EX-99.1 2 delta_ex9901.htm PRESS RELEASE DATED JULY 13, 2022 TITLED "DELTA AIR LINES ANNOUNCES JUNE QUARTER 2022 FINANCIAL RESULTS"

Exhibit 99.1

 

 

 

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

 

 

Delta Air Lines Announces June Quarter 2022 Profit

 

Good progress in restoring operational reliability to Delta's leading standards in July

 

Generated double digit June quarter operating margin

 

Expect double digit operating margin in September quarter and meaningful full year profitability

 

On track to achieve 2024 targets of over $7 adj. EPS and $4 billion of free cash flow

 

ATLANTA, Jul. 13, 2022 – Delta Air Lines (NYSE:DAL) today reported financial results for the June quarter 2022 and provided its outlook for the September quarter 2022. Highlights of the June quarter 2022 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.

 

"I would like to thank our entire team for their outstanding work during a challenging operating environment for the industry as we work to restore our best-in-class reliability. Their performance coupled with strong demand drove nearly $2 billion of free cash flow as well as profitability in the first half of the year, and we are accruing profit sharing, marking a great milestone for our people,” said Ed Bastian, Delta’s chief executive officer. “For the September quarter, we expect an adjusted operating margin of 11 to 13 percent, supporting our outlook for meaningful full year profitability."

 

June Quarter 2022 GAAP Financial Results

 

•Operating revenue of $13.8 billion
•Operating income of $1.5 billion with operating margin of 11.0 percent
•Earnings per share of $1.15
•Operating cash flow of $2.5 billion
•Total debt and finance lease obligations of $24.8 billion

 

June Quarter 2022 Adjusted Financial Results

 

•Operating revenue of $12.3 billion, 99 percent recovered versus June quarter 2019 on 82 percent capacity restoration
•Operating income of $1.4 billion with operating margin of 11.7 percent, the first quarter of double-digit margin since 2019
•Earnings per share of $1.44
•Free cash flow of $1.6 billion after investing $864 million into the business
•Payments on debt and finance lease obligations of $1.0 billion
•$13.6 billion in liquidity* and adjusted net debt of $19.6 billion

 

 

 

*Includes cash and cash equivalents, short-term investments and undrawn revolving credit facilities

 

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September Quarter Outlook1

 

  3Q22 Forecast
Capacity2 Down 15% - 17%
Total Revenue2 Up 1% - 5%
CASM-Ex2 Up ~22%
Fuel Price ($/gal) $3.45 - $3.60
Operating Margin 11% - 13%
Gross Capital Expenditures ~$1.8 billion
Adjusted Net Debt ~$20 billion

 

1 Non-GAAP measures, except for Capacity; Refer to Non-GAAP reconciliations for 3Q19 comparison figures

2 Compared to September quarter 2019

 

Fuel price guidance is based on prices as of July 8th, including Brent at $107 per barrel, cracks at $41 per barrel and $0.27 per gallon refinery contribution. Additional metrics for financial modeling can be found in the Supplemental Information section under Quarterly Results on ir.delta.com.

 

June Quarter Revenue Environment and Outlook

 

“With growing demand across our network in the June quarter, we recaptured higher fuel prices and delivered adjusted revenue recovery of 99 percent with unit revenues up 20.5 percent versus 2019. We also delivered another record quarter of American Express co-brand remuneration, up 35 percent from the June quarter 2019, reflecting growing brand preference and further diversification of our revenue base," said Glen Hauenstein, Delta's president. "With sustained strength in bookings, we expect September quarter revenue to be up 1 to 5 percent compared to 2019 with total unit revenue growth improving sequentially."

 

•Domestic continues to lead recovery with international accelerating: Domestic passenger revenue was 3 percent higher and international passenger revenue was 81 percent recovered compared to the June quarter 2019. Revenue in Latin America and Transatlantic both exceeded 2019 levels in the month of June and the pace of recovery in the Pacific saw meaningful improvement, driven by Korea and Australia re-openings and the easing of restrictions in Japan.
•Business recovery progressing: Domestic corporate sales* for the quarter were ~80 percent recovered versus 2019, up 25 points compared to the March quarter. International corporate sales* for the quarter were ~65 percent recovered versus 2019, up 30 points compared to the March quarter, driven by outsized improvement in Transatlantic. Recent corporate survey results show positive expectations for business travel in the September quarter, including optimism around international travel given the elimination in June of the pre-departure test requirement for flights to the U.S.
•Premium products outperforming Main Cabin: Premium product revenue recovery outpaced Main Cabin across all markets. Premium and other diversified revenue streams, including Loyalty, Cargo and MRO, comprised 54 percent of total revenues.
•Strong American Express remuneration: Received $1.4 billion in the quarter, up 35 percent compared to the June quarter 2019 and on track to surpass $5 billion for the full year. Co-brand spend was up 43 percent and co-brand card acquisitions were up 15 percent compared to the June quarter 2019.
•Cargo records best ever June quarter performance; MRO approaches 2019 levels: Cargo revenue was $272 million, a 46 percent increase compared to the same period in 2019. MRO revenue in the June quarter was $178 million, restored to 85 percent of 2019 levels.

