ATLANTA, Jan. 11, 2018 /PRNewswire/ -- Delta Air
Lines (NYSE: DAL) today reported financial results for the December
quarter 2017. Highlights of those results, including both
GAAP and adjusted metrics, are below and incorporated
here.
Adjusted pre-tax income for the December
2017 quarter was $1.0 billion,
despite a $60 million impact from the
combination of December's power outage at Atlanta's Hartsfield-Jackson Airport and
Winter Storm Benji. For the
full year, adjusted pre-tax income was $5.5
billion, a $621 million
decrease relative to 2016.
"Delta people rose to the challenges of 2017 to produce solid
financial results, industry leading operational reliability and
strong improvements in customer satisfaction, and it's an honor to
recognize their achievements with $1.1
billion in profit sharing," said Ed
Bastian, Delta's chief executive officer.
"Looking ahead to 2018, we expect to drive solid earnings growth by
growing our top line 4 to 6 percent, improving our cost trajectory
and integrating our international partner network. As a
result, we are able to increase our previous full-year guidance to
$6.35 to $6.70 per share due to additional benefits from
tax reform."
Revenue Environment
Delta's operating revenue of $10.2
billion for the December quarter was up 8.3 percent, or
$787 million versus prior year.
Total unit revenues excluding refinery sales increased 4.4 percent
for the December quarter.
Passenger revenue increased $527
million, including $200
million from Delta's Branded Fares initiatives.
Passenger unit revenues increased 4.2 percent, including 0.5 points
from one-time revenue adjustments, on 2.3 percent higher
capacity.
Cargo revenue increased 14.4 percent, driven by higher volumes
and yields. Other revenue improved 17.9 percent primarily due
to higher loyalty revenue and a $150
million increase in third-party refinery sales.
For the full year, Delta's operating revenue of $41.2 billion was up 4.0 percent, or $1.6 billion versus prior year. Total unit
revenues excluding refinery sales increased 2.4 percent on 1.0
percent higher capacity.
"We enter 2018 with significant momentum and every entity
delivering positive passenger unit revenue for the first time in
five years, driven by a robust demand environment and improving
business fares," said Glen
Hauenstein, Delta's president. "We expect to deliver
total unit revenue growth of 2.5 to 4.5 percent in the March
quarter and leverage our unrivaled domestic network, international
partnerships, and solid pipeline of commercial initiatives to
deliver similar performance each quarter throughout 2018."
|
|
|
|
Increase
(Decrease)
|
|
|
|
|
4Q17 versus
4Q16
|
|
|
|
|
Change
|
Unit
|
|
|
Revenue
|
4Q17
($M)
|
|
YoY
|
Revenue
|
Yield
|
Capacity
|
|
Mainline
|
4,766
|
|
8.7
%
|
3.4
%
|
4.4
%
|
5.1
%
|
|
Regional
|
1,423
|
|
1.8
%
|
6.7
%
|
7.6
%
|
(4.6) %
|
Total
Domestic
|
6,189
|
|
7.0
%
|
3.5
%
|
4.4
%
|
3.4
%
|
|
Atlantic
|
1,181
|
|
9.0
%
|
7.4
%
|
3.7
%
|
1.5
%
|
|
Pacific
|
559
|
|
0.1
%
|
1.6
%
|
0.7
%
|
(1.5) %
|
|
Latin
America
|
572
|
|
4.5
%
|
4.0
%
|
5.0
%
|
0.5
%
|
Total
Passenger
|
8,501
|
|
6.6
%
|
4.2
%
|
4.1
%
|
2.3
%
|
Cargo
Revenue
|
200
|
|
14.4
%
|
|
|
|
Other
Revenue
|
1,544
|
|
17.9
%
|
|
|
|
Total
Revenue
|
10,245
|
|
8.3
%
|
4.4
%
|
|
|
See Note A for
reconciliation of total unit revenue (TRASM) change
|
March 2018
Quarter Guidance
For the March quarter, Delta is expecting improving revenues and
the benefit from tax reform to partially offset fuel cost increases
and the period of highest non-fuel expense growth for the year.
|
1Q18
Forecast
|
Earnings per
share
|
$0.60 -
$0.80
|
Pre-tax
margin
|
6% - 8%
|
Fuel price, including
taxes and refinery impact
|
$2.05 -
$2.10
|
Total unit revenue
excluding refinery sales (year-over-year)
|
Up 2.5% -
4.5%
|
CASM-Excluding fuel
and profit sharing (year-over-year)
|
Up 2% - 4%
|
System capacity
(year-over-year)
|
Up ~3%
|
See Note A for
information about reconciliation of projected non-GAAP financial
measures
|
2017 Cost Performance
Adjusted fuel expense2 increased $349 million compared to the same period in 2016
as market fuel prices increased throughout the quarter.
Delta's adjusted fuel price per gallon for the December quarter was
$1.93, which includes $0.03 of benefit from the refinery.
