Financial Technology

Delta Air Lines Announces December Quarter and Full Year 2022 Profit

Generated double-digit operating margin in December quarter with EPS ahead of guidance

Expect March quarter revenue to accelerate further relative to 2019

Reiterating outlook for significant earnings and cash flow growth in 2023, including EPS of $5$6 and free cash flow of more than $2 billion

ATLANTA, Jan. 13, 2023 /PRNewswire/ — Delta Air Lines (NYSE:DAL) today reported financial results for the December quarter and full year 2022 and provided its outlook for the March quarter 2023.  Highlights of the December quarter and full year 2022 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.

“Delta people rose to the challenges of 2022, delivering industry-leading operational reliability and financial performance, and I’m looking forward to recognizing their achievements with over $500 million in profit sharing payments next month,” said Ed Bastian, Delta’s chief executive officer.  “As we move into 2023, the industry backdrop for air travel remains favorable and Delta is well positioned to deliver significant earnings and free cash flow growth.  We expect to grow 2023 revenue by 15 to 20 percent and improve unit costs year-over-year, supporting a full-year outlook for earnings of $5 to $6 per share and keeping us on track to achieve more than $7 of earnings per share in 2024.” 

December Quarter 2022 GAAP Financial Results

  • Operating revenue of $13.4 billion
  • Operating income of $1.5 billion with an operating margin of 10.9 percent
  • Pre-tax income of $1.1 billion with a pre-tax margin of 8.3 percent
  • Earnings per share of $1.29
  • Operating cash flow of $1.2 billion
  • Payments on debt and finance lease obligations of $285 million

December Quarter 2022 Adjusted Financial Results

  • Operating revenue of $12.3 billion, 8 percent higher than the December quarter 2019
  • Operating income of $1.4 billion with an operating margin of 11.6 percent
  • Pre-tax income of $1.2 billion with a pre-tax margin of 10.1 percent
  • Earnings per share of $1.48
  • Operating cash flow of $1.2 billion

Full Year 2022 GAAP Financial Results 

  • Operating revenue of $50.6 billion
  • Operating income of $3.7 billion with an operating margin of 7.2 percent
  • Pre-tax income of $1.9 billion with a pre-tax margin of 3.8 percent
  • Earnings per share of $2.06
  • Operating cash flow of $6.4 billion
  • Payments on debt and finance lease obligations of $4.5 billion
  • Total debt and finance lease obligations of $23.0 billion at year end

Full Year 2022 Adjusted Financial Results 

  • Operating revenue of $45.6 billion, 2 percent lower than the full year 2019
  • Operating income of $3.6 billion with an operating margin of 7.8 percent
  • Pre-tax income of $2.7 billion with a pre-tax margin of 5.9 percent
  • Earnings per share of $3.20
  • Operating cash flow of $6.2 billion
  • Free cash flow of $244 million
  • $9.4 billion in liquidity* and adjusted net debt of $22.3 billion at year end

*Includes cash and cash equivalents, short-term investments and undrawn revolving credit facilities

March Quarter and Full Year Outlook1


1Q23 Forecast

FY 2023 Forecast

Total Revenue

+14% – 17% vs. 2019

+15% – 20% YoY

Operating Margin

4% – 6%

10% – 12%

Earnings Per Share

$0.15 – $0.40

$5 – $6

1 Non-GAAP measures; Refer to Non-GAAP reconciliations for comparison figures

Additional metrics for financial modeling can be found in the Supplemental Information section under Quarterly Results on ir.delta.com.

Revenue Environment and Outlook

“Industry-leading operations and the best-in-class service our people provided drove strong customer satisfaction scores and increasing brand preference in 2022,” said Glen Hauenstein, Delta’s president.  “For the year we delivered $45.6 billion in adjusted revenue, a $19 billion increase over the prior year, with record unit revenue performance expected to sustain a revenue premium to the industry of more than 110 percent.  Momentum continues in 2023 with strong demand trends, and we expect March quarter adjusted revenue to be 14 to 17 percent higher than 2019 on capacity that is 1 percent lower.”

