Delta Air Lines announces June quarter 2024 financial results

image credit: Delta

Delta Air Lines today reported financial results for the June quarter and provided its outlook for the September quarter.

Highlights of the June quarter, including both GAAP and adjusted metrics, are on page five and incorporated here.

Ed Bastian, Delta’s chief executive officer said: “Thanks to the incredible work of our 100,000 people, Delta is delivering industry-leading operational performance and best-in-class service for our customers.

“We delivered record June quarter revenue and pre-tax income of $2 billion with a 15 percent operating margin.

“Our people are the best in the industry, and we are pleased to recognize their efforts with more than $640 million accrued in the first half toward next year’s profit sharing,” .

“For the September quarter, we expect a double-digit operating margin and a pre-tax profit of approximately $1.5 billion.

“With strong first half results and visibility into the second half, we remain confident in our full-year guidance.”

June Quarter 2024 GAAP Financial Results:

Operating revenue of $16.7 billion
Operating income of $2.3 billion with an operating margin of 13.6 percent
Pre-tax income of $1.8 billion with a pre-tax margin of 10.6 percent
Earnings per share of $2.01
Operating cash flow of $2.5 billion
Payments on debt and finance lease obligations of $1.4 billion
Total debt and finance lease obligations of $18.0 billion at quarter end

June Quarter 2024 Adjusted Financial Results:

Operating revenue of $15.4 billion, 5.4 percent higher than the June quarter 2023
Operating income of $2.3 billion with an operating margin of 14.7 percent
Pre-tax income of $2.0 billion with a pre-tax margin of 13.0 percent
Earnings per share of $2.36
Operating cash flow of $2.5 billion
Free cash flow of $1.3 billion
Adjusted debt to EBITDAR of 2.8x, down from 3.0x at the end of 2023
Return on invested capital of 13.1 percent

Glen Hauenstein, Delta’s president said: “Peak summer travel demand remains strong and Delta is delivering elevated experiences for our customers.

“Consistent with our guidance, we generated record June quarter revenue 5.4 percent higher than the prior year.

“Diverse revenue streams, including premium and loyalty, contributed higher growth and margins, underpinning Delta’s industry-leading financial performance and increasing our financial durability.

“As our international network and core hubs approach full restoration and we return to a normal cadence of retiring aircraft, Delta’s capacity growth is decelerating into the second half.

“We expect September quarter capacity growth of 5 to 6 percent and revenue growth of 2 to 4 percent, with sequential improvement in unit revenue trends through the quarter.”

Record June quarter revenue with leading operational performance: Delta delivered June quarter revenue that was 5.4 percent higher than 2023, driven by strong demand and best-in-class operations. Year to date, Delta has led the industry in completion factor and on-time performance, and operated 39 cancel-free, brand-perfect days. Adjusted total unit revenue (TRASM) was down 2.6 percent from the prior year.

Revenue diversification driving Delta’s differentiation: Premium, loyalty and other diversified revenue streams comprised 56 percent of total revenue. Premium revenue grew 10 percent versus the June quarter 2023, with premium unit revenues positive year-over-year. Loyalty revenue was up 8 percent, driven by co-brand spend growth and increasing premium card mix. Remuneration from American Express for the June quarter was $1.9 billion, approximately 9 percent higher than 2023. Cargo revenue grew 16 percent year-over-year, a significant improvement from prior trends.

Corporate travel demand grew at double-digit levels: Managed corporate travel volumes* have grown double-digits for six consecutive months, with broad-based demand as all sectors increased year-over-year. Recent corporate survey results indicate that 90 percent of companies expect their travel volumes to increase or stay the same in the September quarter and beyond.

International performance built on record 2023: International passenger revenue was 4 percent higher than June quarter of 2023. Demand across the Transatlantic remains very strong, with unit revenue in line with last year’s record performance excluding the impact from the summer Olympics in Paris. Pacific and Latin America accounted for the majority of international capacity growth on continued network restoration and improving connectivity with our JV partners.

Dan Janki, Delta’s chief financial officer said: “For the June quarter, we came in at the midpoint of our guidance with earnings of $2.36 per share.

“Delta’s operational excellence drove an incremental point of capacity growth and unit cost favorability, with non-fuel unit costs 0.6 percent higher than last year.

“Growth continues to normalize and our teams are consistently running a great operation, enabling us to deliver efficiency. In the September quarter, we expect non-fuel unit costs to increase 1 to 2 percent year-over-year as capacity growth moderates.”

June Quarter 2024 Cost Performance

Operating expense of $14.4 billion and adjusted operating expense of $13.1 billion
Adjusted non-fuel costs of $9.8 billion
Non-fuel CASM was 13.14¢, an increase of 0.6 percent year-over-year
Adjusted fuel expense of $2.8 billion was up 12 percent year-over-year
Adjusted fuel price of $2.64 per gallon increased 5 percent year-over-year with a refinery benefit of 6¢ per gallon
Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.3, a 1.1 percent improvement year-over-year

Janki said: “Through the first half of the year, Delta delivered $2.7 billion in free cash flow, enabling $2.1 billion in debt repayment and a 50 percent increase in our quarterly dividend beginning in the September quarter.

“Debt reduction remains our top financial priority and we are progressing toward investment grade ratings, with gross leverage improving to 2.8x at the end of the first half.”

Adjusted net debt of $19.2 billion at June quarter end, a reduction of $2.3 billion from the end of 2023
Payments on debt and finance lease obligations for the June quarter of $1.4 billion
Weighted average interest rate of 4.3 percent with 94 percent fixed rate debt and 6 percent variable rate debt
Adjusted operating cash flow in the June quarter of $2.5 billion, and with gross capital expenditures of $1.2 billion, free cash flow was $1.3 billion
Air Traffic Liability ended the quarter at $9.4 billion, up $2.4 billion compared to the end of 2023