EX-99.1 2 delta_ex9901.htm PRESS RELEASE

Exhibit 99.1

 

 

CONTACT: Investor Relations Corporate Communications
  404-715-2170 404-715-2554
  InvestorRelations@delta.com Media@delta.com

 

 

Delta Air Lines Announces December Quarter and Full Year 2020 Financial Results

 

December quarter 2020 GAAP pre-tax loss of $1.1 billion and loss per share of $1.19 on total revenue of $4.0 billion

December quarter 2020 adjusted pre-tax loss of $2.1 billion and adjusted loss per share of $2.53 on adjusted operating revenue of $3.5 billion

Full year 2020 GAAP pre-tax loss of $15.6 billion and loss per share of $19.49 on total revenue of $17.1 billion

Full year 2020 adjusted pre-tax loss of $9.0 billion and adjusted loss per share of $10.76 on adjusted operating revenue of $15.9 billion

Delta ended 2020 with $16.7 billion in liquidity

 

 

ATLANTA, Jan. 14, 2021 – Delta Air Lines (NYSE:DAL) today reported financial results for the December quarter and full year 2020 and provided its outlook for the March quarter 2021. Highlights of the December quarter and full year 2020 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.

 

“Our December quarter results capped the toughest year in Delta’s history. I want to thank the Delta people who have risen to the occasion, focusing on delivering results for all of our stakeholders by putting our customers at the center of our recovery,” said Ed Bastian, Delta’s chief executive officer. “While our challenges continue in 2021, I am optimistic this will be a year of recovery and a turning point that results in an even stronger Delta returning to revenue growth, profitability and free cash generation.”

 

December Quarter Financial Results

 

•Adjusted pre-tax loss of $2.1 billion excludes nearly $1 billion of items directly related to the impact of, and our response to, COVID-19, including charges associated with employee pay and benefit changes, which were offset by the benefit of the CARES Act payroll support program (PSP) grant recognized in the quarter
•Adjusted operating revenue of $3.5 billion declined 69 percent on 62 percent lower sellable capacity (see Note A) versus the prior year period
•Total operating expense, which includes $930 million of items described above, decreased $5.2 billion over prior year period. Adjusted for those items and third-party refinery sales, total operating expense decreased $4.6 billion or 47 percent in the December quarter compared to the prior year period, driven by lower capacity- and revenue-related expenses and strong cost management across the business
•During the December quarter cash burn (see Note B) averaged $12 million per day, marking an approximate 90 percent reduction in cash burn since late March
•At the end of 2020, the company had $16.7 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit facilities

 

 

 

 1 

 

 

Full Year 2020 Financial Results

 

•Adjusted pre-tax loss of $9.0 billion excludes a net of $6.6 billion of items primarily related to the impact of, and our response to, COVID-19
•Adjusted operating revenue of $15.9 billion declined 66 percent on 61 percent lower sellable capacity versus the prior year
•Total operating expense, which includes $4.3 billion of COVID- related and other items, decreased $10.8 billion over prior year. Adjusted for those items and third-party refinery sales, total operating expense decreased $16.0 billion or 40 percent in 2020 compared to the prior year

 

March Quarter 2021 Outlook

 

  1Q21 Forecast
Scheduled Capacity 1 Down ~35%
Sellable Capacity 1 Down ~55%
Total Revenue 1, 2 Down 60% - 65%
Total Operating Expense 1, 2 Down 35% - 40%
Consolidated CASM 1, 2 Down 5% - 10%
Capital Expenditures ~$350 million
Average Daily Cash Burn 2 $10-15 million
Liquidity 3 $18-19 billion
Adjusted Net Debt 2, 3

 ~$18 billion

1 Compared to March quarter 2019

2 Non-GAAP measure

3 Includes estimated PSP funds of ~$3.0 billion

  

 

Revenue Environment

 

Delta’s adjusted operating revenue of $3.5 billion for the December quarter was down 69 percent versus the prior year period, a 10-point improvement from September quarter 2020. Passenger revenues declined 74 percent on 62 percent lower sellable capacity. Non-ticket revenues outperformed passenger revenues, with cargo revenues up 10 percent versus the prior year period and total loyalty revenues down 54 percent.

 

For the full year, adjusted operating revenue declined to $15.9 billion, down 66 percent versus 2019, as the global pandemic severely affected air travel. Passenger revenues declined 70 percent on 61 percent lower sellable capacity. Total loyalty revenues were down 51 percent and American Express remuneration declined 30 percent compared to prior year to $2.9 billion.

 

“We see three distinct phases in 2021. The early part of the year will be characterized by choppy demand recovery and a booking curve that remains compressed, followed by an inflection point, and finally a sustained demand recovery as customer confidence gains momentum, vaccinations become widespread and offices re-open,” said Glen Hauenstein, Delta’s president.  “For each phase, Delta has the levers to pull to successfully react to the emerging demand environment, including tightly matching our sellable capacity to expected demand.”

 

Cost Performance

 

Total adjusted operating expense for the December quarter decreased $4.6 billion or 47 percent versus the prior year period excluding items related to the company’s response to COVID-19 and the $1.4 billion CARES Act benefit, resulting in Delta’s consolidated CASM, adjusted being 4.5 percent lower than the prior year period. This performance was driven by a $1.3 billion, or 64 percent reduction in fuel expense versus the prior year period, a 51 percent reduction in maintenance expense and lower volume- and revenue-related expenses. Salaries and related costs were down 34 percent compared to the prior year period as a result of approximately 20 percent of our workforce, or nearly 18,000 employees, electing to voluntarily depart the company, in addition to the impact of voluntary unpaid leaves, work hour reductions and other cost-saving initiatives.