 

 

 

*Corporate sales include tickets sold to corporate contracted customers, including tickets for travel during and beyond the referenced time period

 

 

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June Quarter Cost Performance and Outlook

 

“Our June quarter non-fuel unit cost performance of up 22 percent compared to 2019 was impacted by lower capacity, higher selling-related expenses and investments in operational reliability,” said Dan Janki, Delta's chief financial officer. “We remain confident in our ability to meaningfully improve our unit costs as we fully scale the network and return our operations to Delta’s high standards. In the near-term, as we prioritize restoring reliability, our full year non-fuel unit cost will remain higher than our previous plan by approximately 8 points on 5 points less capacity.”

 

•Operating expense of $12.3 billion and total adjusted operating expense of $10.9 billion in the June quarter, both increased 21 percent sequentially
•Adjusted non-fuel costs of $7.5 billion were up 10 percent sequentially, primarily driven by higher capacity
•Compared to the June quarter 2019, adjusted non-fuel CASM was 22 percent higher on 18 percent less capacity
•Adjusted fuel price of $3.82 per gallon was up 37 percent sequentially. Compared to the June quarter 2019, market prices were up 94 percent
•Refinery operating income of $269 million resulted in a 31¢ per gallon benefit to our adjusted fuel price per gallon
•Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.6, a 4.2 percent improvement versus 2019

 

June Quarter Balance Sheet, Cash and Liquidity

 

“In the June quarter, we repaid $1 billion of gross debt after delivering strong profitability and generating free cash flow ahead of our expectations," Janki said. "We remain committed to achieving investment-grade metrics and a return on invested capital in the mid-teens over the next 3 years.”

 

•Adjusted net debt of $19.6 billion; Weighted average interest rate of 4.3 percent with 84 percent fixed rate debt and 16 percent variable rate debt
•Payments on debt and finance lease obligations of $1.0 billion, bringing the first half total to $2.4 billion
•Free cash flow of $1.6 billion with operating cash flow of $2.5 billion and gross capital expenditures of $864 million
•Air Traffic Liability ended June at $9.9 billion, up $805 million compared to March
•Liquidity of $13.6 billion, including $2.8 billion in undrawn revolver capacity

 

 

 

 

 

 

 

 

 

 

 

 

 

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Other June Quarter Highlights

 

Operational Reliability

•Took decisive action to improve resilience and restore operational reliability for our customers and employees, including schedule adjustments for the remainder of the year, implementation of earlier boarding procedures and addition of operational buffers
•July performance is off to a good start, with an average month-to-date completion factor of 99.2 percent and 84 percent of flights arriving within 14 minutes of scheduled arrival time
•Updated airport procedures, including earlier domestic boarding and schedule modifications at the company's largest hubs to help drive more on-time departures and successful connections
•Reactivated Peach Corps, providing employees from the corporate offices the opportunity to step away from daily work routines to assist frontline colleagues while supporting Delta's operation and customers

 

Culture and People

•To reward Delta people for their dedication and excellence, implemented a 4 percent base pay increase for eligible scale and merit employees globally on May 1
•Recorded a profit-sharing accrual, which is expected to pay out to Delta employees in February 2023 to recognize their commitment to serving our people, customers and communities
•Introduced industry-only boarding premium pay for flight attendants, marking continued investment in our operational performance
•Recognized as the No. 1 corporate blood drive sponsor with the American Red Cross for the fifth consecutive year
•Resumed The Delta Air Lines Foundation Matching Gifts to Education program, matching Delta employee and retiree donations to accredited, eligible educational institutions

 

