01—Abstract
Summary
Summary of the 10-Q filed July 11, 2024. Cited figures are marked; the original filing is the authoritative source.
Delta Air Lines, Inc. reported operating income of $2.3 billiona for the June 2024 quarter ($2,267 million), compared with $2,491 million in the June 2023 quarter.
Total operating revenue rose to $16,658 millionb from $15,578 million, driven by an 8% increase in capacity (ASMs) and a 5% rise in passenger revenue, with total operating expense up 10% to $14,391 million. Net income for the quarter was $1,305 million, or $2.01 per diluted share, versus $1,827 million, or $2.84 per diluted share, a year earlier. The decline in profit reflects a $196 million loss on investments in the quarter (versus a $128 million gain a year earlier), along with higher salaries, fuel, and landing fee costs.
For the six months ended June 30, 2024, net income was $1,342 millionc, or $2.08 per diluted share, compared with $1,464 million, or $2.28 per diluted share, in the prior-year period. Operating income for the six months improved to $2,881 million from $2,215 million, which included a $864 million pilot agreement expense in the 2023 period. Liquidity stood at $7.2 billion at June 30, 2024, including approximately $2.9 billion undrawn under revolving credit facilities.
Total debt fell to $16,783 milliond from $18,610 million at December 31, 2023, and the company paid $2.1 billion in debt and finance lease repayments during the first half, including roughly $900 million of early repayments. The company also reported operating cash flow of $4,857 million for the six months, capital expenditures of $2,502 million, and a quarterly dividend of $0.10 per share paid in June 2024, with a higher $0.15 per share dividend declared for payment on August 20, 2024.
The filing notes free cash flow of $1,274 million for the June 2024 quarter, a non-GAAP measure. Management expects 2024 capital spending of approximately $5.0 billion, excluding the LaGuardia terminal project, and an effective tax rate of 24% to 26%.
02—Key points
Key Highlights
- Operating income for the June 2024 quarter was $2,267 million, down from $2,491 million in the June 2023 quarter, while total operating revenue rose 7% to $16,658 million.
- Net income for the June 2024 quarter was $1,305 million ($2.01 diluted EPS), compared with $1,827 million ($2.84 diluted EPS) a year earlier, weighed down by a $196 million loss on investments.
- Six-month operating income increased to $2,881 million from $2,215 million, aided by the absence of the $864 million pilot agreement expense recorded in 2023.
- Total debt declined to $16,783 million at June 30, 2024 from $18,610 million at December 31, 2023, with $2.1 billion of debt and finance lease payments in the first half, including about $900 million of early repayments.
- Liquidity was $7.2 billion at June 30, 2024, including approximately $2.9 billion undrawn under revolving credit facilities.
- Free cash flow was $1,274 million for the June 2024 quarter (non-GAAP), and operating cash flow for the six months was $4,857 million.
- The board approved a quarterly dividend of $0.15 per share, payable August 20, 2024 to holders of record as of July 30, 2024, up from $0.10 per share paid in June 2024.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 11, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $16.66B$15.58B | +6.9% |
| Operating Expenses | $14.39B$13.09B | +10.0% |
| Operating Income | $2.27B$2.49B | −9.0% |
| Net Income | $1.30B$1.83B | −28.6% |
| EPS (Basic) | $2.04$2.86 | −28.7% |
| EPS (Diluted) | $2.01$2.84 | −29.2% |
| Shares Outstanding (Basic) | 641.00M639.00M | +0.3% |
| Shares Outstanding (Diluted) | 648.00M642.00M | +0.9% |
05—Questions
Frequently Asked Questions
Why did Delta's net income decline in the June 2024 quarter despite higher revenue?
Operating income fell by $224 million to $2,267 million as operating expenses rose 10% to $14,391 million, outpacing a 7% revenue increase. Non-operating results also worsened: the company recorded a $196 million loss on investments, net, compared with a $128 million gain in the prior-year quarter, and income tax provision was $468 million versus $490 million. Together these reduced net income to $1,305 million from $1,827 million.
What drove the increase in operating expenses?
The filing attributes the increase primarily to higher employee costs from wage increases, higher fuel expense, and costs associated with increased capacity. Salaries and related costs rose $320 million to $4,012 million, aircraft fuel and related taxes rose $297 million to $2,813 million, and landing fees and other rents rose $149 million, partly reflecting airport rate increases tied to redevelopment projects.
How much debt did Delta repay, and what is its liquidity position?
During the six months ended June 30, 2024, Delta had cash outflows of $2.1 billion for debt and finance lease repayments, including about $900 million of early repayments and $744 million of early extinguishment of principal on portions of the SkyMiles Term Loan and various notes. As of June 30, 2024, total liquidity was $7.2 billion, consisting of cash, short-term investments, and approximately $2.9 billion undrawn under revolving credit facilities. Total debt was $16,783 million, with the company stating it was in compliance with its debt covenants.
What are Delta's capital spending and aircraft commitments?
Capital expenditures were $2.5 billion in each of the six-month periods ended June 30, 2024 and 2023. Management expects 2024 capital spending of approximately $5.0 billion, excluding the New York-LaGuardia project, which is expected to cost about $400 million in 2024. Future aircraft purchase commitments totaled approximately $19.9 billion at June 30, 2024, and in January 2024 Delta agreed to buy 20 A350-1000 aircraft from Airbus, with deliveries scheduled to begin in 2026.
What is Delta's outlook on fuel and tax rates?
Delta expects fuel consumption throughout 2024 to increase compared with 2023, in line with capacity, partially offset by fleet fuel efficiency gains, and expects jet fuel prices to remain volatile. The company projects its 2024 annual effective tax rate will be between 24% and 26%.
06—Continue