  • Consumer demand remains robust: Strong demand through the quarter drove Domestic total passenger revenue 7 percent higher versus December quarter 2019, with International passenger revenue up 5 percent. 
  • Business bookings steady: Domestic Corporate sales* in the December quarter were 80 percent recovered to 2019 levels.  Recent corporate survey results indicate that 96 percent of companies expect their travel will stay the same or increase sequentially in the March quarter. 
  • Premium product revenue momentum continues: Premium revenue was up 13 percent in the December quarter versus 2019, 8 points higher than main cabin revenue growth.  

*Corporate sales include tickets sold to corporate contracted customers, including tickets for travel during and beyond the referenced time period

  • American Express remuneration exceeds target: Remuneration for the December quarter was $1.5 billion, approximately 40 percent higher than the December quarter 2019 and was approximately $5.5 billion for the full year 2022, exceeding our initial target of $5 billion.  Co-brand card spend was up 45 percent compared to the December quarter 2019 with co-brand card acquisitions exceeding 2019 levels.

Cost Performance and Outlook

“With a step up in capacity restoration, we reported sequential improvement in December quarter unit cost performance.  In 2023, we are confident in completing our network rebuild and delivering the benefits of scale and efficiency as we move through the year, resulting in a 2 to 4 percent decline in non-fuel unit costs year-over-year, including all expected labor cost increases,” said Dan Janki, Delta’s chief financial officer.

“For the March quarter, we expect non-fuel unit costs to increase 3 to 4 percent year-over-year, including a full quarter impact from labor cost increases and finalizing the rebuild of our network for the peak summer period.  Our outlooks for the March quarter and full year are consistent with our cost framework provided to investors on December 14, updated for all expected labor cost increases,” Janki said.

December Quarter 2022 Cost Performance 

  • December quarter operating expense of $12.0 billion and total adjusted operating expense of $10.9 billion
  • December quarter adjusted non-fuel costs of $7.8 billion
  • December quarter non-fuel CASM was 13 percent higher than the December quarter 2019 on 9 percent less capacity, including a 1 point impact from severe winter weather
  • Adjusted fuel expense of $2.8 billion was up 40 percent compared to the December quarter 2019
  • Adjusted fuel price of $3.20 per gallon includes a refinery benefit of 30¢ per gallon
  • Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.6, a 4.1 percent improvement versus 2019

Full Year 2022 Cost Performance 

  • Full year 2022 operating expense of $46.9 billion and total adjusted operating expense of $42.0 billion
  • Full year 2022 adjusted non-fuel costs of $30.0 billion
  • Full year non-fuel CASM was 18 percent higher than the full year 2019 on 15 percent less capacity
  • Adjusted fuel expense of $11.5 billion was up 35 percent compared to 2019
  • Adjusted fuel price of $3.36 per gallon includes a refinery benefit of 23¢ per gallon
  • Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.6, a 4.2 percent improvement versus 2019

Balance Sheet, Cash and Liquidity

“We made significant progress restoring our financial foundation in 2022 with positive free cash flow generation and three quarters of double-digit margins.  This enabled us to pay down over $4.5 billion of gross debt during the year, strengthening our balance sheet,” Janki said.  “We expect to deliver free cash flow of more than $2 billion in 2023 and further reduce debt on our path to reach investment grade metrics in 2024.”