CASM-Ex3 including profit sharing decreased 0.4
percent for the December 2017 quarter
compared to the prior year period driven by the impact of Delta's
pilot agreement ratified in the December
2016 quarter. The pilot agreement resulted in $475 million of expense in the prior year period
and included a $380 million
retroactive payment for the first three quarters of 2016.
Normalized CASM-Ex4 including profit sharing
increased 5.6 percent versus the prior year period, driven by
continued investments in Delta's people, product and operation, as
well as pressure from accelerated depreciation due to aircraft
retirements.
For the full year, CASM-Ex including profit sharing increased
4.3 percent compared to 2016. Excluding profit sharing, 2017
CASM-Ex increased 4.7 percent driven by targeted investments in
Delta's employees, fleet, and product.
Non-operating expense increased $36
million for the December quarter due to higher interest
expense from Delta's unsecured debt financing primarily used to
fund its pension plan, as well as foreign exchange pressures.
"Our focus for 2018 is to bring our unit cost trajectory back in
line with our long-term 0 to 2 percent target," said Paul Jacobson, Delta's chief financial
officer. "We have a line of sight to achieving our cost goal,
and expect our March quarter to be the peak of our non-fuel expense
growth as we lap investments in our business and higher levels of
depreciation, and the savings from our fleet and efficiency
initiatives begin ramping up as we move through the year."
Cash Flow, Shareholder Returns, and Adjusted Net
Debt
Delta generated $1.7 billion of
adjusted operating cash flow and $435
million of free cash flow during the quarter. The company
invested $850 million into the
business for aircraft purchases and improvements, facilities
upgrades and technology. The company also spent $450 million to purchase its 10 percent stake in
Air France-KLM.
Delta generated $6.8 billion of
adjusted operating cash flow and $2.0
billion of free cash flow for the full year, and invested
$3.6 billion into the business and
$1.2 billion in equity stakes in
partner airlines.
During the December quarter, Delta announced an order for 100
state-of-the-art Airbus A321neo aircraft with deliveries beginning
in 2020 and a long-term commitment with Pratt & Whitney for
Delta TechOps to be a major maintenance, repair and overhaul
provider for the PW1100G and PW1500G engines, powering Delta's
A321neo and C Series aircraft.
Adjusted net debt at the end of the quarter was $8.8 billion, up $2.6
billion versus the prior year largely as a result of a
$2.5 billion increase in unsecured
debt, primarily issued to accelerate pension funding. The
company's unfunded pension liability declined by $3.6 billion from the end of 2016 to $7.0 billion at the end of 2017.
For the December quarter, Delta returned $541 million to shareholders, comprised of
$325 million of share repurchases and
$216 million in dividends. For the
full year, Delta returned $2.4
billion to shareholders, comprised of $1.7 billion of share repurchases and
$731 million in dividends.
Tax Reform
As a result of the Tax Cuts and Jobs Act of 2017, Delta
recognized a one-time charge of $150
million in the December quarter from the estimated impact of
the inclusion of foreign earnings and revaluation of deferred tax
assets and liabilities. This one-time charge is being excluded from
Delta's results as a special item. For 2018, Delta expects the
reduction in the corporate tax rate will result in an all-in book
tax rate for the company of 22-24 percent.
December Quarter Results
Special items for the quarter consist primarily of the impact
from tax reform noted above and mark-to-market adjustments on fuel
hedges.
|
GAAP
|
Adjusted
|
GAAP
|
Adjusted
|
($ in millions except
as noted)
|
4Q17
|
4Q16
|
4Q17
|
4Q16
|
FY17
|
FY16
|
FY17
|
FY16
|
Pre-tax
income
|
1,089
|
952
|
1,025
|
923
|
5,701
|
6,636
|
5,450
|
6,071
|
Net income
|
572
|
622
|
681
|
604
|
3,577
|
4,373
|
3,568
|
4,017
|
Diluted earnings per
share
|
0.80
|
0.84
|
0.96
|
0.82
|
4.95
|
5.79
|
4.93
|
5.32
|
Fuel expense
(including regional carriers)
|
1,803
|
1,492
|
1,852
|
1,503
|
6,756
|
5,985
|
7,015
|
6,435
|
Average fuel price
per gallon
|
1.88
|
1.59
|
1.93
|
1.60
|
1.68
|
1.49
|
1.74
|
1.60
|
Consolidated unit
cost (CASM/CASM-Ex)
|
15.07
|
14.37
|
11.20
|
11.25
|
13.81
|
12.98
|
10.57
|
10.13
|
Operating cash
flow
|
1,917
|
1,125
|
1,736
|
1,217
|
5,148
|
7,205
|
6,793
|
6,954
|
Total debt and
capital leases
|
8,834
|
7,332
|
8,750
|
6,144
|
8,834
|
7,332
|
8,750
|
6,144
|
Total unit revenues
(TRASM/TRASM-Ex)
|
17.06
|
16.11
|
16.65
|
15.95
|
16.22
|
15.74
|
16.02
|
15.65
|
About Delta
Delta Air Lines serves more than 180 million customers each
year. In 2017, Delta was named to Fortune's top 50 Most Admired
Companies in addition to being named the most admired airline for
the sixth time in seven years. Additionally, Delta has ranked No.1
in the Business Travel News Annual Airline survey for an
unprecedented seven consecutive years. With an industry-leading
global network, Delta and the Delta Connection carriers offer
service to 314 destinations in 54 countries on six continents.