 

 

 

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Non-operating expense for the December quarter was up $248 million versus the prior year period, driven primarily by higher interest expense from increased debt the company has incurred during the COVID-19 pandemic.

 

“We reduced our average daily cash burn to $12 million in the December quarter, a reduction of nearly 90 percent since the early days of the pandemic in March, as we progress to achieving cash breakeven in the spring,” said Gary Chase, Delta’s interim co-chief financial officer. “Remaining agile and disciplined with our cost structure will be key to our success, and when combined with an improving demand environment, will allow us to return to the free cash flow generation needed for debt reduction.”

 

Balance Sheet, Cash and Liquidity

 

Delta ended the December quarter with $16.7 billion in liquidity. Cash used in operations during the quarter was $1.3 billion. Daily cash burn averaged $12 million for the quarter, down from $24 million per day in the September quarter.

 

The company anticipates receiving approximately $3 billion from the U.S. Treasury under the PSP extension in the March quarter. With these funds and an estimated $10 to $15 million in average daily cash burn for the March quarter, the company expects to end the March quarter with approximately $18 to $19 billion in liquidity.

 

At the end of the December quarter, the company had total debt and finance lease obligations of $29.2 billion with adjusted net debt of $18.8 billion, $8.3 billion higher year over year. The company’s total debt had a weighted average interest rate of 4.6 percent at year-end. During the quarter, the company repaid $2.6 billion under its revolving credit facilities drawn down in March 2020, $3 billion associated with the 364-day term loan entered into in March 2020 and a $450 million unsecured debt maturity. The company currently has $9 to $10 billion in unencumbered assets, primarily consisting of aircraft, engines and spare parts.

 

At the end of the December quarter, the company’s Air Traffic Liability stood at $4.5 billion, including a current liability of $4.0 billion and a non-current liability of $0.5 billion. Travel credits represent approximately 65 percent of the Air Traffic Liability at the end of the December quarter. The company refunded more than $3 billion to customers in 2020 and extended the use of certain travel credits through December 2022 to provide additional flexibility to customers.

 

Highlights from 2020

 

In 2020, Delta undertook a number of initiatives related to our culture and people, our customers’ experience and loyalty and other actions to protect and restore the business and serve our communities.

 

Culture and People: Delta’s number one priority during the pandemic has been taking care of our people. The following measures were taken to preserve our culture, create a more inclusive environment and protect the health and safety of our people

 

•Avoiding involuntary furloughs of U.S. employees by providing generous voluntary separation and early retirement programs, voluntary unpaid leaves, job sharing and other initiatives
•Slowing the COVID-19 spread with an extensive employee testing program, while helping ease the strain on the health system by offering free flu shots for all U.S. employees
•Protecting employees with pay protection programs for those diagnosed, exposed or at high risk from COVID-19
•Addressing systemic racial inequity with a commitment to double our spend with Black-owned businesses and double the percentage of Black Officers and Directors by 2025; a commitment to increase Black representation on our Board of Directors; enhanced employee inclusion training; and joining forces with organizations and coalitions that advance equity and justice, including OneTen, Operation HOPE and others
•Recognized by Glassdoor as one of the Best Places to Work for the fifth year, ranking No. 7 on the 2021 list of 100 large companies, the highest rank Delta has ever received

 

 

 

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Customer Experience and Loyalty: Delta’s innovative, customer-centric approach focused on customer health and safety and improving the travel experience during the challenges of the pandemic

 

•Blocking middle seats through at least March 30, 2021 – the only major U.S. airline to make such a commitment
•Launched the industry’s first COVID-tested flights from Atlanta to Rome and Atlanta to Amsterdam with no quarantine on arrival
•Created a Global Cleanliness organization and implemented the Delta CareStandard, our ongoing, organization-wide commitment to cleanliness and safety that includes mask requirements, regular sanitization of surfaces, onboard use of industrial-grade HEPA filters and more than 100 other measures to ensure a safe travel experience
•Eliminated change fees for U.S. customers and discontinued redeposit/reissuance fees for SkyMiles members; extended Medallion member benefits through January 2022
•Unveiled Phase I of the new Salt Lake City airport, with accelerated investment in Los Angeles and New York-LaGuardia airports to provide customers state of the art facilities across our domestic network

 

Actions Taken to Protect and Restore the Business: Delta took quick and decisive action to mitigate liquidity risk at the onset of the global pandemic. Financing transactions and efficiency initiatives have created a long-term competitive cost structure that will aid in the recovery of the airline

 

•Completed more than $25 billion in financing transactions in 2020, including Delta’s $9 billion SkyMiles financing, the largest debt financing in aviation history
•Received $5.6 billion in PSP proceeds through the CARES Act legislation passed in March 2020, with $4.0 billion in grant funds, $1.6 billion in low-interest rate loans and issuance of warrants for over 6.7 million shares – Delta’s shareholder dilution of 1 percent in 2020 was primarily attributable to warrants issued under the CARES Act
•Restructured our aircraft orderbook, reducing aircraft purchase commitments by $2 billion in 2020 and $5 billion through 2022
•Accelerated its fleet simplification strategy with 227 aircraft retirements in 2020, reducing the number of fleet families from 13 to 11. Delta anticipates the cumulative retirement of nearly 400 aircraft through 2025, further simplifying fleet families down to nine
•Reduced total adjusted operating expense by 40 percent during the full year 2020, with a nearly 50 percent or greater reduction in each of the June, September and December quarters

 

Serving our Communities: Continued to exhibit the Delta values of serving our communities and giving back to those in need

 

•Supported healthcare workers by manufacturing 70,000 face shields to extend the life of essential N95 mask respirators, donating 800,000 pounds of snacks and drinks to hospitals in 20 different countries, and provided more than 350 free flights for medical professionals traveling to assist states that were heavily impacted by the pandemic
•Donated more than one million pounds of food across the globe and millions of amenity kits, blankets and dishware to social service agencies
•Maintained our commitment to serving our communities by partnering with KABOOM! to build five playgrounds, building 750 bikes and contributing 1,300 toys and $735,000 in donations to Toys for Tots
•Donated more than 10,000 pints of blood to the American Red Cross, serving as the No. 1 American Red Cross corporate blood donor for the third straight year
•Supported and encouraged Delta people who volunteered their time and talents to numerous charities and organizations

 

CARES Act Accounting and Other COVID-19 Related Charges

 

In the December quarter, the remaining $1.4 billion of the CARES Act PSP grant was recognized as a contra-expense, which is reflected as “CARES Act grant recognition” on the Consolidated Statements of Operations.