  • Adjusted net debt of $22.3 billion at quarter end; weighted average interest rate of 4.7 percent with 83 percent fixed rate debt and 17 percent variable rate debt
  • Payments on debt and finance lease obligations of $285 million in the December quarter, bringing year-to-date total to $4.5 billion
  • Operating cash flow in the December quarter of $1.2 billion and gross capital expenditures of $2.1 billion
  • Full year operating cash flow of $6.2 billion and gross capital expenditures of $6.0 billion, resulting in $244 million free cash flow
  • Air Traffic Liability ended the year at $8.3 billion, up $1.9 billion compared to the end of 2021
  • Liquidity of $9.4 billion at year-end, including $2.9 billion in undrawn revolver capacity

December Quarter and 2022 Highlights

Operational Reliability

  • Earned the Cirium Platinum Award for global operational excellence as North America’s most on-time airline, reflecting the exemplary work of the Delta people to achieve on-time performance while limiting the impact of disruption to our customers
  • Operated the most on-time airline during the quarter, leading our competitors in October, November and December* despite the most impactful weather event of 2022 over the Christmas holiday
  • For the full year, Delta’s network system ranked first among our competitors in Completion Factor, A0, A14 and D0**

Culture and People

  • Delta people earned $563 million in profit sharing and $61 million in Shared Rewards for the year, recognizing the outstanding performance of Delta’s 90,000 employees
  • Ranked 6th overall and the top airline recognized on Forbes’ annual list of the “World’s Best Employers”
  • Launched fundraising campaign to ensure the long-term health of Delta’s employee assistance fund, the Delta Care Fund, with a goal of raising $30 million
  • Expanded recruitment strategy giving active-duty military pilots conditional job offers up to two years before retirement
  • Announced employee healthcare premiums for 2023 will not increase for the fifth consecutive year
  • Helped build Habitat for Humanity homes, bringing the total built or rehabbed by Delta volunteers to 279

Customer Experience and Loyalty

  • Announced at CES fast, free, unlimited Wi-Fi on most domestic mainline flights starting February 1, 2023 for all customers through a free SkyMiles account
  • Introduced Delta Sync, to create personalized experiences and further elevate the consumer experience across the travel journey, including partnerships with leading brands
  • 2022 NPS score higher than 2019, representing growing brand affinity and leading operational reliability
  • Added a record 8.5 million new SkyMiles Members in 2022 and a record 1.2 million new Delta American Express cardholders
  • Took delivery of 69 aircraft in 2022, including new A321neo, A220-300, A330-900, A350-900 aircraft and gently used Boeing 737-900ER aircraft
  • Named No. 1 in the Business Travel News Airline Survey for the 12th consecutive year and No. 1 U.S. airline by Conde Nast Traveler readers
  • Received top honors from The Points Guy’s Readers’ Choice Awards for the Best U.S. Airline Loyalty Program, Best Airport Lounge Network and Best Airline Co-Branded Credit Card with the SkyMiles® Platinum American Express
  • Awarded Delta SkyMiles as Americas’ top loyalty program by the Frequent Traveler People’s Awards in four of its five award categories
  • Opened the latest phase of the Delta Sky Way in Los Angeles and a new Delta Sky Club at Chicago O’Hare

Environmental, Social and Governance

  • Improved fuel efficiency by 4.2 percent in 2022 versus 2019 through fleet renewal and other initiatives
  • Saved more than 10 million gallons of fuel in 2022 as a result of Delta’s Carbon Council initiatives including fleet modifications, enhanced landing procedures and optimizations to flight routing and speed
  • Partnering with Aero Design Labs to test novel drag-reduction technology to further decrease emissions
  • Honored with the Green Partner in Travel Award from the American Society of Travel Advisors
  • Awarded the North American Environmental Sustainability Airline / Airline Group of the Year award from the Centre for Aviation
  • Engaged more than 70 percent of our officer group in racial equity training

* Based on FlightStats preliminary data for Delta flights system wide and for Delta’s competitive set (AA, UA, B6, AS, WN, and DL), from October 1 – December 31, 2022. On-time is defined as A0.

** Based on US DOT ATCR for January – September, and FlightStats preliminary data for Delta flights system wide and for Delta’s competitive set (AA, UA, B6, AS, WN, and DL), from October 1 – December 31, 2022.

December Quarter Results

December quarter results have been adjusted primarily for the third-party refinery sales, unrealized losses on investments and loss on extinguishment of debt and as described in the reconciliations in Note A. 