Headquartered in Atlanta, Delta
employs more than 80,000 employees worldwide and operates a
mainline fleet of more than 800 aircraft. The airline is a founding
member of the SkyTeam global alliance and participates in the
industry's leading transatlantic joint venture with Air
France-KLM and Alitalia as well as a joint venture with Virgin
Atlantic. Including its worldwide alliance partners, Delta offers
customers more than 15,000 daily flights, with key hubs and markets
including 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, and Tokyo-Narita.
Delta has invested billions of dollars in airport facilities,
global products and services, and technology to enhance the
customer experience in the air and on the ground. Additional
information is available on the Delta News Hub, as well as
delta.com, Twitter @DeltaNewsHub, Google.com/+Delta, and
Facebook.com/delta.
End Notes
(1)
|
Note A to the
attached Consolidated Statements of Operations provides a
reconciliation of non-GAAP financial measures used in this release
to the comparable GAAP metric and provides the reasons management
uses those measures.
|
|
|
(2)
|
Adjusted fuel expense
reflects, among other things, the impact of mark-to-market ("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. These items adjust fuel
expense to show the economic impact of hedging, including cash
received or paid on hedge contracts during the period. See Note A
for a reconciliation of adjusted fuel expense and average fuel
price per gallon to the comparable GAAP metric.
|
|
|
(3)
|
CASM - Ex, including
profit sharing: In addition to fuel expense, Delta
believes adjusting for certain other expenses is helpful to
investors because other expenses are not related to the generation
of a seat mile. These expenses include aircraft maintenance and
staffing services Delta provides to third parties, Delta's vacation
wholesale operations and refinery cost of sales to third parties.
The amounts excluded were $520 million and $338 million for the
December 2017 and December 2016 quarters, and $1.5 billion and $1.2
billion for the years ended December 31, 2017 and 2016,
respectively. Management believes this methodology provides a more
consistent and comparable reflection of Delta's airline
operations.
|
|
|
(4)
|
Normalized CASM-Ex,
including profit sharing: Delta's new pilot contract was ratified
on December 1, 2016 and was retroactive to January 1, 2016. As a
result, Delta recognized $380 million in retroactive wages and
other benefits in the December 2016 quarter that were related to
previous quarters. We believe that adjusting this period allows
investors to better understand and analyze the company's core
operational performance on a year-over-year basis.
|
Forward Looking Statements
Statements in this investor update 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
effects of terrorist attacks or geopolitical conflict; 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;
the restrictions that financial covenants in our financing
agreements could have on our financial and business operations;
labor issues; interruptions or disruptions in service at one of our
hub, gateway, or key airports; breaches or security lapses in our
information technology systems; disruptions in our information
technology infrastructure; our dependence on technology in our
operations; 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 management and key employees; competitive
conditions in the airline industry; 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
leading up to and following 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 Dec. 31, 2016.
Caution should be taken not to place undue reliance on our
forward-looking statements, which represent our views only as of
Jan. 11, 2018, 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)
|
2017
|
2016
|
$
Change
|
%
Change
|
|
2017
|
2016
|
$
Change
|
%
Change
|
Operating
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Passenger:
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
7,078
|
$
6,575
|
$
503
|
8%
|
|
$
29,105
|
$
28,105
|
$
1,000
|
4%
|
|
|
Regional
carriers
|
1,423
|
1,399
|
24
|
2%
|
|
5,714
|
5,672
|
42
|
1%
|
|
|
Total passenger
revenue
|
8,501
|
7,974
|
527
|
7%
|
|
34,819
|
33,777
|
1,042
|
3%
|
|
Cargo
