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Delta Air Lines 8-K Report, Financial Results (Apr 10, 2024)

Reports
Earnings & Results·Exhibits & Filings
Filing Date
Filed April 10, 2024
Period End
April 10, 2024
Security
DAL
In the record · 2016–202610-K1210-Q338-K210

DAL filed 12 annual reports (10-K), 33 quarterly reports (10-Q) and 210 current reports (8-K) between 2016 and 2026.

  1. Leadership change8-K · Apr ’18Apr ’18
  2. Impairment8-K · May ’20May ’20
  3. Material agreement8-K · Jul ’22Jul ’22
  4. Material agreement8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 8-K filed April 10, 2024. Cited figures are marked; the original filing is the authoritative source.

Delta Air Lines, Inc. furnished a press release (Exhibit 99.1) and supplemental information (Exhibit 99.2) reporting its financial results for the quarter ended March 31, 2024.

On a GAAP basis, operating revenue was $13.7 billiona, operating income was $614 million (4.5% operating margin), pre-tax income was $122 million, and diluted EPS was $0.06. On an adjusted basis, operating revenue was $12.6 billion, up 6% year over year, operating income was $640 million (5.1% margin), pre-tax income was $380 million, and EPS was $0.45. Operating cash flow was $2.4 billion (GAAP) and $2.5 billion (adjusted), and adjusted free cash flow was $1.4 billion.

Management cited record March quarter revenue, record completion factor, and corporate travel demand that grew 14% year over year. The company's balance sheet metrics improved. Adjusted net debt was $20.2 billionb, down $1.2 billion from year-end 2023, and adjusted debt to EBITDAR was 2.9x versus 3.0x at December 31, 2023.

Air traffic liability rose to $10.2 billionc, up $3.1 billion from year-end 2023. Liquidity was $7.4 billion, including $2.9 billion of undrawn revolver capacity. Management stated it expects to repay at least $4 billion of debt in 2024.

For outlook, Delta expects June quarter 2024 total revenue to grow 5% to 7% year over year, operating margin of 14% to 15%, and EPS of $2.20 to $2.50d. For full-year 2024, the company reiterated EPS guidance of $6 to $7 and free cash flow guidance of $3 to $4 billion, along with adjusted debt to EBITDAR of 2x to 3x.

02—Key points

Key Highlights

  1. GAAP diluted EPS of $0.06 on operating income of $614 million; adjusted diluted EPS of $0.45 on adjusted operating income of $640 million, versus $0.25 adjusted EPS in the March 2023 quarter.
  2. Operating revenue of $13.7 billion (GAAP), up 8% year over year; adjusted operating revenue of $12.6 billion, up 6%, with adjusted TRASM down 0.7%.
  3. Corporate travel demand strengthened, with managed corporate sales up 14% year over year; domestic unit revenues grew 3% and were a March quarter record.
  4. Adjusted free cash flow of $1.4 billion after paying over $1 billion in profit sharing and investing $1.1 billion in gross capital expenditures.
  5. Adjusted net debt declined to $20.2 billion from $21.4 billion at year-end 2023; adjusted debt to EBITDAR improved to 2.9x from 3.0x.
  6. June quarter 2024 outlook: total revenue up 5% to 7%, operating margin of 14% to 15%, and EPS of $2.20 to $2.50; non-fuel unit costs expected to rise about 2%.
  7. Full-year 2024 outlook reiterated: EPS of $6 to $7 and free cash flow of $3 to $4 billion, with at least $4 billion of debt repayment expected this year.

03—Questions

Frequently Asked Questions

  1. How did Delta perform in the March 2023 quarter compared with the prior year?

    On a GAAP basis, Delta reported operating income of $614 million and diluted EPS of $0.06, compared with an operating loss of $277 million and a loss of $0.57 per share in the March 2023 quarter. The prior-year GAAP results included a $864 million pilot agreement expense. On an adjusted basis, operating income rose to $640 million from $546 million, and EPS rose to $0.45 from $0.25.

  2. What drove revenue growth this quarter?

    Adjusted operating revenue grew 6% to $12.6 billion. Management attributed this to record March quarter revenue, with domestic unit revenues up 3% and corporate sales up 14%. Passenger revenue rose 7% on a GAAP basis, while Loyalty revenue was up 12% and Premium revenue was up 10%. Delta also reported American Express remuneration of $1.7 billion, approximately 5% higher than the prior year.

  3. What is Delta's outlook for the June quarter and full year 2024?

    For the June quarter 2024, Delta expects total revenue to grow 5% to 7% year over year, an operating margin of 14% to 15%, and EPS of $2.20 to $2.50. For full year 2024, the company reiterated EPS guidance of $6 to $7 and free cash flow of $3 to $4 billion, and expects adjusted debt to EBITDAR of 2x to 3x.

  4. How is Delta's balance sheet and liquidity position?

    Adjusted net debt was $20.2 billion at March 31, 2024, down $1.2 billion from year-end 2023. Adjusted debt to EBITDAR was 2.9x, down from 3.0x. Liquidity totaled $7.4 billion, including $2.9 billion of undrawn revolver capacity. The weighted average interest rate was 4.5%, with 91% of debt at fixed rates. Air traffic liability increased to $10.2 billion, up $3.1 billion from year-end 2023.

  5. What are the main cost pressures Delta highlighted?

    Non-fuel unit costs (CASM-Ex) rose 1.5% year over year to 14.08 cents in the March quarter. Management expects non-fuel unit costs to increase about 2% in the June quarter and a low single-digit increase for full year 2024 over 2023. Adjusted fuel price fell 10% year over year to $2.76 per gallon, which helped offset cost growth.

04—Continue

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