
|
|
|
Equity investment MTM
adjustments
|
55
|
|
|
(12)
|
|
|
43
|
|
|
|
Unrealized gain/loss on
investments
|
(184)
|
|
|
38
|
|
|
(146)
|
|
|
|
Total
adjustments
|
(162)
|
|
|
33
|
|
|
(129)
|
|
|
(0.19)
|
|
Non-GAAP
|
$
|
1,182
|
|
|
$
|
(292)
|
|
|
$
|
890
|
|
|
$
|
1.30
|
|
Year-over-year
change
|
|
|
|
|
|
|
42
|
%
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
December 31,
2017
|
|
December 31,
2017
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
1,044
|
|
|
$
|
(745)
|
|
|
$
|
299
|
|
|
$
|
0.42
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(49)
|
|
|
18
|
|
|
(31)
|
|
|
|
Equity investment MTM
adjustments
|
(15)
|
|
|
5
|
|
|
(10)
|
|
|
|
Tax reform charge
|
—
|
|
|
394
|
|
|
394
|
|
|
|
Total
adjustments
|
(64)
|
|
|
417
|
|
|
353
|
|
|
0.50
|
|
Non-GAAP
|
$
|
980
|
|
|
$
|
(328)
|
|
|
$
|
652
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
|
December 31,
2018
|
|
December 31,
2018
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
5,151
|
|
|
$
|
(1,216)
|
|
|
$
|
3,935
|
|
|
$
|
5.67
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(53)
|
|
|
27
|
|
|
(26)
|
|
|
|
Equity investment MTM
adjustments
|
29
|
|
|
(15)
|
|
|
14
|
|
|
|
Unrealized gain/loss on
investments
|
(14)
|
|
|
7
|
|
|
(7)
|
|
|
|
Total
adjustments
|
(38)
|
|
|
19
|
|
|
(19)
|
|
|
(0.02)
|
|
Non-GAAP
|
$
|
5,113
|
|
|
$
|
(1,196)
|
|
|
$
|
3,917
|
|
|
$
|
5.65
|
|
Year-over-year
change
|
$
|
(137)
|
|
|
|
|
|
|
19
|
%
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
|
December 31,
2017
|
|
December 31,
2017
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
5,500
|
|
|
$
|
(2,295)
|
|
|
$
|
3,205
|
|
|
$
|
4.43
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(259)
|
|
|
88
|
|
|
(171)
|
|
|
|
Equity investment MTM
adjustments
|
8
|
|
|
4
|
|
|
12
|
|
|
|
Tax reform charge
|
—
|
|
|
394
|
|
|
394
|
|
|
|
Total
adjustments
|
(251)
|
|
|
486
|
|
|
235
|
|
|
0.33
|
|
Non-GAAP
|
$
|
5,250
|
|
|
$
|
(1,808)
|
|
|
$
|
3,442
|
|
|
$
|
4.76
|
|
Operating Revenue, adjusted and Total Revenue Per
Available Seat Mile ("TRASM"), adjusted. We adjust
operating revenue and TRASM for refinery sales to third parties to
determine operating revenue, adjusted and TRASM, adjusted because
refinery sales to third parties are not related to our airline
segment. Operating revenue, adjusted and TRASM, adjusted therefore
provide a more meaningful comparison of revenue from our airline
operations to the rest of the airline industry.
|
Three Months
Ended
|
|
|
(in
millions)
|
|
December 31,
2018
|
December 31,
2017
|
|
Change
|
Operating
revenue
|
$
|
10,742
|
|
$
|
10,229
|
|
|
|
Adjusted
for:
|
|
|
|
|
Third-party refinery
sales
|
(11)
|
|
(245)
|
|
|
|
Operating revenue,
adjusted
|
$
|
10,731
|
|
$
|
9,984
|
|
|
7.5
|
%
|
Year-over-year
change
|
|
|
$
|
747
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
(in
millions)
|
|
December 31,
2018
|
December 31,
2017
|
|
Change
|
Operating
revenue
|
$
|
44,438
|
|
$
|
41,138
|
|
|
|
Adjusted
for:
|
|
|
|
|
Third-party refinery
sales
|
(548)
|
|
(502)
|
|
|
|
Operating revenue,
adjusted
|
$
|
43,890
|
|
$
|
40,636
|
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
December 31,
2018
|
December 31,
2017
|
|
Change
|
TRASM
(cents)
|
17.18
|
|
17.03
|
|
|
|
Adjusted
for:
|
|
|
|
|
Third-party refinery
sales
|
(0.02)
|
|
(0.41)
|
|
|
|
TRASM,
adjusted
|
17.16
|
|
16.62
|
|
|
3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
|
December 31,
2018
|
December 31,
2017
|
|
Change
|
TRASM
(cents)
|
16.87
|
|
16.18