|
200
|
174
|
26
|
14%
|
|
729
|
668
|
61
|
9%
|
|
Other
|
1,544
|
1,310
|
234
|
18%
|
|
5,696
|
5,194
|
502
|
10%
|
|
|
Total operating
revenue
|
10,245
|
9,458
|
787
|
8%
|
|
41,244
|
39,639
|
1,605
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expense:
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
costs
|
2,632
|
2,869
|
(237)
|
(8)%
|
|
10,436
|
10,034
|
402
|
4%
|
|
Aircraft fuel and
related taxes
|
1,526
|
1,256
|
270
|
21%
|
|
5,733
|
5,133
|
600
|
12%
|
|
Regional carriers
expense
|
|
|
|
|
|
|
|
|
|
|
|
Fuel
|
277
|
236
|
41
|
17%
|
|
1,023
|
852
|
171
|
20%
|
|
|
Other
|
879
|
854
|
25
|
3%
|
|
3,480
|
3,459
|
21
|
1%
|
|
Depreciation and
amortization
|
586
|
472
|
114
|
24%
|
|
2,235
|
1,902
|
333
|
18%
|
|
Contracted
services
|
557
|
511
|
46
|
9%
|
|
2,184
|
1,991
|
193
|
10%
|
|
Aircraft maintenance
materials and outside repairs
|
497
|
466
|
31
|
7%
|
|
1,992
|
1,823
|
169
|
9%
|
|
Passenger commissions
and other selling expenses
|
443
|
419
|
24
|
6%
|
|
1,787
|
1,710
|
77
|
5%
|
|
Landing fees and
other rents
|
383
|
367
|
16
|
4%
|
|
1,528
|
1,490
|
38
|
3%
|
|
Passenger
service
|
261
|
233
|
28
|
12%
|
|
1,067
|
907
|
160
|
18%
|
|
Profit
sharing
|
262
|
193
|
69
|
36%
|
|
1,065
|
1,115
|
(50)
|
(4)%
|
|
Aircraft
rent
|
92
|
81
|
11
|
14%
|
|
351
|
285
|
66
|
23%
|
|
Other
|
657
|
481
|
176
|
37%
|
|
2,249
|
1,986
|
263
|
13%
|
|
|
Total operating
expense
|
9,052
|
8,438
|
614
|
7%
|
|
35,130
|
32,687
|
2,443
|
7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
1,193
|
1,020
|
173
|
17%
|
|
6,114
|
6,952
|
(838)
|
(12)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Expense:
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(99)
|
(93)
|
(6)
|
6%
|
|
(396)
|
(388)
|
(8)
|
2%
|
|
Miscellaneous,
net
|
(5)
|
25
|
(30)
|
NM
|
|
(17)
|
72
|
(89)
|
NM
|
|
|
Total non-operating
expense, net
|
(104)
|
(68)
|
(36)
|
53%
|
|
(413)
|
(316)
|
(97)
|
31%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
1,089
|
952
|
137
|
14%
|
|
5,701
|
6,636
|
(935)
|
(14)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Provision
|
(517)
|
(330)
|
(187)
|
57%
|
|
(2,124)
|
(2,263)
|
139
|
(6)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
572
|
$
622
|
$
(50)
|
(8)%
|
|
$
3,577
|
$
4,373
|
$
(796)
|
(18)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
0.81
|
$
0.85
|
|
|
|
$
4.97
|
$
5.82
|
|
|
Diluted Earnings
Per Share
|
$
0.80
|
$
0.84
|
|
|
|
$
4.95
|
$
5.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted
Average Shares Outstanding
|
707
|
732
|
|
|
|
720
|
751
|
|
|
Diluted Weighted
Average Shares Outstanding
|
711
|
737
|
|
|
|
723
|
755
|
|
|
DELTA AIR LINES,
INC.
|
Statistical
Summary
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
2017
|
2016
|
Change
|
|
2017
|
2016
|
Change
|
Consolidated:
|
|
|
|
|
|
|
|
Revenue passenger
miles (millions)
|
51,180
|
49,985
|
2.4%
|
|
217,712
|
213,098
|
2.2%
|
Available seat miles
(millions)
|
60,060
|
58,715
|
2.3%
|
|
254,325
|
251,867
|
1.0%
|
Passenger mile yield
(cents)
|
16.61
|
15.95
|
4.1%
|
|
15.99
|
15.85
|
0.9%
|
Passenger revenue per
available seat mile (cents)
|
14.15
|
13.58
|
4.2%
|
|
13.69
|
13.41
|
2.1%
|
Total revenue per
available seat mile (cents)
|
17.06
|
16.11
|
5.9%
|
|
16.22
|
15.74
|
3.0%
|
TRASM, excluding
refinery- see Note A (cents)
|
16.65
|
15.95
|
4.4%
|
|
16.02
|
15.65
|
2.4%
|
Operating cost per
available seat mile (cents)
|
15.07
|
14.37
|
4.9%
|
|
13.81
|
12.98
|
6.4%
|
As reported CASM-Ex,
including profit sharing- see Note A (cents)
|
11.20
|
11.25
|
(0.4%)
|
|
10.57
|
10.13
|
4.3%
|
Normalized CASM-Ex,
including profit sharing- see Note A (cents)
|
11.20
|
10.60
|
5.6%
|
|
10.57
|
10.13
|
4.3%
|
Passenger load
factor
|
85.2%
|
85.1%
|
0.1 pts
|
|
85.6%
|
84.6%
|
1.0 pts
|
Fuel gallons consumed
(millions)
|
959
|
941
|
1.9%
|
|
4,032
|
4,016
|
0.4%
|
Average price per
fuel gallon
|
$
1.88
|
$
1.59
|
18.2%
|
|
$
1.68
|
$
1.49
|
12.8%
|
Average price per
fuel gallon, adjusted - see Note A
|
$
1.93
|
$
1.60
|
20.9%
|
|
$
1.74
|
$
1.60
|
8.6%
|
Number of aircraft in
fleet, end of period
|
999
|
966
|
33
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline:
|
|
|
|
|
|
|
|
Revenue passenger
miles (millions)
|
46,089
|
44,601
|
3.3%
|
|
196,873
|
191,714
|
2.7%
|