 

 

 

 

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During the December quarter, the company recorded $421 million in restructuring charges primarily related to employees benefits and other matters within operating expense.

 

December Quarter and Full Year 2020 Results

 

December quarter and full year results have been adjusted primarily for the CARES Act grant recognition, restructuring charges, and impairment charges described in this release.

 

  GAAP Adjusted GAAP Adjusted
($ in millions except per share and unit costs) 4Q20 4Q19 4Q20 4Q19 FY20 FY19 FY20 FY19
Pre-tax (loss)/income (1,108)   1,397    (2,121)   1,417    (15,587)   6,198    (8,996)   6,214   

Net (loss)/income

 (755)   1,099    (1,604)   1,098    (12,385)   4,767    (6,839)   4,776   
Diluted (loss)/earnings per share (1.19)   1.71    (2.53)   1.70    (19.49)   7.30    (10.76)   7.32   
Operating revenue 3,973    11,439    3,532    11,384    17,095    47,007    15,945    46,718   
Operating expense 4,831    10,040    5,314    9,961    29,564    40,389    24,130    40,082   
Total cost per available seat mile (CASM) 13.21    15.34    14.53    15.21    22.01    14.67    17.96    14.56   
CASM-Ex     12.57    11.59        15.61    10.88   
Fuel expense 723    2,012    717    1,983    3,176    8,519    3,166    8,477   
Total debt and finance lease obligations 29,157    11,160    18,823    10,489    29,157    11,160    18,823    10,489   
Total revenue per available seat mile (TRASM) 10.86    17.47    9.66    17.39    12.73    17.07    11.87    16.97   
Average fuel price per gallon 1.45    2.01    1.44    1.99    1.64    2.02    1.64    2.01   

 

About Delta Air Lines

 

Delta Air Lines (NYSE: DAL) is the U.S. global airline leader in safety, innovation, reliability and customer experience. Powered by our employees around the world, Delta has for a decade led the airline industry in operational excellence while maintaining our reputation for award-winning customer service.

 

Today, and always, nothing is more important than the health and safety of our customers and employees. Since the onset of the COVID-19 pandemic, Delta has moved quickly to transform the industry standard of clean while offering customers more space across the travel journey. These and numerous other layers of protection ensure a safe and comfortable travel experience for our customers and employees.

 

With our mission of connecting the people and cultures of the globe, Delta strives to foster understanding across a diverse world and serve as a force for social good.

 

 

 

 

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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. Risks and uncertainties that could cause differences between actual results and forward-looking statements include, but are not limited to, the material adverse effect that the COVID-19 pandemic is having on our business; uncertainties with respect to timing of vaccine distribution and widespread vaccination; the impact of incurring significant debt in response to the pandemic; 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 performance of our significant investments in and commercial relationships with, airlines in other parts of the world; failure to comply with the financial and other covenants in our financing agreements; labor issues; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third parties; the cost of aircraft fuel; the availability of aircraft fuel; 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 and our culture; damage to our reputation and brand if we are exposed to significant adverse publicity; 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 impact of environmental regulation on our business; and the sensitivity of the airline industry to prolonged periods of stagnant or weak economic conditions.

 

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, 2019 and our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2020. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of January 14, 2021, and which we have no current intention to update except to the extent required by law.

 

 

 

 

 

 

 

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DELTA AIR LINES, INC.

Consolidated Statements of Operations

(Unaudited)

                   

 

  Three Months Ended       Year Ended    
  December 31,       December 31,    
(in millions, except per share data) 2020 2019 $ Change % Change   2020 2019 $ Change % Change
Operating Revenue:                  
Passenger $ 2,698    $ 10,245    $ (7,547)   (74) %   $ 12,883    $ 42,277    $ (29,394)   (70) %
Cargo 204    187    17    10  %   608    753    (145)   (19) %
Other 1,071    1,007    64    6  %   3,604    3,977    (373)   (9) %
Total operating revenue 3,973    11,439    (7,466)   (65) %   17,095    47,007    (29,912)   (64) %
                   
Operating Expense:                  
Salaries and related costs 1,940    2,949    (1,009)   (34) %   8,754    11,225    (2,471)   (22) %
Aircraft fuel and related taxes 723    2,012    (1,289)   (64) %   3,176    8,519    (5,343)   (63) %
Regional carriers expense, excluding fuel 591    885    (294)   (33) %   2,479    3,584    (1,105)   (31) %
Depreciation and amortization 499    622    (123)   (20) %   2,312    2,581    (269)   (10) %
Ancillary businesses and refinery 604    299    305    NM   1,785    1,245    540    43  %
Contracted services 381    668    (287)   (43) %   1,778    2,641    (863)   (33) %
Landing fees and other rents 323    440    (117)   (27) %   1,518    1,762    (244)   (14) %
Aircraft maintenance materials and outside repairs 204    417    (213)   (51) %   822    1,751    (929)   (53) %
Passenger commissions and other selling expenses 84    488    (404)   (83) %   582    1,993    (1,411)   (71) %
Passenger service 90    313    (223)   (71) %   523    1,251    (728)   (58) %
Aircraft rent 104    105    (1)   (1) %   399    423    (24)   (6) %
Restructuring charges 421    —    421    NM   8,219    —    8,219    NM
CARES Act grant recognition (1,351)   —    (1,351)   NM   (3,946)   —    (3,946)   NM
Profit sharing —    387    (387)   (100) %   —    1,643    (1,643)   (100) %
Other 218    455    (237)   (52) %   1,163    1,771    (608)   (34) %
Total operating expense 4,831    10,040    (5,209)   (52) %   29,564    40,389    (10,825)   (27) %
                   