|
|
|
|
Adjusted
for:
|
|
|
|
|
Third-party refinery
sales
|
(0.21)
|
|
(0.20)
|
|
|
|
TRASM,
adjusted
|
16.66
|
|
15.98
|
|
|
4.3
|
%
|
Fuel expense, adjusted and Average fuel price per
gallon, adjusted. The tables below show the components of
fuel expense, including the impact of the refinery segment and
airline segment hedging on fuel expense and average price per
gallon. We then adjust for MTM adjustments and settlements for the
same reason described under the heading pre-tax income and net
income, adjusted:
|
|
|
|
|
|
|
Average Price Per
Gallon
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
December
31,
|
|
|
December
31,
|
(in millions, except
per gallon data)
|
2018
|
2017
|
|
|
2018
|
2017
|
Fuel purchase
cost
|
$
|
2,318
|
|
$
|
1,805
|
|
|
|
$
|
2.38
|
|
$
|
1.89
|
|
Airline segment fuel
hedge impact
|
(33)
|
|
22
|
|
|
|
(0.03)
|
|
0.02
|
|
Refinery segment
impact
|
42
|
|
(24)
|
|
|
|
0.04
|
|
(0.03)
|
|
Total fuel
expense
|
$
|
2,327
|
|
$
|
1,802
|
|
|
|
$
|
2.39
|
|
$
|
1.88
|
|
MTM adjustments and
settlements
|
33
|
|
49
|
|
|
|
0.03
|
|
0.05
|
|
Total fuel expense,
adjusted
|
$
|
2,360
|
|
$
|
1,852
|
|
|
|
$
|
2.42
|
|
$
|
1.93
|
|
Change
year-over-year
|
$
|
508
|
|
|
|
|
|
|
Percent change
year-over-year
|
27
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Average Price Per
Gallon
|
|
|
Year
Ended
|
|
|
Year
Ended
|
|
|
December
31,
|
|
|
December
31,
|
(in millions, except
per gallon data)
|
2018
|
2017
|
|
|
2018
|
2017
|
Fuel purchase
cost
|
$
|
9,131
|
|
$
|
6,833
|
|
|
|
$
|
2.22
|
|
$
|
1.70
|
|
Airline segment fuel
hedge impact
|
(53)
|
|
33
|
|
|
|
(0.01)
|
|
0.01
|
|
Refinery segment
impact
|
(58)
|
|
(110)
|
|
|
|
(0.01)
|
|
(0.03)
|
|
Total fuel
expense
|
$
|
9,020
|
|
$
|
6,756
|
|
|
|
$
|
2.20
|
|
$
|
1.68
|
|
MTM adjustments and
settlements
|
53
|
|
259
|
|
|
|
0.01
|
|
0.06
|
|
Total fuel expense,
adjusted
|
$
|
9,073
|
|
$
|
7,015
|
|
|
|
$
|
2.21
|
|
$
|
1.74
|
|
Change
year-over-year
|
|
$
|
2,057
|
|
|
|
|
|
|
Percent change
year-over-year
|
29
|
%
|
|
|
|
|
|
Pre-Tax Margin, adjusted. We adjust pre-tax margin
for MTM adjustments and settlements, equity investment MTM
adjustments and unrealized gain/loss on investments for the same
reasons described above under the heading pre-tax income and net
income, adjusted. We adjust for third-party refinery sales for the
same reason described above under the heading operating revenue and
TRASM, adjusted.
|
|
|
Three Months
Ended
|
|
December 31,
2018
|
December 31,
2017
|
Pre-tax
margin
|
12.5%
|
10.2%
|
Adjusted
for:
|
|
|
MTM adjustments and
settlements
|
(0.3)%
|
(0.5)%
|
Equity investment MTM
adjustments
|
0.5%
|
(0.2)%
|
Unrealized gain/(loss) on
investments
|
(1.7)%
|
—%
|
Third-party refinery
sales
|
—%
|
0.3%
|
Pre-tax margin,
adjusted
|
11.0%
|
9.8%
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
December 31,
2018
|
December 31,
2017
|
Pre-tax
margin
|
11.6%
|
13.4%
|
Adjusted
for:
|
|
|
MTM adjustments and
settlements
|
(0.1)%
|
(0.6)%
|
Equity investment MTM
adjustments
|
—%
|
—%
|
Unrealized gain/(loss) on
investments
|
—%
|
—%
|
Third-party refinery
sales
|
0.1%
|
0.2%
|
Pre-tax margin,
adjusted
|
11.6%
|
12.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense, adjusted. We adjust operating
expense for MTM adjustments and settlements and third-party
refinery sales for the same reasons described above under the
headings pre-tax income and net income, adjusted and operating
revenue and TRASM, adjusted to determine operating expense,
adjusted.