Available seat miles
(millions)
|
53,801
|
52,153
|
3.2%
|
|
228,406
|
225,268
|
1.4%
|
Operating cost per
available seat mile (cents)
|
14.55
|
14.06
|
3.5%
|
|
13.30
|
12.51
|
6.3%
|
CASM-Ex, including
profit sharing - see Note A (cents)
|
10.84
|
11.08
|
(2.2%)
|
|
10.22
|
9.75
|
4.8%
|
Fuel gallons consumed
(millions)
|
813
|
790
|
2.9%
|
|
3,431
|
3,405
|
0.7%
|
Average price per
fuel gallon
|
$
1.87
|
$
1.58
|
18.4%
|
|
$
1.66
|
$
1.50
|
10.7%
|
Average price per
fuel gallon, adjusted - see Note A
|
$
1.93
|
$
1.60
|
20.6%
|
|
$
1.74
|
$
1.63
|
6.7%
|
Number of aircraft in
fleet, end of period
|
856
|
832
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: 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)
|
2017
|
|
2016
|
Cash Flows From
Operating Activities:
|
|
|
|
Net
income
|
$
572
|
|
$
622
|
Depreciation and
amortization
|
586
|
|
472
|
Deferred income
taxes
|
497
|
|
332
|
Changes in air
traffic liability
|
(640)
|
|
(516)
|
Other working capital
changes, net
|
902
|
|
215
|
|
Net cash provided
by operating activities
|
1,917
|
|
1,125
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
Property and
equipment additions:
|
|
|
|
|
Flight equipment,
including advance payments
|
(798)
|
|
(468)
|
|
Ground property and
equipment, including technology
|
(362)
|
|
(326)
|
Purchase of equity
investments
|
(450)
|
|
-
|
Net redemptions of
short-term investments
|
132
|
|
1,023
|
Other, net
|
146
|
|
216
|
|
Net cash (used in)
provided by investing activities
|
(1,332)
|
|
445
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
Payments on long-term
debt and capital lease obligations
|
(439)
|
|
(306)
|
Proceeds from
long-term obligations
|
450
|
|
-
|
Repurchases of common
stock
|
(325)
|
|
(300)
|
Cash
dividends
|
(216)
|
|
(149)
|
Other, net
|
281
|
|
309
|
|
Net cash used in
financing activities
|
(249)
|
|
(446)
|
|
|
|
|
|
Net Increase in
Cash and Cash Equivalents
|
336
|
|
1,124
|
Cash and cash
equivalents at beginning of period
|
1,478
|
|
1,638
|
Cash and cash
equivalents at end of period
|
$
1,814
|
|
$
2,762
|
|
|
DELTA AIR LINES,
INC.
|
|
|
Consolidated
Balance Sheets
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
(in
millions)
|
2017
|
|
2016
|
|
|
ASSETS
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
1,814
|
|
$
2,762
|
|
Short-term
investments
|
825
|
|
487
|
|
Accounts receivable,
net
|
2,377
|
|
2,064
|
|
Fuel
inventory
|
916
|
|
519
|
|
Expendable parts and
supplies inventories, net
|
413
|
|
372
|
|
Prepaid expenses and
other
|
1,499
|
|
1,247
|
|
|
Total current
assets
|
7,844
|
|
7,451
|
|
|
|
|
|
|
Property and
Equipment, Net:
|
|
|
|
|
Property and
equipment, net
|
26,563
|
|
24,375
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
Goodwill
|
9,794
|
|
9,794
|
|
Identifiable
intangibles, net
|
4,847
|
|
4,844
|
|
Deferred income
taxes, net
|
942
|
|
3,064
|
|
Other noncurrent
assets
|
3,308
|
|
1,733
|
|
|
Total other
assets
|
18,891
|
|
19,435
|
Total
assets
|
$
53,298
|
|
$
51,261
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
Liabilities:
|
|
|
|
|
Current maturities of
long-term debt and capital leases
|
$
2,242
|
|
$
1,131
|
|
Air traffic
liability
|
4,888
|
|
4,626
|
|
Accounts
payable
|
3,674
|
|
2,572
|
|
Accrued salaries and
related benefits
|
3,022
|
|
2,924
|
|
Frequent flyer
deferred revenue
|
1,822
|
|
1,648
|
|
Other accrued
liabilities
|
2,925
|
|
2,338
|
|
|
Total current
liabilities
|
18,573
|
|
15,239
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
Long-term debt and
capital leases
|
6,592
|
|
6,201
|
|
Pension,
postretirement and related benefits
|
9,837
|
|
13,378
|
|
Frequent flyer
deferred revenue
|
2,296
|
|
2,278
|
|
Other noncurrent
liabilities
|
2,111
|
|
1,878
|
|
|
Total noncurrent
liabilities
|
20,836
|
|
23,735
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
13,889
|
|
12,287
|
Total liabilities and
stockholders' equity
|
$
53,298
|
|
$
51,261
|
Note A: The following tables show reconciliations of non-GAAP
financial measures. The reasons Delta uses these measures are
described below
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 does not
reconcile forward looking non-GAAP financial measures because MTM
adjustments and settlements will not be known until the end of the
period and could be significant.
