01—Abstract
Summary
Summary of the 10-Q filed October 10, 2024. Cited figures are marked; the original filing is the authoritative source.
Delta Air Lines, Inc. reported net income of $1.27 billiona for the September 2024 quarter, compared with $1.11 billion in the September 2023 quarter, and diluted earnings per share of $1.97 versus $1.72.
Operating income fell to $1.4 billionb from $1.98 billion, a decrease of $587 million. Total operating revenue rose 1% to $15.68 billion, driven by refinery sales to third parties and a 4% increase in capacity, while total operating expense increased 6% to $14.28 billion. Management attributed part of the cost increase to the July 2024 CrowdStrike-caused outage, which led to approximately 7,000 flight cancellations over five days and a direct revenue impact of about $380 million, with roughly $170 million of additional operating expenses.
For the nine months ended September 30, 2024, net income was $2.61 billionc, essentially flat with $2.57 billion a year earlier, and operating income was $4.28 billion versus $4.20 billion. Balance sheet and cash metrics improved: total debt declined to $16.58 billion from $18.61 billion at December 31, 2023, and nine-month operating cash flow was $6.13 billion. The company reported liquidity of $6.9 billion, including approximately $2.9 billion undrawn under revolving credit facilities.
Free cash flow for the September 2024 quarter was $95 milliond, and the company paid $225 million in cash dividends in the first nine months. Management highlighted a credit rating upgrade by Fitch to BBB-, which led to the release of collateral liens under the Corporate Revolving Credit Facility. The company also disclosed aircraft purchase commitments of approximately $19.0 billion, an amended Boeing 737-10 delivery schedule, and a quarterly dividend of $0.15 per share declared for payment on October 31, 2024.
02—Key points
Key Highlights
- Net income of $1.27 billion ($1.97 diluted EPS) in the September 2024 quarter, up from $1.11 billion ($1.72 diluted EPS) a year earlier, aided by a $350 million gain on investments, net.
- Operating income declined $587 million to $1.4 billion, as operating expense rose 6% to $14.28 billion, led by salaries and related costs up $471 million to $4.23 billion.
- The July 2024 CrowdStrike-caused outage led to approximately 7,000 flight cancellations over five days, a direct revenue impact of about $380 million, and roughly $170 million of additional operating expenses.
- Nine-month operating cash flow of $6.13 billion; total debt reduced to $16.58 billion from $18.61 billion at December 31, 2023, with $2.4 billion of debt and finance lease payments in the period.
- Liquidity of $6.9 billion as of September 30, 2024, including approximately $2.9 billion undrawn under revolving credit facilities.
- Fitch upgraded Delta's credit rating to BBB- in July 2024, releasing liens on collateral including Pacific route authorities under the Corporate Revolving Credit Facility.
- Aircraft purchase commitments of approximately $19.0 billion at September 30, 2024; the Boeing 737-10 delivery schedule was amended to begin with 20 aircraft in 2026.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 10, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $15.68B$15.49B | +1.2% |
| Operating Expenses | $14.28B$13.50B | +5.7% |
| Operating Income | $1.40B$1.98B | −29.6% |
| Net Income | $1.27B$1.11B | +14.8% |
| EPS (Basic) | $1.98$1.73 | +14.5% |
| EPS (Diluted) | $1.97$1.72 | +14.5% |
| Shares Outstanding (Basic) | 641.00M639.00M | +0.3% |
| Shares Outstanding (Diluted) | 647.00M644.00M | +0.5% |
05—Questions
Frequently Asked Questions
How did Delta's profitability change in the September 2024 quarter?
Net income rose to $1.27 billion from $1.11 billion, and diluted EPS rose to $1.97 from $1.72. However, operating income fell to $1.4 billion from $1.98 billion. The net income increase was driven largely by non-operating items, including a $350 million gain on investments, net, compared with a $206 million loss in the prior-year quarter, and lower interest expense of $173 million versus $196 million.
What was the financial impact of the CrowdStrike-caused outage?
The filing estimates a direct revenue impact of approximately $380 million from about 7,000 flight cancellations over five days, which reduced expected year-over-year capacity growth in the quarter by about 1.5 percentage points. The outage and operational recovery resulted in approximately $170 million of additional operating expenses, mainly customer expense reimbursements and crew-related costs, partly offset by roughly $50 million of lower fuel expense from the cancellations. The filing also notes the outage impacted 1.4 million customers.
How is Delta managing its debt and liquidity?
Total debt and finance leases were reduced to $16.58 billion at September 30, 2024, from $18.61 billion at December 31, 2023. The company made $2.4 billion of debt and finance lease payments in the first nine months, including approximately $900 million of early repayments. Liquidity totaled $6.9 billion, including about $2.9 billion undrawn under revolving credit facilities. Fitch's upgrade to BBB- led to the release of collateral liens under the Corporate Revolving Credit Facility, and the company stated it was in compliance with its debt covenants.
What drove revenue and cost trends in the quarter?
Total operating revenue rose 1% to $15.68 billion, reflecting increased refinery sales to third parties (up $148 million) and loyalty travel awards, partly offset by a 5% decline in main cabin ticket revenue. Salaries and related costs rose 13% to $4.23 billion due to base pay increases and CrowdStrike-related crew costs. Landing fees and other rents increased 23%, reflecting higher airport rates and more flights. Aircraft fuel and related taxes fell 6% as the market price of jet fuel decreased 13%.
What capital returns and commitments did Delta disclose?
Delta paid $225 million in cash dividends in the first nine months of 2024 and approved a quarterly dividend of $0.15 per share, payable October 31, 2024 to holders of record as of October 10, 2024. The company's future aircraft purchase commitments totaled approximately $19.0 billion, and it expects capital spending of approximately $5.0 billion in 2024, excluding the LaGuardia redevelopment project. The company also expects a 2024 annual effective tax rate between 24% and 26%.
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