Executing on three-year recovery plan with
year-one results ahead of expectations
Providing 2023 guidance for margin
expansion and significant earnings growth to $5 to $6 a
share
Reiterating 2024 financial targets of
earnings over $7 per share and
investment grade metrics
NEW
YORK, Dec. 14, 2022 /PRNewswire/ -- Delta
Air Lines (NYSE:DAL) will highlight the company's financial outlook
and strategic priorities to the investment community today in
New York. The event will be
webcast, with presentations by Chief Executive Officer Ed Bastian, President Glen Hauenstein and Chief Financial Officer
Dan Janki.
"2022 is proving to be a pivotal year as we rebuild the world's
best-performing airline. Thanks to the exceptional work of our
people, we navigated challenges while continuing to strengthen our
competitive advantages, enhancing the power of our trusted consumer
brand," Bastian said. "Demand for air travel remains robust as we
exit the year and Delta's momentum is building. Our 2023 outlook
for 15 to 20 percent revenue growth over 2022 and margin expansion
support a near doubling of EPS to $5
to $6 per share, keeping us on track
for our 2024 earnings target of over $7 per share."
The update comes as Delta closes out the final weeks of 2022, a
year of significant progress in the restoration of the airline's
financial foundation. Delta is delivering on key operational and
commercial milestones and is ahead of its financial plan for the
first year of the airline's three-year plan, established last
December. Full year 2022 GAAP EPS is expected to be $2.12 to $2.17.
Adjusted EPS of $3.07 to $3.12 reflects an increased outlook for the
December quarter compared to prior guidance provided in
October.
In 2023, Delta expects to deliver strong topline growth and
significant operating leverage on a full restoration of its network
and continued improvements in premium and loyalty revenue. Non-fuel
unit costs are expected to decline 5 to 7 percent, driving margin
expansion and a near doubling of adjusted EPS to $5 to $6. The
company expects to generate more than $2
billion of free cash flow, enabling further debt reduction.
The company is reiterating 2024 targets, including earning over
$7 per share and strengthening the
balance sheet to return to investment grade metrics.
Three Year Financial Outlook1
|
2022
|
2023
|
2024
|
Total
Revenue
|
$45.5 -
$45.6B
|
+15 - 20%
YoY
|
GDP+ YoY
|
Operating
Margin
|
7.7 %
|
10 - 12%
|
13 - 15%
|
Earnings Per
Share
|
$3.07 -
$3.12
|
$5 - $6
|
>$7
|
Free Cash
Flow
|
Positive
|
>$2B
|
>$4B
|
Leverage2
|
5x
|
3 - 3.5x
|
2 - 3x
|
|
1 Non-GAAP measures; Refer to
Non-GAAP reconciliations
|
2 Adjusted Debt /
EBITDAR
|
December Quarter 2022 Financial Outlook1
Amid continued strong demand, Delta is raising its December
quarter adjusted EPS guidance.
|
4Q22
Forecast
|
|
Updated
|
Prior
|
Total
Revenue2
|
Up 7 - 8%
|
Up 5 – 9%
|
Operating
Margin
|
11 %
|
9 – 11%
|
Earnings Per
Share
|
$1.35 -
$1.40
|
$1.00 -
$1.25
|
|
1 Non-GAAP measures; Refer to
Non-GAAP reconciliations
|
2 Compared to December quarter
2019
|
Event Details, Webcast and Materials
The presentation will begin at 10 a.m.
ET and conclude at 12 p.m. ET.
It will include prepared remarks from Delta's Chief Executive
Officer, President and Chief Financial Officer followed by a
question and answer session.
A live webcast of the event, as well as the complete
presentation, will be available at ir.delta.com. An online replay
will be available at the same site shortly after the webcast is
complete.
About Delta
More than 4,000 Delta Air Lines (NYSE: DAL) flights take off
every day, connecting people across more than 275 destinations on
six continents with a commitment to industry-leading customer
service, safety and innovation.
Delta's team of 90,000 global professionals lead the way in
delivering a world-class customer experience, and we're
continuing to ensure the future of travel is personalized,
enjoyable and stress-free. Our people's genuine and enduring
motivation is to make every customer feel welcomed and respected
across every point of their journey with us.
Delta has served as many as 200 million customers annually.
Headquartered in Atlanta, Delta
operates significant hubs and key markets in Amsterdam, Atlanta, Boston, Detroit, London-Heathrow, Los
Angeles, Mexico City,
Minneapolis-St. Paul, New York-JFK
and LaGuardia, Paris-Charles de
Gaulle, Salt Lake City,
Seattle, Seoul-Incheon and
Tokyo.