Operating (Loss)/Income (858)   1,399    (2,257)   NM   (12,469)   6,618    (19,087)   NM
                   
Non-Operating Expense:                  
Interest expense, net (365)   (72)   (293)   NM   (929)   (301)   (628)   NM
Impairments and equity method (losses)/gains —    18    (18)   (100) %   (2,432)   (62)   (2,370)   NM
Gain/(loss) on investments, net 94    136    (42)   (31) %   (105)   119    (224)   NM
Miscellaneous, net 21    (84)   105    NM   348    (176)   524    NM
Total non-operating expense, net (250)   (2)   (248)   NM   (3,118)   (420)   (2,698)   NM
                   
(Loss)/Income Before Income Taxes (1,108)   1,397    (2,505)   NM   (15,587)   6,198    (21,785)   NM
                   
Income Tax Benefit/(Provision) 353    (298)   651    NM   3,202    (1,431)   4,633    NM
                   
Net (Loss)/Income $ (755)   $ 1,099    $ (1,854)   NM   $ (12,385)   $ 4,767    $ (17,152)   NM
                   
Basic (Loss)/Earnings Per Share $ (1.19)   $ 1.71          $ (19.49)   $ 7.32       
Diluted (Loss)/Earnings Per Share $ (1.19)   $ 1.71          $ (19.49)   $ 7.30       
                   
Basic Weighted Average Shares Outstanding 635    642          636    651       
Diluted Weighted Average Shares Outstanding 635    644          636    653       

 

 

 

 

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DELTA AIR LINES, INC.

Passenger Revenue

(Unaudited)

                 

  Three Months Ended       Year Ended    
  December 31,       December 31,    
(in millions) 2020 2019 $ Change % Change   2020 2019 $ Change % Change
Ticket- Main cabin $ 1,447    $ 5,238    $ (3,791)   (72) %   $ 6,676    $ 21,919    $ (15,243)   (70) %
Ticket- Business cabin and premium products 810    3,684    (2,874)   (78) %   4,294    14,989    (10,695)   (71) %
Loyalty travel awards 204    726    (522)   (72) %   935    2,900    (1,965)   (68) %
Travel-related services 237    597    (360)   (60) %   978    2,469    (1,491)   (60) %
Total passenger revenue $ 2,698    $ 10,245    $ (7,547)   (74) %   $ 12,883    $ 42,277    $ (29,394)   (70) %

 

 

DELTA AIR LINES, INC.

Other Revenue

(Unaudited)

                 

  Three Months Ended       Year Ended    
  December 31,       December 31,    
(in millions) 2020 2019 $ Change % Change   2020 2019 $ Change % Change
Ancillary businesses and refinery $ 614    $ 307    $ 307    100  %   $ 1,798    $ 1,297    $ 501    39  %
Loyalty program 372    519    (147)   (28) %   1,458    1,962    (504)   (26) %
Miscellaneous 85    181    (96)   (53) %   348    718    (370)   (52) %
Total other revenue $ 1,071    $ 1,007    $ 64    6  %   $ 3,604    $ 3,977    $ (373)   (9) %

  

 

DELTA AIR LINES, INC.

Total Revenue

(Unaudited)

 

        Increase (Decrease)
        4Q20 versus 4Q19
Revenue   4Q20 ($M)   Change
YoY		 Unit Revenue Yield Capacity
       Domestic $ 2,229    (71)% (55)% (11)% (36)%
Atlantic   157    (88)% (62)% 9% (69)%
Latin America   234    (67)% (52)% (9)% (31)%
Pacific   78    (87)% (55)% 97% (70)%
Total Passenger $ 2,698    (74)% (53)% (3)% (44)%
Cargo Revenue   204    10%      
Other Revenue   1,071    6%      
Total Revenue $ 3,973    (65)% (38)%    
       Third Party Refinery Sales   (441)          
Total Revenue, adjusted $ 3,532    (69)% (44)%    

 

 

 

 

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DELTA AIR LINES, INC.

Statistical Summary

(Unaudited)

 

  Three Months Ended       Year Ended    
  December 31,       December 31,    
  2020 2019 Change   2020 2019 Change
Revenue passenger miles (millions) 15,183    56,028    (73)   %   73,412    237,680    (69)   %
Available seat miles (millions) 36,569    65,468    (44)   %   134,339    275,379    (51)   %
Passenger mile yield (cents) 17.77    18.29    (3)   %   17.55    17.79    (1)   %
Passenger revenue per available seat mile (cents) 7.38    15.65    (53)   %   9.59    15.35    (38)   %
Total revenue per available seat mile (cents) 10.86    17.47    (38)   %   12.73    17.07    (25)   %
TRASM, adjusted - see Note B (cents) 9.66    17.39    (44)   %   11.87    16.97    (30)   %
Total cost per available seat mile (cents) 13.21    15.34    (14)   %   22.01    14.67    50    %
Consolidated CASM, adjusted - see Note B (cents) 14.53    15.21    (4)   %   17.96    14.56    23    %
CASM-Ex  - see Note B (cents) 12.57    11.59    8    %   15.61    10.88    43    %
Passenger load factor 42  % 86  % (44)   pts   55  % 86  % (32)   pts
Fuel gallons consumed (millions) 498    999    (50)   %   1,935    4,214    (54)   %
Average price per fuel gallon $ 1.45    $ 2.01    (28)   %   $ 1.64    $ 2.02    (19)   %
Average price per fuel gallon, adjusted - see Note B $ 1.44    $ 1.99    (28)   %   $ 1.64    $ 2.01    (18)   %

 

 

 

 

 

 

 

 

 

 

 

 

 

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DELTA AIR LINES, INC.