Pre-Tax Income, adjusted and Net Income, adjusted. We
adjust for the following items to determine pre-tax income,
adjusted and net income, adjusted, for the reasons described
below:
Mark-to-Market ("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. These items adjust fuel
expense to show the economic impact of hedging, including cash
received or paid on hedge contracts during the period. Adjusting
for these items allows investors to understand and analyze our core
financial performance in the periods shown.
Investment MTM adjustments.
We record our proportionate share of earnings from our equity
investment in Virgin Atlantic and Aeromexico in non-operating
expense. We adjust for these MTM adjustments to allow investors to
understand and analyze the company's core financial 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 of $150 million in
the December quarter from the estimated impact of the inclusion of
foreign earnings and revaluation of deferred tax assets and
liabilities. We adjust for this charge to allow investors to
understand and analyze the company's core financial performance in
the periods shown.
Income tax. We included the
income tax effect of adjustments when presenting net income,
adjusted. We believe that presenting the income tax effect of
adjustments allows investors to understand and analyze the
company's core financial performance in the periods shown.
|
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
|
$
1,089
|
|
$
(517)
|
|
$
572
|
|
$
0.80
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(49)
|
|
18
|
|
(31)
|
|
|
Investment MTM
adjustments
|
(15)
|
|
5
|
|
(10)
|
|
|
Tax reform charge
|
-
|
|
150
|
|
150
|
|
|
Total
adjustments
|
(64)
|
|
173
|
|
109
|
|
0.16
|
Non-GAAP
|
$
1,025
|
|
$
(344)
|
|
$
681
|
|
$
0.96
|
Year-over-year
change
|
$
102
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
December 31,
2016
|
|
December 31,
2016
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
952
|
|
$
(330)
|
|
$
622
|
|
$
0.84
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(11)
|
|
4
|
|
(7)
|
|
|
Investment MTM
adjustments
|
(18)
|
|
7
|
|
(11)
|
|
|
Total
adjustments
|
(29)
|
|
11
|
|
(18)
|
|
(0.02)
|
Non-GAAP
|
$
923
|
|
$
(319)
|
|
$
604
|
|
$
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
$
5,701
|
|
$
(2,124)
|
|
$
3,577
|
|
$
4.95
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(259)
|
|
88
|
|
(171)
|
|
|
Investment MTM
adjustments
|
8
|
|
4
|
|
12
|
|
|
Tax reform charge
|
-
|
|
150
|
|
150
|
|
|
Total
adjustments
|
(251)
|
|
242
|
|
(9)
|
|
(0.02)
|
Non-GAAP
|
$
5,450
|
|
$
(1,882)
|
|
$
3,568
|
|
$
4.93
|
Year-over-year
change
|
$
(621)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
|
December 31,
2016
|
|
December 31,
2016
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Net
Income
|
(in millions, except
per share data)
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
6,636
|
|
$
(2,263)
|
|
$
4,373
|
|
$
5.79
|
Adjusted
for:
|
|
|
|
|
|
|
|
MTM adjustments and
settlements
|
(450)
|
|
166
|
|
(284)
|
|
|
Investment MTM
adjustments
|
(115)
|
|
43
|
|
(72)
|
|
|
Total
adjustments
|
(565)
|
|
209
|
|
(356)
|
|
(0.47)
|
Non-GAAP
|
$
6,071
|
|
$
(2,054)
|
|
$
4,017
|
|
$
5.32
|
Operating Cash Flow, adjusted. We adjusted operating 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 capital expenditures, debt service or
general corporate initiatives. Adjustments include.
Hedge deferrals, including early settlements. During the
March 2015 quarter, we effectively
deferred settlement of a portion of our fuel hedge portfolio 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 2015 and require approximately $300
million in cash payments in 2016. During the March 2016 quarter, we further 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. Additionally, during the
June 2016 quarter, we early
terminated certain of our outstanding deferral transactions and
made cash payments of $170 million,
including normal settlements. 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
periods shown.
Hedge margin. Operating cash flow is adjusted for hedge
margin as we believe this adjustment removes the impact of current
market volatility on our unsettled hedges and allows investors to
understand and analyze the company's core operational performance
in the periods shown.