GAAP

Adjusted

GAAP

Adjusted

($ in millions except per share and unit costs)

4Q22

4Q19

4Q22

4Q19

FY22

FY19

FY22

FY19

Operating income

1,470

1,399

1,422

1,423

3,661

6,618

3,566

6,636

Operating margin

10.9 %

12.2 %

11.6 %

12.5 %

7.2 %

14.1 %

7.8 %

14.2 %

Pre-tax income

1,120

1,397

1,242

1,417

1,914

6,198

2,703

6,214

Pre-tax margin

8.3 %

12.2 %

10.1 %

12.4 %

3.8 %

13.2 %

5.9 %

13.3 %

Net income

828

1,099

950

1,098

1,318

4,767

2,053

4,776

Diluted earnings per share

1.29

1.71

1.48

1.70

2.06

7.30

3.20

7.32

Operating revenue

13,435

11,439

12,292

11,384

50,582

47,007

45,605

46,718

Total revenue per available seat mile (TRASM) (cents)

22.58

17.47

20.66

17.39

21.69

17.07

19.55

16.97

Operating expense

11,965

10,040

10,871

9,961

46,921

40,389

42,039

40,082

Non-fuel cost



7,821

7,590



30,024

29,962

Cost per available seat mile (CASM) (cents)

20.11

15.34

13.14

11.59

20.12

14.67

12.87

10.88

Fuel expense

2,849

2,012

2,778

1,983

11,482

8,519

11,453

8,477

Average fuel price per gallon

3.28

2.01

3.20

1.99

3.36

2.02

3.36

2.01

Operating cash flow

1,189

969

1,211

837

6,364

8,425

6,210

8,476

Capital expenditures

2,200

1,072

2,113

954

6,366

4,936

6,008

5,306

Total debt and finance lease obligations

23,030

11,160



23,030

11,160



Adjusted net debt



22,303

10,489



22,303

10,489

About Delta Air Lines Through the warmth and service of the Delta Air Lines (NYSE: DAL) people and the power of innovation, Delta never stops looking for ways to make every trip feel personalized. More than 90,000 Delta people lead the way in delivering a world-class customer experience on over 4,000 daily flights to more than 275 destinations on six continents, connecting people to places and each other.

Delta is committed to serving as many as 200 million customers annually, with industry-leading customer service, safety, innovation and reliability – recognized as North America’s most on-time airline. We’re dedicated to ensuring that the future of travel is connected, personalized and enjoyable. Our people’s genuine and enduring motivation is to make every customer feel welcomed and respected across every point of their journey with us.

Headquartered in Atlanta, Delta operates significant hubs and key markets in Amsterdam, Atlanta, Boston, Detroit, LondonHeathrow, Los Angeles, Mexico City, Minneapolis-St. Paul, New York-JFK and LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Seattle, Seoul-Incheon and Tokyo.

As the leading global airline, Delta’s mission to connect the world creates opportunities, fosters understanding and expands horizons by connecting people and communities to each other and their potential.

Powered by innovative and strategic partnerships with Aeromexico, Air France-KLM, China Eastern, Korean Air, LATAM, Virgin Atlantic and WestJet, Delta brings more choice and competition to customers worldwide.

Delta is America’s most-awarded airline thanks to the dedication, passion and professionalism of its people, recognized by Fortune, the Wall Street Journal, and Business Travel News, among many others.