Consolidated Statements of Cash Flows

(Unaudited)

 

   Three Months Ended 
   December 31, 
(in millions)  2020   2019 
Cash Flows From Operating Activities:          
Net (loss) income  $(755)  $1,099 
Depreciation and amortization   499    622 
Deferred income taxes   (350)   324 
Pension, postretirement and postemployment payments greater than expense   (87)   (447)
Change in other payables, deferred revenue and accrued liabilities   692    (104)
Changes in air traffic liability   (75)   (647)
Deferred CARES Act grant recognition   (1,351)   – 
Other, net   141    122 
     Net cash (used in)/provided by operating activities   (1,286)   969 
           
Cash Flows From Investing Activities:          
Property and equipment additions:          
Flight equipment, including advance refunds/(payments)   (302)   (570)
Ground property and equipment, including technology   (246)   (502)
Sale of equity investments   –    278 
Purchase of short-term investments   (4,700)   – 
Redemption of short-term investments   3,955    – 
Proceeds from loans to others   142    – 
Other, net   103    15 
     Net cash used in investing activities   (1,048)   (779)
           
Cash Flows From Financing Activities:          
Payments on debt and finance lease obligations   (6,241)   (516)
Repurchase of common stock   –    (225)
Cash dividends   –    (259)
Proceeds from long-term obligations   310    1,557 
Fuel card obligation   –    297 
Other, net   (26)   (12)
     Net cash (used in)/provided by financing activities   (5,957)   842 
           
Net Increase/(Decrease) in Cash, Cash Equivalents and Restricted Cash Equivalents   (8,291)   1,032 
Cash, cash equivalents and restricted cash equivalents at beginning of period   18,346    2,698 
Cash, cash equivalents and restricted cash equivalents at end of period  $10,055   $3,730 

 

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  $8,307   $2,882 
     Restricted cash included in prepaid expenses and other   192    212 
Other assets:          
     Cash restricted for airport construction   1,556    636 
Total cash, cash equivalents and restricted cash equivalents  $10,055   $3,730 

 

 

 

 10 

 

 

DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)

         

 

   December 31,   December 31, 
(in millions)  2020   2019 
ASSETS        
Current Assets:          
Cash and cash equivalents  $8,307   $2,882 
Short-term investments   5,789    – 
Accounts receivable, net   1,396    2,854 
Fuel inventory   377    730 
Expendable parts and supplies inventories, net   355    521 
Prepaid expenses and other   1,180    1,262 
Total current assets   17,404    8,249 
           
Property and Equipment, Net:          
Property and equipment, net   26,529    31,310 
           
Other Assets:          
Operating lease right-of-use assets   5,733    5,627 
Goodwill   9,753    9,781 
Identifiable intangibles, net   6,011    5,163 
Cash restricted for airport construction   1,556    636 
Equity investments   1,665    2,568 
Deferred income taxes, net   2,043    120 
Other noncurrent assets   1,357    1,078 
Total other assets   28,118    24,973 
Total assets  $72,051   $64,532 
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current Liabilities:          
Current maturities of debt and finance leases  $1,732   $2,287 
Current maturities of operating leases   678    801 
Air traffic liability   4,044    5,116 
Accounts payable   2,840    3,266 
Accrued salaries and related benefits   2,086    3,701 
Loyalty program deferred revenue   1,777    3,219 
Fuel card obligation   1,100    736 
Other accrued liabilities   1,670    1,078 
Total current liabilities   15,927    20,204 
           
Noncurrent Liabilities:          
Debt and finance leases   27,425    8,873 
Noncurrent air traffic liability   500    – 
Pension, postretirement and related benefits   10,865    8,452 
Loyalty program deferred revenue   5,405    3,509 
Noncurrent operating leases   5,713    5,294 
Deferred income taxes, net   –    1,456 
Other noncurrent liabilities   4,863    1,386 
Total noncurrent liabilities   54,771    28,970 
           
Commitments and Contingencies          
           
Stockholders' Equity:   1,353    15,358 
Total liabilities and stockholders' equity  $72,051   $64,532 

 

 

 

 

 11 

 

 

Note A: Scheduled capacity, also referred to as available seat miles or ASMs and which we have historically presented as a capacity measure, equals the total number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period. Sellable capacity refers to available seat miles after giving effect to load factor caps and blocked seats. Cost and revenue unit metrics in this release, including all measures presented in the statistical summary and in Note B, are calculated on the basis of scheduled capacity.

 

Note B: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below. Reconciliations may not calculate due to rounding.

 

Delta sometimes uses information ("non-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Under the Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The tables below show reconciliations of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures.

 

Forward Looking Projections. Delta is not able to reconcile forward looking non-GAAP financial measures 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 12 

 

 

Pre-Tax (Loss)/Income, Net (Loss)/Income, and Diluted (Loss)/Earnings per Share, adjusted. In the December 2020 quarter and full year 2020, pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share, adjusted exclude the following items directly related to the impact of COVID-19 and our response for comparability with the prior period:

 

Restructuring charges. We recognized restructuring charges following strategic business decisions in response to the COVID-19 pandemic. For the full year 2020, these charges primarily include impairments and related charges from retirement decisions related to approximately 400 aircraft and the voluntary early retirement and separation programs.

