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Avión Delta

Delta anuncia los resultados financieros del segundo trimestre de 2021 (en inglés)

-June quarter 2021 GAAP pre-tax income of $776 million and earnings per share of $1.02 on total revenue of $7.1 billion

-June quarter 2021 adjusted pre-tax loss of $881 million and adjusted loss per share of $1.07 on adjusted operating revenue of $6.3 billion

-With an improving demand environment, achieved a solid pre-tax profit in the month of June and recently announced the opportunistic addition of seven A350s and 29 737-900ERs to our fleet

 

ATLANTA, Jul. 14, 2021 – Delta Air Lines (NYSE:DAL) today reported financial results for the June quarter 2021 and provided its outlook for the September quarter 2021.  Highlights of the June quarter 2021 results, including both GAAP and adjusted metrics, are on page six and are incorporated here.

“With the best employees and operation in the industry and an accelerating demand environment, we achieved significant milestones in the quarter including a solid pre-tax profit in the month of June, positive free cash flow for the June quarter, and our people and our brand being recognized with the top spot in the J.D. Power 2021 Airline Study,” said Ed Bastian, Delta’s chief executive officer.  “Looking forward, we are harnessing the power of our differentiated brand and resilient competitive advantages to drive towards sustainable profitability in the second half of 2021 and enable long-term value creation.”

“Domestic leisure travel is fully recovered to 2019 levels and there are encouraging signs of improvement in business and international travel.  With the recovery picking up steam, we are making investments to support our industry-leading operation.  We are also opportunistically acquiring aircraft and creating upside flexibility to accelerate our capacity restoration in 2022 and beyond in a capital-disciplined manner,” he said.

June Quarter Financial Results 

 –Adjusted pre-tax loss of $881 million excludes $1.5 billion of benefit related to the first and second payroll support program extensions (PSP2 and PSP3, respectively) and mark-to-market adjustments on our investments

-Adjusted operating revenue of $6.3 billion, which excludes refinery sales, declined 49 percent on 39 percent lower sellable capacity (see Note A) versus June quarter 2019

-Total operating expense, which includes $1.5 billion of benefit related to PSP2 and PSP3, decreased $4.1 billion relative to the June quarter 2019.  Adjusted for the benefit related to the PSP programs and third-party refinery sales, total operating expense decreased $3.3 billion or 32 percent in the June quarter 2021 versus the comparable 2019 period

-Generated $1.9 billion of operating cash flow, $1.5 billion of free cash flow and $195 million of free cash flow, adjusted in the June quarter

-At the end of the June quarter, the company had $17.8 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit facilities.  The company had total debt and finance lease obligations of $29.1 billion with adjusted net debt of $18.3 billion

September Quarter 2021 Outlook

  3Q21 Forecast
Capacity 1 Down 28% – 30%
Total Revenue 1, 2 Down 30% – 35%
Fuel Price ($/gal) 2 $2.05 – $2.15
CASM-Ex 1, 2 Up 11% – 14%
Capital Expenditures ~$800 million
Adjusted Net Debt 2 ~$19.0 billion

 

1 Compared to September quarter 2019

  2 Non-GAAP measure

Revenue Environment

“With accelerating demand for air travel and growing affinity for Delta’s best-in-class products, June quarter adjusted operating revenue improved 76 percent from the March quarter.  Increasing customer engagement is evident with spend on the American Express co-brand credit card already exceeding 2019 levels and a record number of new customers signing up for SkyMiles accounts during the June month,” said Glen Hauenstein, Delta’s president.  “I am excited to see this momentum continuing in the September quarter as business travel rebounds and international markets continue to reopen.”

“We have the industry’s best domestic and global network, an increasingly efficient and simplified fleet, a de-commoditized product, a highly valued brand, and the industry’s best employees,” Hauenstein continued.  “Combined with our more efficient cost structure, we are on a path to improve on pre-pandemic margins and generate sustainable free cash flow.”

Adjusted operating revenue of $6.3 billion for the June quarter improved 76 percent from March quarter 2021.  Compared to the same period in 2019, adjusted operating revenue declined 49 percent, an improvement from the company’s guidance update in June of down 50 to 52 percent.  Passenger revenue declined 53 percent in the June quarter 2021 compared to June quarter 2019 on 32 percent lower scheduled capacity and 39 percent lower sellable capacity, which included the blocking of the middle seat through the month of April 2021.

Total unit revenue, adjusted was 45.4 percent higher than the March quarter 2021 as adjusted operating revenue grew 76 percent on a 21 percent increase in scheduled capacity over the same period.  Compared to the March quarter 2021, system yields improved 4.8 percent and load factors improved 24 points.

Revenue-related Highlights:

-Booking curve normalized as customers made future travel plans: Average daily net cash sales, defined as tickets purchased less tickets refunded, doubled compared to the March quarter and were 20 percent higher than our initial internal forecast. For the month of June, our average daily net cash sales were 70 percent restored to 2019 levels and roughly 10 points ahead of revenue recovery as consumers continue to make future travel plans.