Forward Looking Statements

Statements made in this press release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, should be considered “forward-looking statements” under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees or promised outcomes and should not be construed as such. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the material adverse effect that the COVID-19 pandemic has had on our business; the impact of incurring significant debt in response to the pandemic; failure to comply with the financial and other covenants in our financing agreements; the possible effects of accidents involving our aircraft or aircraft of our airline partners; breaches or lapses in the security of technology systems on which we rely and of the data stored within them, as well as compliance with ever-evolving global privacy and security regulatory obligations; disruptions in our information technology infrastructure; our dependence on technology in our operations; our commercial relationships with airlines in other parts of the world and the investments we have in certain of those airlines; the effects of a significant disruption in the operations or performance of third parties on which we rely; failure to realize the full value of intangible or long-lived assets; labor issues; the effects of weather, natural disasters and seasonality on our business; changes in the cost of aircraft fuel; extended disruptions in the supply of aircraft fuel, including from Monroe Energy, LLC (“Monroe“), a wholly-owned subsidiary of Delta; failure or inability of insurance to cover a significant liability at Monroe’s Trainer refinery; failure to comply with existing and future environmental regulations to which Monroe’s refinery operations are subject, including costs related to compliance with renewable fuel standard regulations; our ability to retain senior management and other key employees, and to maintain our company culture; significant damage to our reputation and brand, including from exposure to significant adverse publicity or inability to achieve certain sustainability goals; the effects of terrorist attacks, geopolitical conflict or security events; competitive conditions in the airline industry; extended interruptions or disruptions in service at major airports at which we operate or significant problems associated with types of aircraft or engines we operate; the effects of extensive government regulation we are subject to; the impact of environmental regulation, including but not limited to increased regulation to reduce emissions and other risks associated with climate change, and the cost of compliance with more stringent environmental regulations; and unfavorable economic or political conditions in the markets in which we operate or volatility in currency exchange rates.

Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 and our Quarterly Reports on Forms 10-Q for the quarterly period ended September 30, 2022. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of the date of this press release, and which we undertake no obligation to update except to the extent required by law. 

DELTA AIR LINES, INC.

Consolidated Statements of Operations

(Unaudited)












Three Months Ended




Year Ended




December 31,




December 31,



(in millions, except per share data)

2022

2019

$ Change

% Change


2022

2019

$ Change

% Change

Operating Revenue:










Passenger

$       10,889

$       10,245

$            644

6 %


$      40,218

$      42,277

$      (2,059)

(5) %

Cargo

248

187

61

33 %


1,050

753

297

39 %

Other

2,298

1,007

1,291

NM


9,314

3,977

5,337

NM

  Total operating revenue

13,435

11,439

1,996

17 %


50,582

47,007

3,575

8 %











Operating Expense:










Salaries and related costs

3,071

3,046

25

1 %


11,902

11,601

301

3 %

Aircraft fuel and related taxes

2,849

2,012

837

42 %


11,482

8,519

2,963

35 %

Ancillary businesses and refinery

1,308

299

1,009

NM


5,756

1,245

4,511

NM

Contracted services

920

742

178

24 %


3,345

2,942

403

14 %

Landing fees and other rents

570

538

32

6 %


2,181

2,176

5

— %

Depreciation and amortization

554

622

(68)

(11) %


2,107

2,581

(474)

(18) %

Regional carrier expense

504

536

(32)

(6) %


2,051

2,158

(107)

(5) %

Aircraft maintenance materials and outside repairs

508

417

91

22 %


1,982

1,751

231

13 %

Passenger commissions and other selling expenses

507

542

(35)

(6) %


1,891

2,211

(320)

(14) %

Passenger service

403

325

78

24 %


1,453

1,312

141

11 %

Profit sharing

272

387

(115)

(30) %


563

1,643

(1,080)

(66) %

Aircraft rent

128

105

23

22 %


508

423

85

20 %

Restructuring charges

(118)

(118)

NM


(124)

(124)

NM

Other

489

469

20

4 %


1,824

1,827

(3)

— %

Total operating expense

11,965

10,040

1,925

19 %


46,921

40,389

6,532

16 %











Operating Income

1,470

1,399

71

5 %


3,661

6,618

(2,957)

(45) %











Non-Operating Expense:










Interest expense, net

(238)

(72)

(166)

NM


(1,029)

(301)

(728)

NM

Impairments and equity method results

(12)

(18)

6

(33) %


(20)

(62)

42

(68) %

Gain/(loss) on investments, net

(170)

136

(306)

NM


(783)

119

(902)

NM

Loss on extinguishment of debt

NM


(100)