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
December
31,
|
(in
millions)
|
|
2018
|
2017
|
Operating
expense
|
|
|
$
|
9,652
|
|
$
|
9,067
|
|
Adjusted
for:
|
|
|
|
|
MTM adjustments and
settlements
|
|
33
|
|
49
|
|
Third-party refinery
sales
|
|
(11)
|
|
(245)
|
|
Operating expense,
adjusted
|
|
$
|
9,673
|
|
$
|
8,870
|
|
Year-over-year
change
|
|
|
$
|
803
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
|
December
31,
|
(in
millions)
|
|
2018
|
2017
|
Operating
expense
|
|
|
$
|
39,174
|
|
$
|
35,172
|
|
Adjusted
for:
|
|
|
|
|
MTM adjustments and
settlements
|
|
53
|
|
259
|
|
Third-party refinery
sales
|
|
(548)
|
|
(502)
|
|
Operating expense,
adjusted
|
|
$
|
38,679
|
|
$
|
34,929
|
|
Non-Fuel Unit Cost or Cost per Available Seat Mile,
("CASM-Ex"). We adjust CASM for the following items to
determine CASM-Ex for the reasons described below:
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 understand and
analyze our non-fuel costs and year-over-year financial
performance.
Ancillary businesses and
refinery. These expenses include aircraft maintenance we
provide to third parties,our vacation wholesale operations and
refinery cost of sales to third parties. Results also include
staffing services performed by DAL Global Services. Because these
businesses are not related to the generation of a seat mile, we
adjust for the costs related to these areas to provide a more
meaningful comparison of the costs of our airline operations to the
rest of the airline industry.
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.
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
Change
|
CASM
(cents)
|
15.44
|
|
|
15.10
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
(3.72)
|
|
|
(3.00)
|
|
|
|
Ancillary businesses and
refinery
|
(0.48)
|
|
|
(0.87)
|
|
|
|
Profit sharing
|
(0.50)
|
|
|
(0.44)
|
|
|
|
CASM-Ex
|
10.74
|
|
|
10.80
|
|
|
(0.5)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
|
|
|
December 31,
2018
|
|
December 31,
2017
|
|
Change
|
CASM
(cents)
|
14.87
|
|
|
13.83
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
(3.43)
|
|
|
(2.66)
|
|
|
|
Ancillary businesses and
refinery
|
(0.64)
|
|
|
(0.58)
|
|
|
|
Profit sharing
|
(0.49)
|
|
|
(0.42)
|
|
|
|
CASM-Ex
|
10.31
|
|
|
10.17
|
|
|
1.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating Income/(Expense), adjusted. We adjust
for equity investment MTM adjustments and unrealized gain/loss on
investments to determine non-operating income/(expense), adjusted
for the same reasons described above in the heading pre-tax income
and net income, adjusted.
|
|
|
Three Months
Ended
|
(in
millions)
|
December 31,
2018
|
December 31,
2017
|
Non-operating
income/(expense)
|
$
|
254
|
|
$
|
(118)
|
|
Adjusted
for:
|
|
|
Equity investment MTM
adjustments
|
55
|
|
(15)
|
|
Unrealized gain/loss on
investments
|
(184)
|
|
—
|
|
Non-operating
income/(expense), adjusted
|
$
|
124
|
|
$
|
(134)
|
|
Change
year-over-year
|
$
|
258
|
|
|
|
|
|
|
|
|
Year
Ended
|
(in
millions)
|
December 31,
2018
|
December 31,
2017
|
Non-operating
income/(expense)
|
$
|
(113)
|
|
$
|
(466)
|
|
Adjusted
for:
|
|
|
Equity investment MTM
adjustments
|
29
|
|
8
|
|
Unrealized gain/loss on
investments
|
(14)
|
|
—
|
|
Non-operating
income/(expense), adjusted
|
$
|
(98)
|
|
$
|
(457)
|
|
Change
year-over-year
|
$
|
360
|
|
|
Operating Cash Flow, adjusted. We present operating cash
flow, adjusted because management believes adjusting for the
following items provides a more meaningful measure for investors.
Adjustments include:
Hedge
deferrals. During the March
2016 quarter, we deferred settlement of a portion of our
hedge portfolio until 2017 by entering into transactions that,
excluding market movements from the date of inception, would
provide approximately $300 million in
cash receipts during the second half of 2016 and require
approximately $300 million in cash
payments in 2017. Operating cash flow is adjusted to include the
impact of these deferral transactions in order to allow investors
to understand the net impact of hedging activities in the period
shown.
Reimbursements from third
parties related to build-to-suit facilities and
other. Management believes investors should be informed
that these reimbursements for build-to-suit leased facilities
effectively reduce net cash provided by operating activities and
related capital expenditures.
Pension plan contribution.