Customer Experience and Loyalty

•Welcomed record number of new SkyMiles and American Express co-brand cardholders to our programs
•Celebrated the openings of Delta’s Terminal 3 at LAX in April followed by Terminal C at LGA in June, featuring the company's two largest Delta Sky Clubs in the system, part of Delta’s $12 billion investment in multi-year transformation projects at airport hubs across the country
•In partnership with American Express, launched a first-of-its-kind, limited-edition Reserve credit card made with airplane metal of a retired Boeing 747
•Welcomed the first A321neo into service while taking delivery of two additional A321neos, one A220-300, one A330-900 and five gently used 737-900ERs
•Enhanced premium offering with new domestic First Class seat on the A321neo, with larger, improved privacy space, more stowage for personal items and enhanced memory-foam seat cushions in all cabins
•In partnership with Misapplied Sciences, launched PARALLEL REALITY™ beta experience at DTW, a groundbreaking technology allowing customers to simultaneously see personalized content tailored to their unique journey on a single digital screen
•As part of Delta's commitment to create a values-led experience, added onboard snack and beverage options from small businesses, global suppliers, and woman- and LGBTQ+-led brands
•Introduced new in-flight entertainment from MasterClass, a streaming platform offering exclusive access to select classes, alongside hit movies, bingeable TV shows and curated audio playlists

 

Environmental, Social and Governance

•Published our 2021 Environmental, Social and Governance (ESG) Report, sharing the latest data and insight into the company’s efforts to advance its purpose of connecting people with opportunity while expanding the understanding of the planet and the people within it
•Leveraged existing infrastructure to accept a batch of sustainable aviation fuel for a Delta flight from New York's LGA and support the scaling of lower carbon intensity fuels
•Participated in the SkyTeam Alliance's Sustainable Flight Challenge, an initiative where partner airlines share learnings and innovations with the common goal of reducing the industry's carbon footprint
•Launched new skills-first career development program establishing a long-term goal of filling 25 percent of corporate management roles with talent in frontline roles and removing career barriers of four-year degrees, supporting economic equity through access to higher-earning jobs across the company
•Joined forces with the Responsible Business Initiative for Justice (RBIJ) to launch Unlock Potential, a program that helps drive economic and social mobility for young people disconnected from education or employment, to create meaningful career opportunities for at-risk young adults

 

 

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June Quarter Results

 

June quarter results have been adjusted primarily for the unrealized losses on investments, loss on extinguishment of debt and third-party refinery sales as described in the reconciliations in Note A.

 

   GAAP        
($ in millions except per share and unit costs)  2Q22    2Q19    $ Change  % Change
Operating income  1,519    2,128    (609)  (29)%
Pre-tax income  1,033    1,907    (874)  (46)%
Net income  735    1,443    (708)  (49)%
Diluted earnings per share  1.15    2.21    (1.06)  (48)%
Operating margin  11.0 %  17.0 %  (6.0) pts (35)%
Operating revenue  13,824    12,536    1,288   10 %
Total revenue per available seat mile (TRASM) (cents)  23.47    17.47    6.00   34 %
Operating expense  12,305    10,408    1,897   18 %
Operating cash flow  2,535    3,268    (733)  (22)%
Capital expenditures  958    1,559    (601)  (39)%
Cost per available seat mile (CASM) (cents)  20.89    14.51    6.38   44 %
Fuel expense  3,223    2,291    932   41 %
Average fuel price per gallon  3.74    2.08    1.66   80 %
Total debt and finance lease obligations  24,839    9,990    14,849   NM

 

 

   Adjusted        
($ in millions except per share and unit costs)  2Q22    2Q19    $ Change  % Change
Operating income  1,445    2,140    (695)  (32)%
Pre-tax income  1,222    1,998    (776)  (39)%
Net income  921    1,533    (612)  (40)%
Diluted earnings per share  1.44    2.35    (0.91)  (39)%
Operating margin  11.7 %  17.2 %  (5.5) pts (32)%
Operating revenue  12,311    12,448    (137)  (1)%
TRASM (cents)  20.90    17.35    3.55   20 %
Operating expense  10,866    10,308    558   5 %
Free cash flow  1,608    2,175    (567)  (26)%
Gross capital expenditures  864    1,618    (754)  (47)%
Non-fuel cost  7,516    7,516    –   — %
Non-fuel unit cost (CASM-Ex) (cents)  12.76    10.47    2.29   22 %
Fuel expense  3,296    2,274    1,022   45 %
Average fuel price per gallon  3.82    2.07    1.75   85 %
Adjusted net debt  19,578    9,347    10,231   NM

 

 

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About Delta Air Lines 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. As the leading global airline, Delta's mission is to create opportunities, foster understanding and expand horizons by connecting people and communities to each other and their potential.

 

Delta's more than 80,000 employees believe our customers should not have to choose between seeing the world and saving the planet. Delta is working toward more sustainable aviation by leveraging existing solutions and technologies, investing in the future of sustainable aviation fuel and actively engaging with next-generation solutions.

 

Our people 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.