Reimbursements 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 our debt issuance. 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
|
|
Three Months
Ended
|
(in
millions)
|
|
December 31,
2017
|
|
December 31,
2016
|
Net cash provided by
operating activities (GAAP)
|
|
$
1,917
|
|
$
1,125
|
Adjustments:
|
|
|
|
|
Hedge deferrals, including
early settlements
|
|
(51)
|
|
75
|
Hedge margin
|
|
—
|
|
17
|
Reimbursements
related to build-to-suit facilities and other
|
|
(130)
|
|
—
|
Net cash provided by
operating activities, adjusted
|
|
$
1,736
|
|
$
1,217
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
(in
millions)
|
|
December 31,
2017
|
|
December 31,
2016
|
Net cash provided by
operating activities (GAAP)
|
|
$
5,148
|
|
$
7,205
|
Adjustments:
|
|
|
|
|
Hedge deferrals, including
early settlements
|
|
(224)
|
|
(159)
|
Hedge margin
|
|
—
|
|
(92)
|
Reimbursements
related to build-to-suit facilities and other
|
|
(131)
|
|
—
|
Pension plan
contribution
|
|
2,000
|
|
—
|
Net cash provided by
operating activities, adjusted
|
|
$
6,793
|
|
$
6,954
|
Total Revenue Per Available Seat Mile "TRASM", excluding
refinery. We adjust TRASM for refinery sales to third parties
to determine TRASM, adjusted because these revenues are not related
to our airline segment. TRASM, excluding refinery therefore
provides a more meaningful comparison of revenue from our airline
operations to the rest of the airline industry.
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
Change
|
TRASM
(cents)
|
17.06
|
|
16.11
|
|
5.9%
|
Adjusted
for:
|
|
|
|
|
|
Third party refinery
sales
|
(0.41)
|
|
(0.16)
|
|
|
TRASM, excluding
refinery
|
16.65
|
|
15.95
|
|
4.4%
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
Change
|
TRASM
(cents)
|
16.22
|
|
15.74
|
|
3.0%
|
Adjusted
for:
|
|
|
|
|
|
Third party refinery
sales
|
(0.20)
|
|
(0.09)
|
|
|
TRASM, excluding
refinery
|
16.02
|
|
15.65
|
|
2.4%
|
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 reason described
below:
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. These items adjust fuel
expense to show the economic impact of hedging, including cash
received or paid on hedge contracts during the period. Adjusting
for these items allows investors to understand and analyze our core
operational performance in the periods shown.
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
Average Price Per
Gallon
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
December
31,
|
|
|
December
31,
|
(in millions, except
per gallon data)
|
|
2017
|
2016
|
|
|
2017
|
2016
|
Fuel purchase
cost
|
|
$
1,805
|
$
1,461
|
|
|
$
1.89
|
$
1.56
|
Airline segment fuel
hedge impact
|
|
22
|
(11)
|
|
|
0.02
|
(0.01)
|
Refinery segment
impact
|
|
(24)
|
42
|
|
|
(0.03)
|
0.04
|
Total fuel
expense
|
|
$
1,803
|
$
1,492
|
|
|
$
1.88
|
$
1.59
|
MTM adjustments and
settlements
|
|
49
|
11
|
|
|
0.05
|
0.01
|
Total fuel expense,
adjusted
|
|
$
1,852
|
$
1,503
|
|
|
$
1.93
|
$
1.60
|
Year-over-year
change
|
|
$
349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
Year
Ended
|
|
|
|
December
31,
|
|
|
December
31,
|
(in millions, except
per gallon data)
|
|
2017
|
2016
|
|
|
2017
|
2016
|
Fuel purchase
cost
|
|
$
6,833
|
$
5,579
|
|
|
$
1.70
|
$
1.39
|
Airline segment fuel
hedge impact
|
|
33
|
281
|
|
|
0.01
|
0.07
|
Refinery segment
impact
|
|
(110)
|
125
|
|
|
(0.03)
|
0.03
|
Total fuel
expense
|
|
$
6,756
|
$
5,985
|
|
|
$
1.68
|
$
1.49
|
MTM adjustments and
settlements
|
|
259
|
450
|
|
|
0.06
|
0.11
|
Total fuel expense,
adjusted
|
|
$
7,015
|
$
6,435
|
|
|
$
1.74
|
$
1.60
|
|
|
|
|
|
|
|
|
Mainline:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
2017
|
2016
|
|
|
2017
|
2016
|
Mainline average
price per gallon
|
|
$
1.87
|
$
1.58
|
|
|
$
1.66
|
$
1.50
|
MTM adjustments and
settlements
|
|
0.06
|
0.02
|
|
|
0.08
|
0.13
|
Mainline average
price per gallon, adjusted
|
|
$
1.93
|
$
1.60
|
|
|
$
1.74
|
$
1.63
|
Non-Fuel Unit Cost or Cost per Available Seat Mile, Including
Profit Sharing ("CASM-Ex"). We adjust CASM for the following
items to determine CASM-Ex, including profit sharing 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 (including our regional carriers)
allows investors to understand and analyze our non-fuel costs and
year-over-year financial
performance.
Other expenses. Other
expenses include aircraft maintenance and staffing services we
provide to third parties, our vacation wholesale operations, and
refinery cost of sales to third parties. Because these businesses
are not related to the generation of a seat mile, we adjust for the
costs related to these sales to provide a more meaningful
comparison of the costs of our airline operations to the rest of
the airline industry.