Powered by innovative and strategic partnerships with
Aeroméxico, Air France-KLM, China
Eastern, Korean Air, LATAM, Virgin Atlantic and WestJet,
Delta brings more choice and competition to customers
worldwide.
Delta is America's most-awarded airline thanks to the
dedication, passion and professionalism of its people, recognized
by Fortune, the Wall Street Journal, and Business Travel News,
among many others.
Non-GAAP Reconciliations
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 update to the most directly
comparable GAAP financial measures. Reconciliations may not
calculate due to rounding.
Forward Looking Projections. Delta is not able to
reconcile certain forward looking non-GAAP financial measures
without unreasonable effort because the adjusting items such as
those used in the reconciliations below will not be known until the
end of the indicated future periods and could be significant.
Adjustments. These reconciliations include certain
adjustments to GAAP measures, which are directly related to the
impact of COVID-19 and our response. These adjustments are made to
provide comparability between the reported periods, if applicable,
as indicated below:
Restructuring charges. During 2020, we
recorded restructuring charges for items such as fleet impairments
and voluntary early retirement and separation programs following
strategic business decision in response to the COVID-19 pandemic.
During 2022, we recognized adjustments to certain of those
restructuring charges, representing changes in our estimates.
Restructuring charges in earlier periods include fleet and other
charges, severance and related costs and other various items.
Because of the variability in restructuring charges, adjusting for
this item is helpful to investors to analyze our core operational
performance.
Loss on extinguishment of debt. This
adjustment relates to early termination of a portion of our
debt.
We also regularly adjust certain GAAP measures for the following
items, if applicable, for the reasons indicated below:
MTM adjustments and settlements on
hedges. Mark-to-market ("MTM") adjustments are defined as
fair value changes recorded in periods other than the settlement
period. Such fair value changes are not necessarily indicative of
the actual settlement value of the underlying hedge in the contract
settlement period. Settlements represent cash received or paid on
hedge contracts settled during the applicable period.
MTM adjustments on
investments. Unrealized gains/losses result from our
equity investments that are accounted for at fair value in
non-operating expense. The gains/losses are driven by changes in
stock prices, foreign currency fluctuations and other valuation
techniques for investments in companies without publicly-traded
shares. Adjusting for these gains/losses allows investors to better
understand and analyze our core operational performance in the
periods shown.
Third-party refinery sales. Refinery
sales to third parties, and related expenses, are not related to
our airline segment. Excluding these sales therefore provides a
more meaningful comparison of our airline operations to the rest of
the airline industry.
Delta Private Jets
adjustment. Because we combined Delta Private Jets with
Wheels Up in January 2020, we have
excluded the impact of Delta Private Jets from 2019 results for
comparability.
Pre-Tax Income, Net
Income, and Diluted Earnings per Share, adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
|
(Projected)
|
|
(Projected)
|
|
December 31,
2022
|
|
December 31,
2022
|
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Earnings
|
(in billions, except
per share data)
|
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
~1.9
|
$
|
~0.6
|
$
|
~1.3
|
|
$
|
~2.12 -
2.17
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
|
~(0.1)
|
|
|
|
|
|
|
|
Loss on extinguishment
of debt
|
|
~0.1
|
|
|
|
|
|
|
|
MTM adjustments and
settlements on hedges
|
|
~(0.1)
|
|
|
|
|
|
|
|
MTM adjustments on
investments
|
|
~0.8
|
|
|
|
|
|
|
|
Non-GAAP
|
$
|
~2.6
|
$
|
~0.6
|
$
|
~2.0
|
|
$
|
~3.07 -
3.12
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
(Projected)
|
|
(Projected)
|
|
December 31,
2022
|
|
December 31,
2022
|
|
|
Pre-Tax
|
|
Income
|
|
Net
|
|
Earnings
|
(in billions, except
per share data)
|
|
Income
|
|
Tax
|
|
Income
|
|
Per Diluted
Share
|
GAAP
|
$
|
~1.2
|
$
|
~0.3
|
$
|
~0.9
|
|
$
|
~1.35 -
1.40
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
|
~(0.1)
|
|
|
|
|
|
|
|
MTM adjustments on
investments
|
|
~0.1
|
|
|
|
|
|
|
|
Non-GAAP
|
$
|
~1.2
|
$
|
~0.3
|
$
|
~0.9
