Delta reports strong financial results but reveals concerns for this year

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Delta Air Lines today reported financial results for the December quarter and full year 2018 with the headline being a rise in pre-tax income and revenue, but revealed trading concerns due to increasing currency headwinds and the ongoing US government shutdown.

Adjusted pre-tax income for the December quarter 2018 was $1.2 billion driven by over $700 million of revenue growth, allowing the company to fully recapture the $508 million increase in adjusted fuel expense and produce an 11 per cent adjusted pre-tax margin.

For the full year, adjusted pre-tax income was $5.1 billion, a $137 million decrease relative to 2017 as the company overcame approximately 90 per cent of the $2 billion increase in fuel expense.

Delta’s chief executive officer, Ed Bastian said: “2018 was a successful year for Delta with record operational reliability, increasing customer satisfaction, and solid financial results in the face of higher fuel costs.”

He added: “As we move into 2019, we expect to drive double-digit earnings growth through higher revenues, maintaining a cost trajectory below inflation, and the modest benefit from lower fuel costs. Margin expansion is a business imperative and we remain confident in our full-year earnings guidance of $6 to $7 per share.”

Delta’s adjusted operating revenue of $10.7 billion for the December quarter improved 7.5 per cent, or $747 million versus the prior year.

For the full year, adjusted operating revenue grew to nearly $44 billion, up eight per cent versus prior year on an increasingly diverse revenue base, with 52 per cent of revenues from premium products and non-ticket sources.

Premium product ticket revenues increased 14 per cent along with double-digit percentage increases from cargo, loyalty, and MRO revenue.

“Delta’s strong brand momentum was evident across the business with positive unit revenue growth in all geographic entities for the full year, a record revenue premium to the industry, and double-digit revenue growth from premium products and non-ticket sources,” said Delta’s president, Glen Hauenstein.

“Our March quarter adjusted unit revenue growth is expected to be flat to up two per cent including impacts from the timing of Easter, increasing currency headwinds, and the ongoing government shutdown.”