Pilot contract impact,
normalized. Delta's new pilot contract was ratified on
December 1, 2016 and was retroactive
to January 1, 2016. As a result,
Delta recognized $380 million in
retroactive wages and other benefits in the December 2016 quarter that related to previous
quarters.
Consolidated
CASM-Ex:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
Change
|
|
|
CASM
(cents)
|
|
|
15.07
|
|
14.37
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
|
|
(3.00)
|
|
(2.54)
|
|
|
|
|
Other expenses
|
|
(0.87)
|
|
(0.58)
|
|
|
|
|
CASM-Ex
|
11.20
|
|
11.25
|
|
-0.4%
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Pilot contract impact,
normalized
|
|
—
|
|
(0.65)
|
|
|
|
|
CASM-Ex, adjusted for
pilot contract impact, normalized
|
11.20
|
|
10.60
|
|
5.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
|
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
Change
|
|
|
CASM
(cents)
|
|
|
13.81
|
|
12.98
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
|
|
(2.66)
|
|
(2.38)
|
|
|
|
|
Other expenses
|
|
(0.58)
|
|
(0.47)
|
|
|
|
|
CASM-Ex
|
10.57
|
|
10.13
|
|
4.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit sharing per
ASM
|
|
(0.42)
|
|
(0.44)
|
|
|
|
|
CASM-Ex, excluding
profit sharing
|
10.15
|
|
9.69
|
|
4.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
CASM-Ex:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
|
December 31,
2017
|
|
December 31,
2016
|
|
December 31,
2017
|
|
December 31,
2016
|
Mainline CASM
(cents)
|
|
|
14.55
|
|
14.06
|
|
13.30
|
|
12.51
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
|
(2.82)
|
|
(2.40)
|
|
(2.50)
|
|
(2.27)
|
Other expenses
|
|
(0.89)
|
|
(0.58)
|
|
(0.58)
|
|
(0.49)
|
Mainline
CASM-Ex
|
10.84
|
|
11.08
|
|
10.22
|
|
9.75
|
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:
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. Free 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.
Pension plan contribution.
In 2017, we contributed $2 billion to
our pension plans using net proceeds from our debt issuance. We
adjusted free cash flow to exclude this contribution to allow
investors to understand the cash flows related to our core
operations in the periods shown.
Reimbursements 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.
Net purchases (redemptions) of
short-term investments and other. 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.
|
|
|
|
|
|
Three Months
Ended
|
(in
millions)
|
|
|
|
|
December 31,
2017
|
Net cash provided by
operating activities
|
|
|
|
|
$
1,917
|
Net cash used in
investing activities
|
|
|
|
|
(1,332)
|
Adjustments:
|
|
|
|
|
|
Hedge deferrals
|
|
|
|
|
(51)
|
Reimbursements related to
build-to-suit facilities
|
|
|
|
|
35
|
Net redemptions of
short-term investments and other
|
|
|
|
|
(134)
|
Total free cash
flow
|
|
|
|
|
$
435
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
(in
millions)
|
|
|
|
|
December 31,
2017
|
Net cash provided by
operating activities
|
|
|
|
|
$
5,148
|
Net cash used in
investing activities
|
|
|
|
|
(5,366)
|
Adjustments:
|
|
|
|
|
|
Hedge deferrals
|
|
|
|
|
(224)
|
Pension plan
contribution
|
|
|
|
|
2,000
|
Reimbursements related to
build-to-suit facilities
|
|
|
|
|
71
|
Net purchases of short-term
investments and other
|
|
|
|
|
338
|
Total free cash
flow
|
|
|
|
|
$
1,967
|
Adjusted Net Debt. Delta uses adjusted total debt,
including aircraft rent, in addition to long-term adjusted debt and
capital leases, to present estimated financial obligations. Delta
reduces adjusted debt by cash, cash equivalents and short-term
investments, and hedge margin receivable, 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. Management has
reduced adjusted debt by the amount of hedge margin receivable,
which reflects cash posted to counterparties, as we believe this
removes the impact of current market volatility on our unsettled
hedges.
(in
millions)
|
|
December 31,
2017
|
|
December 31,
2016
|
Debt and capital
lease obligations
|
|
$
8,834
|
|
|
$
7,332
|
|
Plus: unamortized
discount, net and debt issuance costs
|
|
99
|
|
|
104
|
|
Adjusted debt and
capital lease obligations
|
|
|
$
8,933
|
|
|
$
7,436
|
Plus: 7x last twelve
months' aircraft rent
|
|
|
2,456
|
|
|
1,995
|
Adjusted total
debt
|
|
|
11,389
|
|
|
9,431
|
Less: cash, cash
equivalents and short-term investments
|
|
|
(2,639)
|
|
|
(3,249)
|
Less: hedge margin
receivable
|
|
|
—
|
|
|
(38)
|
Adjusted net
debt
|
|
|
$
8,750
|
|
|
$
6,144
|
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SOURCE Delta Air Lines