 

Forward Looking Statements

Statements made in this press release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, should be considered “forward-looking statements” under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees or promised outcomes and should not be construed as such. 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, goals, aspirations, commitments and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the material adverse effect that the COVID-19 pandemic has had on our business; the impact of incurring significant debt in response to the pandemic; failure to comply with the financial and other covenants in our financing agreements; the possible effects of accidents involving our aircraft or aircraft of our airline partners; breaches or lapses in the security of technology systems on which we rely and of the data stored within them, as well as compliance with ever-evolving global privacy and security regulatory obligations; disruptions in our information technology infrastructure; our dependence on technology in our operations; our commercial relationships with airlines in other parts of the world and the investments we have in certain of those airlines; the effects of a significant disruption in the operations or performance of third parties on which we rely; failure to realize the full value of intangible or long-lived assets; labor issues; the effects of weather, natural disasters and seasonality on our business; changes in the cost of aircraft fuel; extended disruptions in the supply of aircraft fuel, including from Monroe Energy, LLC (“Monroe”), a wholly-owned subsidiary of Delta; failure or inability of insurance to cover a significant liability at Monroe’s Trainer refinery; failure to comply with existing and future environmental regulations to which Monroe’s refinery operations are subject, including costs related to compliance with renewable fuel standard regulations; our ability to retain senior management and other key employees, and to maintain our company culture; significant damage to our reputation and brand, including from exposure to significant adverse publicity or inability to achieve certain sustainability goals; the effects of terrorist attacks, geopolitical conflict or security events; competitive conditions in the airline industry; extended interruptions or disruptions in service at major airports at which we operate or significant problems associated with types of aircraft or engines we operate; the effects of extensive government regulation we are subject to; the impact of environmental regulation, including but not limited to increased regulation to reduce emissions and other risks associated with climate change, and the cost of compliance with more stringent environmental regulations; and unfavorable economic or political conditions in the markets in which we operate or volatility in currency exchange rates.

 

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, 2021 and our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2022. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of the date of this press release, and which we undertake no obligation 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          Six Months Ended        
   June 30,          June 30,        
(in millions, except per share data)  2022   2019   $ Change   % Change  2022   2019   $ Change   % Change
Operating Revenue:                                    
Passenger  $10,958   $11,368   $(410)  (4)%  $17,865   $20,622   $(2,757)  (13)%
Cargo   272    186    86   46%   561    378    183   48%
Other   2,594    982    1,612   NM   4,747    2,008    2,739   NM
Total operating revenue   13,824    12,536    1,288   10%   23,173    23,008    165   1%
                                     
Operating Expense:                                    
Salaries and related costs   2,955    2,847    108   4%   5,782    5,579    203   4%
Aircraft fuel and related taxes   3,223    2,291    932   41%   5,315    4,269    1,046   25%
Ancillary businesses and refinery   1,718    316    1,402   NM   3,100    667    2,433   NM
Contracted services   791    731    60   8%   1,544    1,440    104   7%
Depreciation and amortization   510    713    (203)  (28)%   1,016    1,328    (312)  (23)%
Landing fees and other rents   546    548    (2)  —%   1,050    1,072    (22)  (2)%
Regional carrier expense   528    542    (14)  (3)%   1,018    1,079    (61)  (6)%
Aircraft maintenance materials and outside repairs   522    434    88   20%   988    910    78   9%
Passenger commissions and other selling expenses   526    597    (71)  (12)%   838    1,071    (233)  (22)%
Passenger service   369    340    29   9%   644    628    16   3%
Aircraft rent   127    107    20   19%   249    209    40   19%
Profit sharing   54    518    (464)  (90)%   54    739    (685)  (93)%
Other   436    424    12   3%   840    869    (29)  (3)%
Total operating expense   12,305    10,408    1,897   18%   22,438    19,860    2,578   13%
                                     
Operating Income   1,519    2,128    (609)  (29)%   735    3,148    (2,413)  (77)%
                                     
Non-Operating Expense:                                    
Interest expense, net   (269)   (75)   (194)  NM   (543)   (158)   (385)  NM
Equity method results   (12)   (17)   5   (29)%   (12)   (71)   59   (83)%
Gain/(loss) on investments, net   (221)   (82)   (139)  NM   (368)   18    (386)  NM
Loss on extinguishment of debt   (41)   –    (41)  NM   (66)   –    (66)  NM
Pension and related benefit/(expense)   73    (17)   90   NM   145    (32)   177   NM
Miscellaneous, net   (16)   (30)   14   (47)%   (58)   (52)   (6)  12%
Total non-operating expense, net   (486)   (221)   (265)  NM   (902)   (295)   (607)  NM
                                     
