Delta Air Lines Announces March Quarter 2024 Financial Results
PR Newswire
ATLANTA, April 10, 2024
Delivered industry-leading operational performance, record March quarter completion factor
March quarter revenue and earnings at the high end of guidance
Expect record June quarter revenue, mid-teens operating margin, and EPS of $2.20 to $2.50
Reiterating 2024 outlook for EPS of $6 to $7 and free cash flow of $3 to $4 billion
ATLANTA, April 10, 2024 /PRNewswire/ — Delta Air Lines (NYSE: DAL) today reported financial results for the March quarter and provided its outlook for the June quarter. Highlights of the March quarter, including both GAAP and adjusted metrics, are on page five and incorporated here.
“Thanks to the extraordinary work of our 100,000 people, Delta is delivering the best operational reliability in our history, and we have widened the gap to our competitors. We were thrilled to recognize their efforts with $1.4 billion in profit sharing payouts during the quarter,” said Ed Bastian, Delta’s chief executive officer.
“For the March quarter, we delivered record revenue on outstanding operational performance, enabling strong earnings growth. We anticipate continued strong momentum for our business, and in the June quarter, we expect to deliver record revenue, a mid-teens operating margin and earnings of $2.20 to $2.50 per share. We remain confident in our full year targets for earnings of $6 to $7 per share and free cash flow of $3 to $4 billion.”
March Quarter 2024 GAAP Financial Results
-- Operating revenue of $13.7 billion -- Operating income of $614 million with an operating margin of 4.5 percent -- Pre-tax income of $122 million with a pre-tax margin of 0.9 percent -- Earnings per share of $0.06 -- Operating cash flow of $2.4 billion -- Payments on debt and finance lease obligations of $712 million -- Total debt and finance lease obligations of $19.4 billion at quarter end
March Quarter 2024 Adjusted Financial Results
-- Operating revenue of $12.6 billion, 6 percent higher than the March
quarter 2023
-- Operating income of $640 million with an operating margin of 5.1 percent
-- Pre-tax income of $380 million with a pre-tax margin of 3.0 percent
-- Earnings per share of $0.45
-- Operating cash flow of $2.5 billion
-- Free cash flow of $1.4 billion
-- Adjusted debt to EBITDAR of 2.9x, down from 3.0x at the end of 2023
-- Return on invested capital of 13.8 percent on a trailing five quarter
average, up 2.8 points over prior year
Financial Guidance(1)
FY 2024 Forecast
Earnings Per Share $6 - $7
Free Cash Flow ($B) $3 - $4
Adjusted Debt to EBITDAR 2x - 3x
2Q24 Forecast
Total Revenue YoY Up 5% - 7%
Operating Margin 14% - 15%
Earnings Per Share $2.20 - $2.50
(1) Non-GAAP measures; Refer to Non-GAAP reconciliations for historical
comparison figures
Additional metrics for financial modeling can be found in the Supplemental Information section under Quarterly Results on ir.delta.com.
Revenue Environment and Outlook
“We generated record March quarter revenues, 6 percent higher than the prior year. Total unit revenue (TRASM) was down 0.7 percent compared to last year, including a nearly one-point headwind from Cargo and MRO. This result was at the high end of our guidance, with the growth rate improving three points from the December quarter,” said Glen Hauenstein, Delta’s president.
“Strong demand for travel on Delta is continuing into the June quarter where we expect total revenue growth of 5 to 7 percent compared to the June quarter 2023 on TRASM of flat to down 2 percent. Within this outlook, all geographic entities are expected to achieve unit revenue approximately flat to last year, except Latin, where we expect a double-digit decline as we lap strong performance and continue to profitably invest in the network.”
-- Record March quarter revenue: Delta delivered March quarter revenue that
was 6 percent higher than 2023 driven by best-in-class operations and
strong demand trends. Delta led the industry in completion factor and
on-time performance, and operated 26 cancel-free, brand-perfect days in
the quarter. Adjusted total unit revenue (TRASM) growth improved 3 points
sequentially from the December quarter 2023 to down 0.7 percent
year-over-year, including a nearly one-point headwind from cargo and MRO.
