Delta Air Lines Announces December Quarter and Full Year 2023 Financial Results
PR Newswire
ATLANTA, Jan. 12, 2024
Delivered industry-leading operational performance and financial results in December quarter
Generated record full year revenue and over $5 billion of pre-tax income, a near doubling over 2022
Guiding to 2024 free cash flow of $3 to $4 billion, an improvement of up to $2 billion over 2023
Expect record March quarter revenue on improving domestic environment and continued strength in international demand, with solid profitability
ATLANTA, Jan. 12, 2024 /PRNewswire/ — Delta Air Lines (NYSE: DAL) today reported financial results for the December quarter and full year 2023 and provided its outlook for the March quarter and full year 2024. Highlights of the December quarter and full year 2023, including both GAAP and adjusted metrics, are on page six and incorporated here.
“2023 was a great year for Delta with industry-leading operational and financial performance. Our people and their commitment to deliver unmatched service excellence for our customers is at the foundation of Delta’s success. We are thrilled to recognize their outstanding work with $1.4 billion in profit sharing payments next month,” said Ed Bastian, Delta’s chief executive officer. “In 2024, demand for air travel remains strong and our customer base is in a healthy financial position with travel a top priority. We expect to grow full year earnings to $6 to $7 per share and generate free cash flow of $3 to $4 billion, further strengthening our financial foundation.”
December Quarter 2023 GAAP Financial Results
-- Operating revenue of $14.2 billion -- Operating income of $1.3 billion with an operating margin of 9.3 percent -- Pre-tax income of $2.3 billion with a pre-tax margin of 16.0 percent -- Earnings per share of $3.16 -- Operating cash flow of $545 million -- Payments on debt and finance lease obligations of $361 million
December Quarter 2023 Adjusted Financial Results
-- Operating revenue of $13.7 billion, 11 percent higher than the December
quarter 2022
-- Operating income of $1.3 billion with an operating margin of 9.7 percent
-- Pre-tax income of $1.1 billion with a pre-tax margin of 7.8 percent
-- Earnings per share of $1.28
-- Operating cash flow of $499 million
Full Year 2023 GAAP Financial Results
-- Operating revenue of $58.0 billion -- Operating income of $5.5 billion with an operating margin of 9.5 percent -- Pre-tax income of $5.6 billion with a pre-tax margin of 9.7 percent -- Earnings per share of $7.17 -- Operating cash flow of $6.5 billion -- Payments on debt and finance lease obligations of $4.1 billion -- Total debt and finance lease obligations of $20.1 billion at year end
Full Year 2023 Adjusted Financial Results
-- Operating revenue of $54.7 billion, 20 percent higher than the full year
2022
-- Operating income of $6.3 billion with an operating margin of 11.6 percent
-- Pre-tax income of $5.2 billion with a pre-tax margin of 9.5 percent
-- Earnings per share of $6.25
-- Operating cash flow of $7.2 billion
-- Free cash flow of $2.0 billion
-- Adjusted debt to EBITDAR of 3.0x, down from 5.0x at the end of 2022
-- Return on invested capital of 13.4 percent, up 5 points over 2022
Financial Guidance(1)
FY 2024 Forecast
Earnings Per Share $6 - $7
Free Cash Flow ($B) $3 - $4
Adjusted Debt to EBITDAR 2x - 3x
1Q24 Forecast
Total Revenue YoY Up 3% - 6%
Operating Margin Approx. 5%
Earnings Per Share $0.25 - $0.50
(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
“With industry-leading operational performance and best-in-class service delivered by our people, more customers than ever are choosing Delta. In 2023 we delivered a record $54.7 billion in revenue, 20 percent higher than 2022. Premium and non-ticket revenue has reached 55 percent of total revenue, supporting Delta’s differentiated financial results from the industry,” said Glen Hauenstein, Delta’s president. “With strong demand for international travel and a positive inflection in the domestic environment, we expect March quarter adjusted revenue to be 3 to 6 percent higher than the prior year.”
“With our outlook for continued revenue growth, we expect March quarter unit revenues to be flat to down 3 percent over 2023,” Glen said. “The midpoint of this outlook implies a two-point sequential improvement in unit revenues on a year-over-year basis. The March quarter includes a headwind from higher international mix, the normalization of travel credit utilization and lapping a competitor’s operational challenges in the year ago period.”