Income/(Loss) Before Income Taxes   1,033    1,907    (874)  (46)%   (167)   2,853    (3,020)  NM
                                     
Income Tax (Provision)/Benefit   (298)   (464)   166   (36)%   (38)   (680)   642   (94)%
                                     
Net Income/(Loss)  $735   $1,443   $(708)  (49)%  $(205)  $2,173   $(2,378)  NM
                                     
Basic Earnings/(Loss) Per Share  $1.15   $2.22           $(0.32)  $3.30         
Diluted Earnings/(Loss) Per Share  $1.15   $2.21           $(0.32)  $3.29         
                                     
Basic Weighted Average Shares Outstanding   638    650            638    658         
Diluted Weighted Average Shares Outstanding   641    652            638    660         

 

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DELTA AIR LINES, INC.

Passenger Revenue

(Unaudited)

 

   Three Months Ended            Six Months Ended        
   June 30,            June 30,        
(in millions)  2022   2019   $ Change   % Change    2022   2019   $ Change   % Change
Ticket - Main cabin  $5,664   $5,911   $(247)  (4)%    $9,111   $10,591   $(1,480)  (14)%
Ticket - Premium products   4,109    4,058    51   1%     6,648    7,366    (718)  (10)%
Loyalty travel awards   744    751    (7)  (1)%     1,287    1,442    (155)  (11)%
Travel-related services   441    648    (207)  (32)%     819    1,223    (404)  (33)%
Total passenger revenue  $10,958   $11,368   $(410)  (4)%    $17,865   $20,622   $(2,757)  (13)%

 

 

DELTA AIR LINES, INC.

Other Revenue

(Unaudited)

 

   Three Months Ended            Six Months Ended        
   June 30,            June 30,        
(in millions)  2022   2019   $ Change   % Change    2022   2019   $ Change   % Change
Refinery  $1,514   $40   $1,474   NM    $2,700   $89   $2,611   NM
Loyalty program   650    484    166   34%     1,221    958    263   27%
Ancillary businesses   206    290    (84)  (29)%     416    610    (194)  (32)%
Miscellaneous   224    168    56   33%     410    351    59   17%
Total other revenue  $2,594   $982   $1,612   NM    $4,747   $2,008   $2,739   NM

 

 

DELTA AIR LINES, INC.

Total Revenue

(Unaudited)

 

       Increase (Decrease)
       2Q22 vs 2Q19
Revenue  2Q22 ($M)   Change  Unit Revenue  Yield  Capacity
Domestic  $8,318   3%  16%  14%  (11)%
Atlantic   1,701   (9)%  10%  13%  (17)%
Latin America   745   (1)%  10%  13%  (10)%
Pacific   194   (70)%  16%  54%  (74)%
Total Passenger  $10,958   (4)%  17%  18%  (18)%
Cargo Revenue   272   46%         
Other Revenue   2,594   NM         
Total Revenue  $13,824   10%  34%      
Third Party Refinery Sales   (1,514)            
Total Revenue, adjusted  $12,311   (1)%  20%      

 

 

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DELTA AIR LINES, INC.

Statistical Summary

(Unaudited)

 

   Three Months Ended          Six Months Ended        
   June 30,          June 30,        
   2022   2019   Change   2022   2019   Change 
Revenue passenger miles (millions)   51,519    63,173   (18) %    90,218    114,790   (21) % 
Available seat miles (millions)   58,903    71,754   (18) %    110,713    134,169   (17) % 
Passenger mile yield (cents)   21.27    18.00   18  %    19.80    17.96   10  % 
Passenger revenue per available seat mile (cents)   18.60    15.84   17  %    16.14    15.37   5  % 
Total revenue per available seat mile (cents)   23.47    17.47   34  %    20.93    17.15   22  % 
TRASM, adjusted - see Note A (cents)   20.90    17.35   20  %    18.49    17.01   9  % 
Cost per available seat mile (cents)   20.89    14.51   44  %    20.27    14.80   37  % 
CASM-Ex  - see Note A (cents)   12.76    10.47   22  %    12.98    10.95   19  % 
Passenger load factor   87%   88%  (1) pt    81%   86%  (5) pts 
Fuel gallons consumed (millions)   863    1,099   (22) %    1,613    2,061   (22) % 
Average price per fuel gallon  $3.74   $2.08   80  %   $3.29   $2.07   59  % 
Average price per fuel gallon, adjusted - see Note A  $3.82   $2.07   85  %   $3.34   $2.06   62  % 

 

 

 

 

 

 

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DELTA AIR LINES, INC.