-Premium cabins outperformed main cabin where demand is strongest: Domestic and short-haul Latin premium revenue outperformed main cabin revenue recovery by 5 to 10 points during the quarter. This recovery is expected to be reflected at a system level as premium revenue in other entities continues to improve with the return of business and international travel at scale.

-Pace of corporate recovery accelerated during the quarter: Corporate volumes experienced steady improvement through the quarter, doubling from 20 percent recovered in March to 40 percent recovered in June, driven by increased vaccination rates, the re-opening of offices and improvements in demand in business-heavy markets like New York and Boston.

-Non-ticket revenue demonstrated resilience: Non-ticket revenue continued to demonstrate resilience, with cargo revenue up 35 percent versus the June quarter 2019 and total loyalty revenue down 30 percent, a 17 percent and 43 percent improvement from the March quarter 2021, respectively.

-Remuneration from American Express returned to 2019 levels in June: American Express remuneration in the quarter was more than 90 percent recovered compared to June quarter 2019 levels as co-brand card spend surpassed 2019 levels while co-brand card acquisitions were nearly fully restored. For the month of June, remuneration exceeded 2019 levels and is expected to remain at or above 2019 levels in the second half.

Cost Performance

“The cost performance in the first half of the year was strong as we continue to restore the business efficiently.  September quarter non-fuel CASM is expected to be between 11 percent and 14 percent above the same period in 2019 as the significantly improving demand environment is driving some welcome cost pressures with an increase in rebuild and selling-related costs,” said Gary Chase, Delta’s interim co-chief financial officer.  “As we continue to leverage our network restoration, we remain on a path to achieve non-fuel CASM below 2019 levels by the fourth quarter,” he said.

Total adjusted operating expense for the June quarter decreased $3.3 billion excluding $1.5 billion in benefits from PSP2 and PSP3.  Expense performance was driven by an $811 million, or 36 percent reduction in fuel expense, adjusted versus the June quarter 2019, a 34 percent reduction in maintenance expense, and lower volume- and revenue-related expenses.  Salaries and related costs and profit sharing of $2.3 billion were down 31 percent compared to the June quarter 2019.

Fuel efficiency (see Note A) improved 7.1 percent in the June quarter versus the same period in 2019, with nearly five points of the improvement a result of our fleet renewal efforts, with the remaining improvement temporary in nature due to reduced airport congestion and lower load factors.  Adjusted fuel price of $2.12 per gallon was up 11.1 percent compared to the March quarter 2021 and higher than initial guidance in April on increased market prices and losses at the refinery equivalent to 23¢ per gallon.

CASM, adjusted was up 0.5 percent compared to June quarter 2019.  CASM-Ex was 9.0 percent higher than the June quarter 2019 on 32 percent less capacity.  The company saw four points of CASM-Ex pressure related to rebuild expense, including accelerated maintenance, training and hiring to prepare for summer 2022 flying.  Additionally, the company made the decision to reward our employees for winning the J.D. Power Award for #1 North American Airline with travel passes, which drove 1.3 points of non-cash CASM-Ex expense in the quarter.  CASM-Ex declined 12.3 percent sequentially from operating leverage on a 21 percent increase in scheduled capacity and realized savings from the employee retention tax credit and third-party rate reductions.

Non-operating expense for the June quarter was down $181 million compared to the June quarter 2019, driven primarily by mark-to-market gains on certain of our investments, partially offset by higher interest expense.

Balance Sheet, Cash and Liquidity

“Improving financial performance and a strong liquidity position enable us to use cash on the balance sheet to reduce leverage, and restore our financial flexibility,” Chase said.  “Strengthening our financial foundation remains a top priority at Delta as we position for the future and deliver value to our owners,” he said.

At the end of the June quarter, the company had total debt and finance lease obligations of $29.1 billion with adjusted net debt of $18.3 billion, $7.8 billion higher than December 2019.  The company’s total debt had a weighted average interest rate of 4.3 percent at June quarter-end.  In addition to maturities and normal amortizations of nearly $875 million, the company prepaid approximately $450 million in aircraft-related debt during the quarter.

As previously announced, Delta voluntarily contributed $1.5 billion into its pension plans during the quarter.  By year-end 2021, the company expects the plans to be fully funded on a Pension Protection Act (PPA) basis based on terms included in the American Rescue Plan Act of 2021 and to achieve GAAP funding of 90 percent.  At this level of funding, investment returns are expected to satisfy future benefit payments, which the company believes will eliminate any need for material cash contributions to the pension plans going forward.  With the plans frozen to new participants, Delta began to reduce the investment risk of the plans during the quarter to protect the funded status.

Since October 2020, Delta has reduced its financial obligations by $11 billion, freeing $6 billion in collateral and driving $500 million in annualized pension and interest expense savings.

Cash generated from operations during the quarter was $1.9 billion, including the benefit from the payroll support programs.  Free cash flow was $1.5 billion, with free cash flow, adjusted of $195 million for the quarter.  With consumer travel demand returning at an accelerated rate, the company’s Air Traffic Liability increased approximately $1.5 billion quarter-over-quarter to $6.9 billion, approximately $300 million higher than at June quarter 2019.  Travel credits represent 35 percent of the Air Traffic Liability and represent approximately 5 percent of average daily bookings.