|
|
$
|
~1.35 -
1.40
|
Total Revenue,
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Three Months
Ended
|
|
4Q22 vs
4Q19 %
restored
|
|
|
|
|
(Projected)
|
|
|
|
(Projected)
|
|
|
|
(in
billions)
|
|
|
December 31,
2022
|
|
December 31,
2019
|
|
December 31,
2022
|
|
|
Total
revenue
|
$
|
~50.3 -
50.4
|
|
$
11.4
|
|
$
|
~13.3
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
Third-party refinery
sales
|
|
|
~(4.8)
|
|
(0.0)
|
|
|
~(1.0)
|
|
|
|
Delta Private Jets
adjustment
|
|
|
-
|
|
(0.1)
|
|
|
-
|
|
|
|
Total revenue,
adjusted
|
$
|
~45.5 -
45.6
|
|
$
11.4
|
|
$
|
~12.3
|
|
107 -
108%
|
|
Operating Margin,
adjusted
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Three Months
Ended
|
|
|
|
(Projected)
|
|
(Projected)
|
|
|
|
December 31,
2022
|
|
December 31,
2022
|
Operating
margin
|
~7.3%
|
|
~12%
|
Adjusted
for:
|
|
|
|
|
Restructuring
charges
|
|
~(0.3)
|
|
~(1)
|
Third-party refinery
sales
|
|
~0.7
|
|
~1
|
Operating margin,
adjusted
|
~7.7%
|
|
~11%
|
Free Cash Flow. We present free cash flow because
management believes this metric is helpful to investors to evaluate
the company's ability to generate cash that is available for use
for debt service or general corporate initiatives. Free cash flow
is defined as net cash from operating activities and net cash from
investing activities, adjusted for (i) net redemptions of
short-term investments, (ii) strategic investments and related,
(iii) net cash flows related to certain airport construction
projects and other, and (iv) financed aircraft acquisitions. These
adjustments are made for the following reasons:
Net redemptions of short-term
investments. Net redemptions of short-term investments
represent the net purchase and sale activity of investments and
marketable securities in the period, including gains and losses. We
adjust for this activity to provide investors a better
understanding of the company's free cash flow generated by our
operations.
Strategic investments and
related. Cash flows related to our investments in and
related transactions with other airlines are included in our GAAP
investing activities. We adjust for this activity because it
provides a more meaningful comparison to our airline industry
peers.
Net cash flows related to certain airport
construction projects and other. Cash flows related to certain
airport construction projects are included in our GAAP operating
activities and capital expenditures. We have adjusted for these
items, which were primarily funded by cash restricted for airport
construction, to provide investors a better understanding of the
company's free cash flow and capital expenditures that are core to
our operations in the periods shown.
Financed aircraft acquisitions. This
adjustment reflects aircraft deliveries that are leased as capital
expenditures. The adjustment is based on their original contractual
purchase price or an estimate of the aircraft's fair value and
provides a more meaningful view of our investing activities.
|
|
|
|
|
|
Year
Ended
|
|
|
|
|
|
|
(Projected)
|
(in
billions)
|
|
|
|
|
December 31,
2022
|
Net cash provided by
operating activities:
|
|
|
|
$
|
~5.9
|
Net cash used in
investing activities:
|
|
|
|
|
~(6.4)
|
Adjusted
for:
|
|
|
|
|
|
|
Net redemptions of
short-term investments
|
|
|
|
|
~(0.4)
|
Strategic investments
and related
|
|
|
|
|
~0.7
|
Net cash flows related
to certain airport construction projects and other
|
|
|
~0.5
|
Financed aircraft
acquisitions
|
|
|
|
|
~(0.2)
|
Free cash
flow
|
|
|
|
|
$
|
~0.1
|
Adjusted Debt to Earnings Before Interest, Taxes,
Depreciation, Amortization and Rent ("EBITDAR"). We
present adjusted debt to EBITDAR because management believes this
metric is helpful to investors in assessing the company's overall
debt profile. Adjusted debt includes operating lease
liabilities. We calculate EBITDAR by adding depreciation and
amortization to GAAP operating income and adjusting for the fixed
portion of operating lease expense.
|
|
|
(Projected)
|
(in
billions)
|
|
December 31,
2022
|
Debt and finance lease
obligations
|
|
$
|
~23
|
Plus: Operating lease
liability
|
|
|
~8
|
Plus: Sale leaseback
liability
|
|
|
~2
|
Adjusted
Debt
|
|
$
|
~33
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
|
(Projected)
|
(in
billions)
|
|
December 31,
2022
|
Operating
income
|
|
$
|
~4
|
Adjusted
for:
|
|
|
|
Depreciation and
amortization
|
|
|
~2
|
Fixed portion of
operating lease expense
|
|
|
~1
|
EBITDAR
|
|
|
$
|
~6
|
|
|
|
|
|
Adjusted Debt to
EBITDAR
|
|
|
5x
|
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SOURCE Delta Air Lines