1 CONTACT: Investor Relations Corporate Communications 404-715-2170 404-715-2554, [email protected]Delta Air Lines Announces December Quarter and Full Year 2018 Profit • December quarter 2018 GAAP pre-tax income of $1.3 billion, net income of $1.0 billion and earnings per diluted share of $1.49 • December quarter 2018 adjusted pre-tax income of $1.2 billion, adjusted net income of $890 million and adjusted earnings per diluted share of $1.30 • Full year 2018 GAAP pre-tax income of $5.2 billion and earnings per diluted share of $5.67, resulting in $1.3 billion profit sharing for Delta people • Full year 2018 GAAP operating cash flow of $7.0 billion used to invest in Delta’s business, strengthen its investment grade balance sheet, and fund $2.5 billion of dividends and share repurchases ATLANTA, Jan. 15, 2019 - 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.
18
Embed
Delta Air Lines Announces December Quarter and …...1 CONTACT: Investor Relations Corporate Communications 404-715-2170 404-715-2554, [email protected] Delta Air Lines Announces December
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
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.
6
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
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.
8
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.
9
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.
10
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.
11
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
12
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