-- Corporate travel demand accelerated: Managed corporate sales* grew 14
percent year-over-year, led by the return of large corporate accounts,
particularly in the Technology, Consumer Services and Financial Services
sectors. Recent corporate survey results indicate that 90 percent of
companies expect their travel volumes to increase or stay the same in the
June quarter and beyond.
-- Domestic environment improved with robust demand: Domestic unit revenues
were a March quarter record, growing 3 percent year-over-year with record
domestic load factors. Unit revenues improved 7 points sequentially from
the December quarter 2023, inflecting positive for the March quarter.
-- International travel strength continued: International passenger revenue
was 12 percent higher versus the March quarter 2023, with Transatlantic
passenger unit revenue (PRASM) up 2 percent. International passenger unit
revenues were down 3 percent on 16 percent higher capacity as Delta
continued to invest in rebuilding the Latin and Pacific networks.
-- Revenue diversification driving Delta's differentiation: For the quarter,
diversified revenue streams, including Loyalty, Premium, Cargo and MRO
comprised 57 percent of total revenues. Premium revenue grew 10 percent
versus the March quarter 2023, continuing to outperform Main Cabin.
Loyalty revenue was up 12 percent, driven by continued co-brand spend
growth and increasing premium card mix. Remuneration from American
Express for the March quarter was $1.7 billion, approximately 5 percent
higher than the March quarter 2023.
*Corporate sales include tickets sold to corporate contracted customers,
including tickets for travel during and beyond the referenced time period
Cost Performance and Outlook
“For the March quarter, we delivered pre-tax income of $380 million, an improvement of $163 million over last year. Delta’s operational excellence resulted in the best March quarter completion factor in our history, providing an incremental point of capacity growth and unit cost favorability with non-fuel unit costs 1.5 percent higher than last year, ” said Dan Janki, Delta’s chief financial officer.
“Growth is normalizing and we are in a period of optimization, with a focus on restoring our most profitable core hubs and delivering efficiency gains. For the June quarter, non-fuel unit costs are expected to increase approximately 2 percent, consistent with our full year outlook for a low single-digit increase in non-fuel unit costs over 2023.”
March Quarter 2024 Cost Performance
-- Operating expense of $13.1 billion and adjusted operating expense of
$11.9 billion
-- Adjusted non-fuel costs of $9.2 billion
-- Non-fuel CASM was 14.08c, an increase of 1.5 percent year-over-year
-- Adjusted fuel expense of $2.6 billion was down 5 percent year-over-year
-- Adjusted fuel price of $2.76 per gallon declined 10 percent
year-over-year with a refinery benefit of 5c per gallon
-- Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.2, a 1.9
percent improvement year-over-year
Balance Sheet, Cash and Liquidity
“Delta delivered $1.4 billion of free cash flow in the March quarter after paying over $1 billion in profit sharing to our employees and reinvesting $1.1 billion in the business. We repaid nearly $1 billion of debt and ended the quarter with 2.9x of leverage,” Janki said.
“We expect to repay at least $4 billion of debt this year and are on track to improve full year leverage. Our commitment to strengthening the balance sheet was recognized this quarter with positive outlook updates from Moody’s and Fitch, marking our continued progress towards an investment grade rating.”
-- Adjusted net debt of $20.2 billion at March quarter end, a reduction of
$1.2 billion from the end of 2023
-- Payments on debt and finance lease obligations for the March quarter of
$712 million
-- Weighted average interest rate of 4.5 percent with 91 percent fixed rate
debt and 9 percent variable rate debt
-- Adjusted operating cash flow in the March quarter of $2.5 billion, with
gross capital expenditures of $1.1 billion, free cash flow was $1.4
billion
-- Air Traffic Liability ended the quarter at $10.2 billion, up $3.1 billion
compared to the end of 2023, a 45 percent increase
-- Liquidity* of $7.4 billion at quarter-end, including $2.9 billion in
undrawn revolver capacity
*Includes cash and cash equivalents, short-term investments and undrawn
revolving credit facilities
March Quarter 2024 Highlights