In 2017, we contributed $2 billion to
our pension plans using net proceeds from issuance of debt. We
adjusted operating cash flow to exclude this contribution to allow
investors to understand the cash flows related to our core
operations in the periods shown.
|
|
|
|
Three Months
Ended
|
(in
millions)
|
|
|
December 31,
2018
|
December 31,
2017
|
Net cash provided by
operating activities
|
|
$
|
1,245
|
|
$
|
1,891
|
|
Adjustments:
|
|
|
|
Hedge deferrals
|
|
—
|
|
(51
|
|
Reimbursements from third
parties related to build-to-suit facilities and other
|
7
|
|
(104
|
|
Net cash provided by
operating activities, adjusted
|
|
$
|
1,252
|
|
$
|
1,736
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
(in
millions)
|
|
|
December 31,
2018
|
December 31,
2017
|
Net cash provided by
operating activities
|
|
$
|
7,014
|
|
$
|
5,023
|
|
Adjustments:
|
|
|
|
Hedge deferrals
|
|
(19)
|
|
(224
|
|
Reimbursements from third
parties related to build-to-suit facilities and other
|
(96)
|
|
(6
|
|
Pension plan
contribution
|
|
—
|
|
2,000
|
|
Net cash provided by
operating activities, adjusted
|
|
$
|
6,899
|
|
$
|
6,793
|
|
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. Adjustments
include:
Net purchases (redemptions) of
short-term investments. Net purchases (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 free cash flow for this activity, net,
to provide investors a better understanding of the company's free
cash flow position core to operations.
Reimbursements from third
parties related to build-to-suit facilities and
other. Management believes investors should be informed
that these reimbursements for build-to-suit leased facilities
effectively reduce net cash provided by operating activities and
related capital expenditures.
|
|
|
|
Three Months
Ended
|
(in
millions)
|
|
|
December 31,
2018
|
Net cash provided by
operating activities
|
|
$
|
1,245
|
|
Net cash used in
investing activities
|
|
(1,020
|
|
Adjustments:
|
|
|
Net purchases (redemptions)
of short-term investments
|
|
(276
|
|
Reimbursements from third
parties related to build-to-suit facilities and other
|
96
|
|
Total free cash
flow
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
(in
millions)
|
|
|
December 31,
2018
|
Net cash provided by
operating activities
|
|
$
|
7,014
|
|
Net cash used in
investing activities
|
|
(4,393
|
|
Adjustments:
|
|
|
Net purchases (redemptions)
of short-term investments
|
|
(621
|
|
Reimbursements from third
parties related to build-to-suit facilities and other
|
264
|
|
Total free cash
flow
|
|
$
|
2,265
|
|
Capital Expenditures, net. We present net capital
expenditures because management believes investors should be
informed that a portion of these capital expenditures are
reimbursed by a third party.
|
|
|
Three Months
Ended
|
(in
millions)
|
|
December 31,
2018
|
Flight equipment,
including advance payments
|
|
$
|
871
|
|
Ground property and
equipment, including technology
|
|
492
|
|
Reimbursements from
third parties related to build-to-suit-facilities and
other
|
|
(89
|
|
Capital expenditures,
net
|
|
$
|
1,274
|
|
|
|
|
|
|
|
|
Year
Ended
|
(in
millions)
|
|
December 31,
2018
|
Flight equipment,
including advance payments
|
|
$
|
3,704
|
|
Ground property and
equipment, including technology
|
|
1,464
|
|
Reimbursements from
third parties related to build-to-suit-facilities and
other
|
|
(432
|
|
Capital expenditures,
net
|
|
$
|
4,736
|
|
Adjusted Debt to Earnings Before Interest, Taxes,
Depreciation, Amortization and Rent ("EBITDAR"),
adjusted. We present adjusted debt to EBITDAR, adjusted
because management believes this metric is helpful to investors in
assessing the company's overall debt profile. Adjusted debt
includes LGA bonds and operating lease liabilities. We calculate
EBITDAR, adjusted by adding depreciation and amortization to GAAP
Operating income and adjusting for the fixed portion of operating
lease expense.
|
|
|
Year
Ended
|
(in
billions)
|
|
December 31,
2018
|
Debt and finance
lease obligations
|
|
$
|
9
|
Plus: Operating lease
liability
|
|
7
|
Adjusted
Debt
|
|
$
|
16
|
|
|
|
|
|
|
|
Year
Ended
|
(in
billions)
|
|
December 31,
2018
|
GAAP operating
income
|
|
$
|
5
|
Adjusted
for:
|
|
|
Depreciation and
amortization
|
|
2
|
Fixed portion of operating
lease expense
|
|
1
|
EBITDAR,
adjusted
|
|
|
$
|
8
|
|
|
|
|
Adjusted Debt to
EBITDAR, adjusted
|
|
|
1.9x
|
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SOURCE Delta Air Lines