Consolidated Statements of Cash Flows

(Unaudited)  

 

   Three Months Ended 
   June 30, 
(in millions)  2022   2019 
Cash Flows From Operating Activities:          
Net income  $735   $1,443 
Depreciation and amortization   510    713 
Changes in air traffic liability   805    17 
Changes in balance sheet and other, net   485    1,095 
Net cash provided by operating activities   2,535    3,268 
           
Cash Flows From Investing Activities:          
Property and equipment additions:          
Flight equipment, including advance payments   (603)   (1,166)
Ground property and equipment, including technology   (355)   (393)
Purchase of short-term investments   (248)   – 
Redemption of short-term investments   943    – 
Other, net   112    (3)
Net cash used in investing activities   (152)   (1,562)
           
Cash Flows From Financing Activities:          
Payments on debt and finance lease obligations   (952)   (1,165)
Repurchase of common stock   –    (268)
Cash dividends   –    (229)
Other, net   (14)   – 
Net cash used in by financing activities   (966)   (1,662)
           
Net Increase in Cash, Cash Equivalents and Restricted Cash Equivalents   1,417    44 
Cash, cash equivalents and restricted cash equivalents at beginning of period   8,135    2,985 
Cash, cash equivalents and restricted cash equivalents at end of period  $9,552   $3,029 
           
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  $9,221   $2,009 
Restricted cash included in prepaid expenses and other   154    127 
Other assets:          
Restricted cash included in other noncurrent assets   177    893 
Total cash, cash equivalents and restricted cash equivalents  $9,552   $3,029 

 

 

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DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)

 

   June 30,   December 31, 
(in millions)  2022   2021 
ASSETS
Current Assets:          
Cash and cash equivalents  $9,221   $7,933 
Short-term investments   1,549    3,386 
Accounts receivable, net   3,093    2,404 
Fuel inventory, expendable parts and supplies inventories, net   1,734    1,098 
Prepaid expenses and other   1,716    1,119 
Total current assets   17,313    15,940 
           
Property and Equipment, Net:          
Property and equipment, net   30,519    28,749 
           
Other Assets:          
Operating lease right-of-use assets   7,189    7,237 
Goodwill   9,753    9,753 
Identifiable intangibles, net   5,997    6,001 
Equity investments   1,771    1,712 
Deferred income taxes, net   1,219    1,294 
Other noncurrent assets   1,044    1,773 
Total other assets   26,973    27,770 
Total assets  $74,805   $72,459 
           
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:          
Current maturities of debt and finance leases  $1,936   $1,782 
Current maturities of operating leases   726    703 
Air traffic liability   9,664    6,228 
Accounts payable   5,353    4,240 
Accrued salaries and related benefits   2,565    2,457 
Loyalty program deferred revenue   2,994    2,710 
Fuel card obligation   1,100    1,100 
Other accrued liabilities   1,986    1,746 
Total current liabilities   26,324    20,966 
           
Noncurrent Liabilities:          
Debt and finance leases   22,903    25,138 
Noncurrent air traffic liability   250    130 
Pension, postretirement and related benefits   5,654    6,035 
Loyalty program deferred revenue   4,763    4,849 
Noncurrent operating leases   7,006    7,056 
Other noncurrent liabilities   4,094    4,398 
Total noncurrent liabilities   44,670    47,606 
           
Commitments and Contingencies          
           
Stockholders' Equity:   3,811    3,887 
Total liabilities and stockholders' equity  $74,805   $72,459 

 

 

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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 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 without unreasonable effort 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.

 

 

Adjustments. These reconciliations include certain adjustments to GAAP measures, that 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 decisions in response to the COVID-19 pandemic. In the June quarter 2022 and six months ended June 2022, we recognized $1 million and $7 million, respectively, of net adjustments to certain of those restructuring charges, representing changes in our estimates.

 

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:

 

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.

 

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, and therefore we remove this impact to allow investors to better understand and analyze our core performance. 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.

 

Equity investment MTM adjustments. We adjust for our proportionate share of our equity method investee, Virgin Atlantic’s, hedge portfolio MTM adjustments (recorded in non-operating expense) to allow investors to understand and analyze our core operational performance in the periods shown.

 

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 better 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.