 

CARES Act grant recognition. We recognized the full grant proceeds from the CARES Act payroll support program as a contra-expense in 2020. We recognized the grant proceeds based on the periods that the funds were intended to benefit.

 

Impairments and equity method losses. During 2020, we recognized charges and the related income tax impacts from write-downs of our investments in LATAM and Grupo Aeroméxico following their financial losses and separate Chapter 11 bankruptcy filings, and the write-down of our investment in Virgin Atlantic based on our share of its historical and projected losses.

 

Pension settlement charges. These charges were recognized in connection with the voluntary early retirement and separation programs.

 

We also regularly adjust pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share for the following items to determine pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share, adjusted for the reasons described below. We include the income tax effect of adjustments when presenting net (loss)/income, adjusted.

 

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.

 

Equity investment MTM adjustments. We previously recorded our proportionate share of losses from our equity investments in Virgin Atlantic, Grupo Aeroméxico and LATAM in non-operating expense. (As a result of Grupo Aeroméxico's and LATAM’s bankruptcy filings, we no longer have significant influence with Grupo Aeroméxico or LATAM and have discontinued accounting for these investments under the equity method in the June 2020 quarter.) We adjust for our equity method investees' hedge portfolio MTM adjustments to allow investors to understand and analyze our core operational performance in the periods shown.

 

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.

 

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.

 

 

 

 

 

 13 

 

 

   Three Months Ended   Three Months Ended 
   December 31, 2020   December 31, 2020 
   Pre-Tax   Income   Net   Net Loss 
(in millions, except per share data)  Loss   Tax   Loss   Per Diluted Share 
GAAP  $(1,108)  $353   $(755)  $(1.19)
Less: Restructuring charges   421    (99)   322      
Less: CARES Act grant recognition   (1,351)   314    (1,037)     
Less: Impairments and equity method losses   –    (47)   (47)     
Less: Pension settlement charges   5    (1)   4      
Adjusted for:                    
MTM adjustments and settlements on hedges   6    (2)   4      
Equity investment MTM adjustments   –    –    –      
MTM adjustments on investments   (94)   (1)   (95)     
Non-GAAP  $(2,121)  $516   $(1,604)  $(2.53)

 

   Three Months Ended   Three Months Ended 
   December 31, 2019   December 31, 2019 
   Pre-Tax   Income   Net   Net Income 
(in millions, except per share data)  Income   Tax   Income   Per Diluted Share 
GAAP  $1,397   $(298)  $1,099   $1.71 
Adjusted for:                    
MTM adjustments and settlements on hedges   22    (5)   17      
Equity investment MTM adjustments   (1)   –    (1)     
MTM adjustments on investments   (3)   (16)   (19)     
Delta Private Jets adjustment   2    –    2      
Non-GAAP  $1,417   $(319)  $1,098   $1.70 

 

   Year Ended   Year Ended 
   December 31, 2020   December 31, 2020 
   Pre-Tax   Income   Net   Net Loss 
(in millions, except per share data)  Loss   Tax   Loss   Per Diluted Share 
GAAP  $(15,587)  $3,202   $(12,385)  $(19.49)
Less: Restructuring charges   8,219    (1,910)   6,309      
Less: CARES Act grant recognition   (3,946)   917    (3,029)     
Less: Impairments and equity method losses   2,172    (70)   2,102      
Less: Pension settlement charges   36    (8)   28      
Adjusted for:                    
MTM adjustments and settlements on hedges   10    (2)   8      
Equity investment MTM adjustments   (19)   4    (15)     
MTM adjustments on investments   119    24    143      
Non-GAAP  $(8,996)  $2,156   $(6,839)  $(10.76)

 

   Year Ended   Year Ended 
   December 31, 2019   December 31, 2019 
   Pre-Tax   Income   Net   Net Income 
(in millions, except per share data)  Income   Tax   Income   Per Diluted Share 
GAAP  $6,198   $(1,431)  $4,767   $7.30 
Adjusted for:                    
MTM adjustments and settlements on hedges   14    (3)   11      
Equity investment MTM adjustments   (14)   3    (11)     
MTM adjustments on investments   13    (7)   6      
Delta Private Jets adjustment   3    –    3      
Non-GAAP  $6,214   $(1,438)  $4,776   $7.32 

 

 

 

 14 

 

 

Operating Revenue, adjusted and Total Revenue Per Available Seat Mile ("TRASM"), adjusted. We adjust operating revenue and TRASM for third party refinery sales for the reasons described below. We make an adjustment related to Delta Private Jets for the same reason described above under the heading pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share, adjusted.

 

Third-party refinery sales. We adjust operating revenue and TRASM for refinery sales to third parties to determine operating revenue, adjusted and TRASM, adjusted because these revenues are not related to our airline segment. Operating revenue, adjusted and TRASM, adjusted therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.