Delta ended the June quarter with $17.8 billion in liquidity, including $2.6 billion in undrawn revolver capacity.

Aircraft Acquisition

The company recently announced it will add seven A350s and 29 737-900ER pre-owned aircraft to its fleet.  This follows the announcement in April to exercise 25 A321neo options.  The A350s and 737-900ERs will enter service over the next 24 months, starting in summer 2022.  These fleet decisions align with the fleet renewal strategy and will drive improved unit costs going forward by replacing older, less efficient aircraft.  The company will lease the seven A350s and acquire the 29 737-900ERs, driving incremental capex of approximately $700 million in the second half of this year.  The company now anticipates full year 2021 total gross capex of approximately $3.2 billion.

Other Highlights from the June quarter

Culture and People

-Achieved the No. 1 spot in the J.D. Power 2021 North America Airline Study for customer satisfaction, underscoring the professionalism, care and humanity Delta people delivered during one of the most challenging periods for air travel in modern history

-Honored by Glassdoor’s Employees’ Choice Awards for Top 10 CEOs of 2021 – CEO, Ed Bastian received a 97 percent approval rating

-Recognized by Disability:IN and The American Association of People with Disabilities as a “Best Place to Work for Disability Inclusion” for the sixth year running

-In keeping with our key priority of protecting employees, vaccinated more than 70 percent of employees as of June 30, 2021 which allowed the company to fully reopen its headquarters in June

-Partnered with Georgia to host the state’s largest COVID vaccination site supporting the state’s vaccination efforts

-Accelerated the funding of the pension plans with $1.5 billion in voluntary contributions in the June quarter, which is now expected to be fully funded on a PPA basis by year end

-Recognized as the No. 1 corporate blood drive sponsor with the American Red Cross for the fourth consecutive year

-Named for the fourth year in a row to the Civic 50, an initiative of Points of Light, which recognizes the 50 most community-minded companies in the nation

Customer Experience and Loyalty

-Ran an industry-leading operation, ranking No. 1 among our competitive peer set on all key operating metrics, including completion factor and on time performance for the month of June and year to date

-Achieved an all-time record for new SkyMiles member enrollments in the month of June, outpacing the prior record set in July of 2019.  New co-brand credit card acquisitions improved more than 75 percent sequentially and were nearly 90 percent recovered to June quarter 2019 levels

-Reintroduced onboard food and beverage service, with L.A. chefs Jon Shook and Vinny Dotolo headlining the return of fresh meals to Delta’s premium domestic cabins

-Announced the reopening of Delta’s full network of Sky Club lounges in July and the phased return of signature hot food options at lounges

-Launched the newest Delta Sky Club in Fort Lauderdale and opened a Pop-Up Delta Sky Club in Anchorage to support Delta’s increased service to the market

-Continued to accelerate expansion and improvements at key hubs, including LAX and LGA, where new headhouses are expected to open in early 2022

-Launched first Viasat-equipped A321 into service, delivering high-speed and streaming-quality connectivity – the first of more than 300 aircraft planned for installation in 2021

-Announced new routes in response to increasing travel demand, including:

    • Nonstop Dubrovnik service from New York-JFK, a market previously unserved by Delta
    • Nonstop Seoul service from Portland
    • Nonstop Athens service from Atlanta
    • Nonstop Reykjavik service from Boston

-Announced Delta FlyReady, a digital health solution built to assist with international entry requirements

Environmental, Social and Governance

-Realized 7.1 percent improvement in fuel efficiency during the June quarter 2021 versus June quarter 2019

-Continued to accelerate fleet renewal efforts, which drives improved fuel efficiency, with yesterday’s announcement of the addition of 29 737-900ERs and seven A350s along with the exercise of 25 A321neo options announced in April 2021

-Continued collaboration with a growing list of travel management companies and corporate partners to purchase sustainable aviation fuel which is a critically important lever in Delta’s Flight to Net Zero

-Published Delta’s inaugural ESG Report in May, which expands on the Corporate Responsibility Reports  issued in the past, informed by the reporting standards of the Sustainability Accounting Standards Board and framework established by the Task Force on Climate-Related Financial Disclosures

-Committed to reporting Delta's progress on the goal of annual airline carbon-neutrality while planning to closely evaluate the Science-Based Targets Initiative framework for aviation

-Leveraged partnerships to help drive equity and accountability with the expansion of a partnership with Operation Hope to support its One Million Black Business and Entrepreneur Initiative and internal financial wellness/literacy programs

-Accepted Atlanta city lead role in the OneTen coalition’s overall efforts to recruit, hire, train and advance 1 million Black Americans over the next 10 years into sustaining jobs with opportunities for advancement

-Launched enhanced Inclusion Training experience with nearly 51,000 employees who have completed at least one of four DEI training classes

Payroll Support Program / Government Grant Accounting

In the June quarter 2021, the remaining $1.1 billion of PSP2 and $356 million of PSP3 was recognized as a contra-expense, which is reflected as “government grant recognition” on the Consolidated Statements of Operations. The remaining funds under PSP3 are expected to be recognized in the second half of 2021.

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