-- Industry-leading operational results with strong leisure and business
demand continuing: Delta delivered record December quarter revenue with
the highest holiday travel volumes in its history. Operational
performance was best-in-class with leading system-wide completion factor
and on-time performance. Corporate sales accelerated into year end,
including double-digit year-over-year growth in the month of December.
Technology and Financial Services led momentum for the December quarter,
with Media and Auto sectors seeing notable traction following strike
resolutions. Recent corporate survey results indicate that 93 percent of
companies surveyed expect their travel volumes to increase sequentially
or stay the same in the March quarter and into 2024.
-- International demand remains strong: International passenger revenue was
25 percent higher versus the December quarter 2022 with double-digit
revenue and capacity growth in the Transatlantic, Pacific and Latin
entities. Transatlantic performance led with passenger unit revenues up 9
percent versus the December quarter 2022. Full year results generated
record margins across all three international regions.
-- Premium and Loyalty driving revenue diversification: Premium revenue grew
15 percent versus the December quarter 2022 on record paid load factors,
outperforming Main Cabin. Loyalty revenue improved 11 percent, driven by
strong co-brand spend growth. Remuneration from American Express for the
December quarter was $1.7 billion, approximately 11 percent higher than
the December quarter 2022, and full year remuneration of $6.8 billion
grew 22 percent year-over-year. For the full year, diversified revenue
streams, including Loyalty, Premium, Cargo, and MRO comprised 55 percent
of total revenues.
Cost Performance and Outlook
“We closed the year strong, with full-year operating margin expanding by four points to 11.6 percent.” said Dan Janki, Delta’s chief financial officer. “In 2024 we are entering a period of optimization and expect to unlock efficiencies that will fund continued investment in our people, our operation and our customers. We expect to deliver earnings and cash flow growth for the full year, with non-fuel unit costs up low-single digits over 2023.”
December Quarter 2023 Cost Performance
-- Operating expense of $12.9 billion and adjusted operating expense of
$12.3 billion
-- Adjusted non-fuel costs of $9.1 billion
-- Non-fuel CASM was 1.1 percent higher year-over-year
-- Adjusted fuel expense of $2.9 billion was up 6 percent year-over-year
-- Adjusted fuel price of $3.00 per gallon declined 6 percent year-over-year
with a breakeven refinery contribution following the planned maintenance
at the refinery facilities
-- Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.3, a 2 percent
improvement year-over-year
Full Year 2023 Cost Performance
-- Operating expense of $52.5 billion and adjusted operating expense of
$48.3 billion
-- Adjusted non-fuel costs of $35.8 billion
-- Non-fuel CASM was 2.3 percent higher year-over-year
-- Adjusted fuel expense of $11.1 billion was down 3 percent year-over-year
-- Adjusted fuel price of $2.83 per gallon declined 16 percent
year-over-year and includes a refinery benefit of 10c per gallon
-- Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.4, a 1.4
percent improvement year-over-year
Balance Sheet, Cash and Liquidity
“Delta delivered $2 billion of free cash flow in the year, while reinvesting in the business and repaying $4.1 billion of gross debt. During the year, we reduced leverage to 3x and reinstated the quarterly dividend,” Janki said. “We expect 2024 free cash flow of $3 to $4 billion, an up to $2 billion improvement driven by continued earnings growth, lower capital expenditures and a higher mix of cash sales. With strong cash generation, we expect to continue reducing debt and growing our unencumbered asset base, progressing our balance sheet towards investment grade.”
-- Adjusted net debt of $21.4 billion at December quarter end, a reduction
of $879 million from the end of 2022
-- Payments on debt and finance lease obligations for the full year of $4.1
billion
-- Weighted average interest rate of 4.6 percent with 90 percent fixed rate
debt and 10 percent variable rate debt
-- Borrowed $878 million in connection with tax-exempt bond financing to
provide a majority of funding to complete the generational terminal
transformation at LaGuardia airport
-- Adjusted operating cash flow in the December quarter of $499 million and
gross capital expenditures of $1.2 billion
-- Full year adjusted operating cash flow of $7.2 billion and gross capital