 

 

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Operating Revenue, adjusted and Total Revenue Per Available Seat Mile ("TRASM"), adjusted

 

   Three Months Ended

   2Q22 vs 2Q19 
(in millions)  June 30, 2022   September 30, 2019   June 30, 2019   % Change 
Operating revenue  $13,824   $12,560   $12,536      
Adjusted for:                    
Third-party refinery sales   (1,514)   (6)   (40)     
Delta Private Jets adjustment   –    (47)   (49)     
Operating revenue, adjusted  $12,311   $12,507   $12,448    (1)%

 

 

   Three Months Ended       2Q22 vs 2Q19 
   June 30, 2022   June 30, 2019       % Change 
TRASM (cents)   23.47    17.47           
Adjusted for:                    
Third-party refinery sales   (2.57)   (0.06)          
Delta Private Jets adjustment   –    (0.07)          
TRASM, adjusted   20.90    17.35         20.5%

 

 

   Six Months Ended         
   June 30, 2022   June 30, 2019       Change 
TRASM (cents)   20.93    17.15           
Adjusted for:                    
Third-party refinery sales   (2.44)   (0.07)          
Delta Private Jets adjustment   –    (0.07)          
TRASM, adjusted   18.49    17.01         9%

 

 

Operating Income, adjusted

 

   Three Months Ended 
(in millions)  June 30, 2022   June 30, 2019 
Operating Income  $1,519   $2,128 
Adjusted for:          
Restructuring charges   (1)   – 
MTM adjustments and settlements on hedges   (73)   10 
Delta Private Jets adjustment   –    1 
Operating Income, adjusted  $1,445   $2,140 

 

 

Operating Margin, adjusted

 

   Three Months Ended 
   June 30, 2022   June 30, 2019 
Operating margin   11.0%   17.0%
Adjusted for:          
MTM adjustments and settlements on hedges   (0.5)   0.1 
Third-party refinery sales   1.3    0.1 
Operating margin, adjusted   11.7%   17.2%

 

 

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Pre-Tax Income, Net Income, and Diluted Earnings per Share, adjusted

 

   Three Months Ended   Three Months Ended 
   June 30, 2022   June 30, 2022 
   Pre-Tax   Income   Net   Earnings 
(in millions, except per share data)  Income   Tax   Income   Per Diluted Share 
GAAP  $1,033   $(298)  $735   $1.15 
Adjusted for:                    
Restructuring charges   (1)               
Loss on extinguishment of debt   41                
MTM adjustments and settlements on hedges   (73)               
MTM adjustments on investments   221                
Non-GAAP  $1,222   $(300)  $921   $1.44 

 

 

   Three Months Ended   Three Months Ended 
   June 30, 2019   June 30, 2019 
   Pre-Tax   Income   Net   Earnings 
(in millions, except per share data)  Income   Tax   Income   Per Diluted Share 
GAAP  $1,907   $(464)  $1,443   $2.21 
Adjusted for:                    
MTM adjustments and settlements on hedges   10                
Equity investment MTM adjustments   (2)               
MTM adjustments on investments   82                
Delta Private Jets adjustment   1                
Non-GAAP  $1,998   $(465)  $1,533   $2.35 

 

 

 

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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 also used internally as a component of our 2022 incentive compensation program. 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, (iv) financed aircraft acquisitions and (v) other items that are not representative of our core operations, such as our pension funding. 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.

 

Pension funding. Cash flows from pension funding are reported within operating activities in GAAP results. We adjust for this item to better illustrate the cash from our core operations.

 

   Three Months Ended 
(in millions)  June 30, 2022   June 30, 2019 
Net cash provided by operating activities  $2,535   $3,268 
Net cash used in investing activities   (152)   (1,562)
Adjusted for:          
Net redemptions of short-term investments   (695)   – 
Strategic investments and related   (105)   89 
Net cash flows related to certain airport construction projects and other   94    54 
Financed aircraft acquisitions   (69)   (174)
Pension funding   –    500 
Free cash flow  $1,608   $2,175 

 

 

   Six Months Ended   
(in millions)  June 30, 2022   
Net cash provided by operating activities  $4,306   
Net cash used in investing activities   (901)  
Adjusted for:       
Net redemptions of short-term investments   (1,815)  
Strategic investments and related   2   
Net cash flows related to certain airport construction projects and other   282   
Financed aircraft acquisitions   (69)  
Free cash flow  $1,805   

 

 

 

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Gross Capital Expenditures. We adjust capital expenditures for the following items to determine gross capital expenditures for the reasons described below:

 

Financed aircraft acquisitions. This adjusts capital expenditures to reflect 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.

 

Net cash flows related to certain airport construction projects. Cash flows related to certain airport construction projects are included in capital expenditures. We have adjusted for these items because management believes investors should be informed that a portion of these capital expenditures from airport construction projects are either funded with restricted cash specific to these projects or reimbursed by a third party.