 

   Three Months Ended     
(in millions)  December 31, 2020   December 31, 2019   Change
Operating revenue  $3,973   $11,439      
Adjusted for:               
     Third-party refinery sales   (441)   (2)     
     Delta Private Jets adjustment   –    (53)     
Operating revenue, adjusted  $3,532   $11,384    (69)%

 

   Year Ended     
(in millions)  December 31, 2020   December 31, 2019   Change
Operating revenue  $17,095   $47,007      
Adjusted for:               
Third-party refinery sales   (1,150)   (97)     
Delta Private Jets adjustment   –    (192)     
Operating revenue, adjusted   $15,945   $46,718    (66)%

  

   Three Months Ended     
   December 31, 2020   December 31, 2019   Change
TRASM (cents)   10.86    17.47      
Adjusted for:               
     Third-party refinery sales   (1.21)   –      
     Delta Private Jets adjustment   –    (0.08)     
TRASM, adjusted   9.66    17.39    (44)%

 

   Year Ended     
   December 31, 2020   December 31, 2019   Change
TRASM (cents)   12.73    17.07      
Adjusted for:               
     Third-party refinery sales   (0.86)   (0.04)     
     Delta Private Jets adjustment   –    (0.07)     
TRASM, adjusted   11.87    16.97    (30)%

 

 

 

 

 15 

 

 

Operating Expense, adjusted and Consolidated CASM, adjusted. In the December 2020 quarter and full year 2020, operating expense, adjusted and consolidated CASM, adjusted exclude the following items directly related to the impact of COVID-19 and our response: restructuring charges and CARES Act grant recognition, as discussed above under the heading pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share, adjusted. We also adjust operating expense and CASM for MTM adjustments and settlements on hedges, third-party refinery sales and the Delta Private Jets adjustment for the same reasons described above under the headings pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share, adjusted, and operating revenue, adjusted and TRASM, adjusted to determine operating expense, adjusted and consolidated CASM, adjusted.

 

   Operating Expense   Consolidated CASM 
   Three Months Ended   Three Months Ended 
(operating expense in millions, CASM in cents)  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019 
GAAP  $4,831   $10,040    13.21    15.34 
Less: Restructuring charges   (421)   –    (1.15)   – 
Less: CARES Act grant recognition   1,351    –    3.69    – 
Adjusted for:                    
MTM adjustments and settlements on hedges   (6)   (22)   (0.02)   (0.03)
Third-party refinery sales   (441)   (2)   (1.21)   (0.01)
Delta Private Jets adjustment   –    (55)   –    (0.08)
Non-GAAP  $5,314   $9,961    14.53    15.21 

 

   Operating Expense   Consolidated CASM 
   Year Ended   Year Ended 
(operating expense in millions, CASM in cents)  December 31, 2020   December 31, 2019   December 31, 2020   December 31, 2019 
GAAP  $29,564   $40,389    22.01    14.67 
Less: Restructuring charges   (8,219)   –    (6.12)   – 
Less: CARES Act grant recognition   3,946    –    2.94    – 
Adjusted for:                    
MTM adjustments and settlements on hedges   (10)   (14)   (0.01)   (0.01)
Third-party refinery sales   (1,150)   (97)   (0.86)   (0.04)
Delta Private Jets adjustment   –    (196)   –    (0.07)
Non-GAAP  $24,130   $40,082    17.96    14.56 

 

   Operating Expense   Consolidated CASM 
   Three Months Ended   Three Months Ended 
(operating expense in millions, CASM in cents)  September 30, 2020   September 30, 2019   September 30, 2020   September 30, 2019 
GAAP  $9,448   $10,489    33.40    13.85 
Less: Restructuring charges   (5,345)   –    (18.89)   – 
Less: CARES Act grant recognition   1,315    –    4.65    – 
Adjusted for:                    
MTM adjustments and settlements on hedges   3    25    0.01    0.03 
Third-party refinery sales   (417)   (6)   (1.47)   (0.01)
Delta Private Jets adjustment   –    (49)   –    (0.06)
Non-GAAP  $5,004   $10,460    17.69    13.81 

 

   Operating Expense   Consolidated CASM 
   Three Months Ended   Three Months Ended 
(operating expense in millions, CASM in cents)  June 30, 2020   June 30, 2019   June 30, 2020   June 30, 2019 
GAAP  $6,283   $10,408    59.30    14.51 
Less: Restructuring charges   (2,454)   –    (23.15)   – 
Less: CARES Act grant recognition   1,280    –    12.08    – 
Adjusted for:                    
MTM adjustments and settlements on hedges   (14)   (10)   (0.14)   (0.01)
Third-party refinery sales   (292)   (40)   (2.76)   (0.06)
Delta Private Jets adjustment   –    (50)   –    (0.07)
Non-GAAP  $4,803   $10,308    45.33    14.37 

 

   Operating Expense   Consolidated CASM 
   Three Months Ended   Three Months Ended 
(operating expense in millions, CASM in cents)  March 31, 2019   March 31, 2019 
GAAP  $9,452    15.14 
Adjusted for:          
MTM adjustments and settlements on hedges   (8)   (0.01)
Third-party refinery sales   (49)   (0.08)
Delta Private Jets adjustment   (42)   (0.07)
Non-GAAP  $9,354    14.99 

 

 16 

 

 

Cash Burn. We present cash burn because management believes this metric is helpful to investors to evaluate the company's ability to maintain liquidity and return to cash generation. The company defines cash burn as net cash from operating activities and net cash used in investing activities, adjusted for (i) net purchases of short-term investments, (ii) strategic investments and related, (iii) net cash flows related to certain airport construction projects, (iv) aircraft financing arrangements, (v) CARES Act grant proceeds, and (vi) other charges that are not representative of our core operations, such as charges associated with our voluntary separation and early retirement programs. Adjustments include:

 

Net purchases of short-term investments. Net purchases 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.

 

Aircraft financing arrangements. Cash flows from payments reported within investing activities related to the purchase of aircraft that are fully financed in the period are removed from free cash flow in calculating daily cash burn to better illustrate the cash generated from our core operations.

 

CARES Act grant proceeds. Cash flows related to the CARES act payroll support program grant proceeds, reported within operating activities in GAAP results. We adjust free cash flow for this item in calculating daily cash burn to better illustrate the cash from our core operations.

 

Voluntary programs. Cash flows from the voluntary separation and early retirement programs offered to employees during the September quarter, reported within operating activities in GAAP results. We adjust free cash flow for this item in calculating daily cash burn to better illustrate the cash from our core operations.