 

   Three Months Ended 
(in millions)  June 30, 2022   June 30, 2019 
Flight equipment, including advance payments  $603   $1,166 
Ground property and equipment, including technology   355    393 
Adjusted for:          
Financed aircraft acquisitions   69    174 
Net cash flows related to certain airport construction projects   (163)   (116)
Gross capital expenditures  $864   $1,618 

 

 

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)  June 30, 2022   June 30, 2019 
Debt and finance lease obligations  $24,839   $9,990 
Plus: sale-leaseback financing liabilities   2,208    – 
Plus: unamortized discount/(premium) and debt issue cost, net and other   176    (125)
Adjusted debt and finance lease obligations  $27,222   $9,865 
Plus: 7x last twelve months' aircraft rent   3,303    2,874 
Adjusted total debt  $30,525   $12,739 
Less: cash, cash equivalents and short-term investments   (10,771)   (2,009)
Less: LGA restricted cash   (177)   (1,383)
Adjusted net debt  $19,578   $9,347 

 

 

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Adjusted Non-Fuel Cost and Non-Fuel Unit Cost or Cost per Available Seat Mile, ("CASM-Ex")

 

   Three Months Ended   2Q22 vs 2Q19 
(in millions)  June 30, 2022   March 31, 2022   June 30, 2019   % Change 
Operating Expense  $12,305   $10,131   $10,408      
Adjusted for:                    
Restructuring charges   1    5    –      
Aircraft fuel and related taxes   (3,223)   (2,092)   (2,291)     
Third-party refinery sales   (1,514)   (1,187)   (40)     
Profit sharing   (54)   –    (518)     
Delta Private Jets adjustment   –    –    (42)     
Non-Fuel Cost  $7,516   $6,858   $7,516    —% 

 

 

   Three Months Ended   2Q22 vs 2Q19 
   June 30, 2022   September 30, 2019   June 30, 2019   % Change 
CASM (cents)   20.89    13.85    14.51      
Adjusted for:                    
Aircraft fuel and related taxes   (5.47)   (2.96)   (3.19)     
Third-party refinery sales   (2.57)   (0.01)   (0.06)     
Profit sharing   (0.09)   (0.68)   (0.72)     
Delta Private Jets adjustment   –    (0.05)   (0.06)     
CASM-Ex   12.76    10.15    10.47    22%

  

 

   Six Months Ended         
   June 30, 2022   June 30, 2019       Change 
CASM (cents)   20.27    14.80           
Adjusted for:                    
Restructuring charges   0.01    –           
Aircraft fuel and related taxes   (4.80)   (3.18)          
Third-party refinery sales   (2.44)   (0.07)          
Profit sharing   (0.05)   (0.55)          
Delta Private Jets adjustment   –    (0.06)          
CASM-Ex   12.98    10.95         19%

 

 

Operating Expense, adjusted

 

   Three Months Ended 
(in millions)  June 30, 2022   March 31, 2022   June 30, 2019 
Operating expense  $12,305   $10,131   $10,408 
Adjusted for:               
Restructuring charges   1    5    – 
MTM adjustments and settlements on hedges   73    4    (10)
Third-party refinery sales   (1,514)   (1,187)   (40)
Delta Private Jets adjustment   –    –    (50)
Operating expense, adjusted  $10,866   $8,954   $10,308 

 

 

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Total Fuel expense, adjusted and Average fuel price per gallon, adjusted

 

             Average Price Per Gallon 
  Three Months Ended    Three Months Ended 
  June 30,   March 31,   June 30,   June 30,   March 31,   June 30, 
(in millions, except per gallon data)  2022   2022   2019   2022   2022   2019 
Total fuel expense  $3,223   $2,092   $2,291   $3.74   $2.79   $2.08 
Adjusted for:                              
MTM adjustments and settlements on hedges   73    4    (10)   0.08    0.01    (0.01)
Delta Private Jets adjustment   –    –    (8)   –    –    (0.01)
Total fuel expense, adjusted  $3,296   $2,097   $2,274   $3.82   $2.79   $2.07 

 

 

               Average Price Per Gallon     
   Six Months Ended       Six Months Ended     
   June 30,   June 30,       June 30,   June 30,     
(in millions, except per gallon data)  2022   2019       2022   2019     
Total fuel expense  $5,315   $4,269        $3.29   $2.07      
Adjusted for:                              
MTM adjustments and settlements on hedges   77    (17)        0.05    (0.01)     
Delta Private Jets adjustment        (15)        –    (0.01)     
Total fuel expense, adjusted  $5,392   $4,237        $3.34   $2.06      

 

 

 

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