 

   Three Months Ended   Three Months Ended 
(in millions)  December 31, 2020   September 30, 2020 
Net cash used in operating activities  $(1,286)  $(2,575)
Net cash used in investing activities   (1,048)   (1,144)
Adjustments:          
Net purchases of short-term investments   745    745 
Strategic investments and related   (142)   235 
Net cash flows related to certain airport construction projects and other   116    208 
Total free cash flow  $(1,615)  $(2,531)
Aircraft financing arrangements   310    37 
CARES Act grant proceeds   –    (491)
Voluntary programs   206    813 
Adjusted free cash flow  $(1,099)  $(2,173)
Days in period   92    92 
Average daily cash burn  $(12)  $(24)

 

 

 

 17 

 

 

Non-Fuel Unit Cost or Cost per Available Seat Mile, ("CASM-Ex"). In the December 2020 quarter and full year 2020, CASM-Ex exclude the following items directly related to the impact of COVID-19 and our response: restructuring charges and CARES Act grant recognition, as discussed above under the heading pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share, adjusted. We adjust for refinery sales to third parties for the same reason described above under the heading operating revenue, adjusted and TRASM, adjusted. We adjust for Delta Private Jets for the same reason described above under the heading pre-tax (loss)/income, net (loss)/income, and diluted (loss)/earnings per share, adjusted. We also 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.

 

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, 2020   December 31, 2019   Change 
CASM (cents)   13.21    15.34      
Less: Restructuring charges   (1.15)   –      
Less: CARES Act grant recognition   3.69    –      
Adjusted for:               
     Aircraft fuel and related taxes   (1.98)   (3.08)     
     Third-party refinery sales   (1.21)   –      
     Profit sharing   –    (0.59)     
     Delta Private Jets adjustment   –    (0.07)     
CASM-Ex   12.57    11.59    8% 

 

   Year Ended     
   December 31, 2020   December 31, 2019   Change 
CASM (cents)   22.01    14.67      
Less: Restructuring charges   (6.12)   –      
Less: CARES Act grant recognition   2.94    –      
Adjusted for:               
     Aircraft fuel and related taxes   (2.36)   (3.10)     
     Third-party refinery sales   (0.86)   (0.04)     
     Profit sharing   –    (0.60)     
     Delta Private Jets adjustment   –    (0.06)     
CASM-Ex   15.61    10.88    43% 

 

 

 

 

 18 

 

 

Fuel expense, adjusted and Average fuel price per gallon, adjusted. The tables below show the components of fuel expense, including the impact of hedging and the refinery on fuel expense and average price per gallon. We then adjust for MTM adjustments and settlements on hedges and Delta Private Jets for the same reasons described under the heading pre-tax (loss)/income, net (loss)/ income, and diluted (loss)/earnings per share, adjusted.

 

           Average Price Per Gallon 
   Three Months Ended   Three Months Ended 
   December 31,   December 31, 
(in millions, except per gallon data)  2020   2019   2020   2019 
Fuel purchase cost  $615   $2,013   $1.23   $2.02 
Fuel hedge impact   6    23    0.01    0.02 
Refinery segment impact   102    (24)   0.21    (0.03)
Total fuel expense  $723   $2,012   $1.45   $2.01 
MTM adjustments and settlements on hedges   (6)   (23)   (0.01)   (0.02)
Delta Private Jets adjustment   –    (6)   –    (0.01)
Total fuel expense, adjusted  $717   $1,983   $1.44   $1.99 

 

           Average Price Per Gallon 
   Year Ended   Year Ended 
   December 31,   December 31, 
(in millions, except per gallon data)  2020   2019   2020   2019 
Fuel purchase cost  $2,938   $8,581   $1.52   $2.04 
Fuel hedge impact   22    14    0.01    – 
Refinery segment impact   216    (76)   0.11    (0.02)
Total fuel expense  $3,176   $8,519   $1.64   $2.02 
MTM adjustments and settlements on hedges   (10)   (14)   (0.01)   – 
Delta Private Jets adjustment   –    (28)   –    (0.01)
Total fuel expense, adjusted  $3,166   $8,477   $1.64   $2.01 
Percent change year-over-year   (63)   %           

 

 

 

 

 

 

 

 

 19 

 

 

Adjusted Net Debt. Delta uses adjusted total debt, including aircraft rent, in addition to adjusted debt and finance leases, to present estimated financial obligations. Delta reduces adjusted total debt by cash, cash equivalents and short-term investments, and LGA restricted cash, resulting in adjusted net debt, to present the amount of assets needed to satisfy the debt. Management believes this metric is helpful to investors in assessing the company's overall debt profile.

 

(in millions)  December 31, 2020 
Debt and finance lease obligations  $29,157 
Plus: sale-leaseback financing liabilities   2,283 
Plus: unamortized discount/(premium) and debt issue cost, net and other   240 
Adjusted debt and finance lease obligations  $31,680 
Plus: 7x last twelve months' aircraft rent   2,794 
Adjusted total debt  $34,475 
Less: cash, cash equivalents and short-term investments   (14,096)
Less: LGA restricted cash   (1,556)
Adjusted net debt  $18,823 

 

(in millions)  December 31, 2019 
Debt and finance lease obligations  $11,160 
Plus: sale-leaseback financing liabilities   – 
Plus: unamortized discount/(premium) and debt issue cost, net and other   (115)
Adjusted debt and finance lease obligations  $11,044 
Plus: 7x last twelve months' aircraft rent   2,963 
Adjusted total debt  $14,007 
Less: cash, cash equivalents and short-term investments   (2,882)
Less: LGA restricted cash   (636)
Adjusted net debt  $10,489 

 

 

 

 

 

 

 

 

 

 

 

 

 

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