(100)

NM

Pension and related benefit/(expense)

74

(17)

91

NM


292

(65)

357

NM

Miscellaneous, net

(4)

(31)

27

(87) %


(107)

(111)

4

(4) %

Total non-operating expense, net

(350)

(2)

(348)

NM


(1,747)

(420)

(1,327)

NM











Income Before Income Taxes

1,120

1,397

(277)

(20) %


1,914

6,198

(4,284)

(69) %











Income Tax Provision

(292)

(298)

6

(2) %


(596)

(1,431)

835

(58) %











Net Income

$            828

$         1,099

$          (271)

(25) %


$        1,318

$        4,767

$      (3,449)

(72) %











Basic Earnings Per Share

$           1.30

$           1.71




$          2.07

$          7.32



Diluted Earnings Per Share

$           1.29

$           1.71




$          2.06

$          7.30













Basic Weighted Average Shares Outstanding

638

642




638

651



Diluted Weighted Average Shares Outstanding

641

644




641

653



















DELTA AIR LINES, INC.

Passenger Revenue

(Unaudited)












Three Months Ended




Year Ended




December 31,




December 31,



(in millions)

2022

2019

$ Change

% Change


2022

2019

$ Change

% Change

Ticket – Main cabin

$        5,398

$        5,169

$           229

4 %


$      20,397

$      21,751

$      (1,354)

(6) %

Ticket – Premium products

4,223

3,753

470

13 %


15,230

15,157

73

— %

Loyalty travel awards

825

726

99

14 %


2,898

2,900

(2)

— %

Travel-related services

443

597

(154)

(26) %


1,694

2,469

(775)

(31) %

Total passenger revenue

$      10,889

$      10,245

$           644

6 %


$      40,218

$      42,277

$      (2,059)

(5) %































DELTA AIR LINES, INC.

Other Revenue

(Unaudited)












Three Months Ended




Year Ended




December 31,




December 31,



(in millions)

2022

2019

$ Change

% Change


2022

2019

$ Change

% Change

Refinery

$        1,142

$               2

$        1,140

NM


$        4,977

$             97

$        4,880

NM

Loyalty program

720

519

201

39 %


2,597

1,962

635

32 %

Ancillary businesses

182

305

(123)

(40) %


846

1,200

(354)

(30) %

Miscellaneous

254

181

73

40 %


894

718

176

25 %

Total other revenue

$        2,298

$        1,007

$        1,291

NM


$        9,314

$        3,977

$        5,337

NM











DELTA AIR LINES, INC.

Total Revenue

(Unaudited)













Increase (Decrease)





4Q22 vs 4Q19

Revenue


4Q22 ($M)


Change

Unit Revenue

Yield

Capacity

Domestic

$

8,162


7 %

16 %

15 %

(8) %

Atlantic


1,540


17 %

9 %

14 %

8 %

Latin America


805


15 %

27 %

24 %

(9) %

Pacific


382


(35) %

32 %

42 %

(50) %

Total Passenger

$

10,889


6 %

17 %

18 %

(9) %

Cargo Revenue


248


33 %




Other Revenue


2,298


NM




Total Revenue

$

13,435


17 %

29 %



       Third Party Refinery Sales


(1,142)






Total Revenue, adjusted

$

12,292


8 %

19 %











DELTA AIR LINES, INC.

Statistical Summary

(Unaudited)



Three Months Ended




Year Ended




December 31,




December 31,




2022

2019

Change


2022

2019

Change

Revenue passenger miles (millions)

50,476

56,028

(10)

%


195,480

237,680

(18)

%

Available seat miles (millions)

59,506

65,468

(9)

%


233,226

275,379

(15)

%

Passenger mile yield (cents)

21.57

18.29

18

%


20.57

17.79

16

%

Passenger revenue per available seat mile (cents)

18.30

15.65

17

%


17.24

15.35

12

%

Total revenue per available seat mile (cents)

22.58

17.47

29

%


21.69

17.07

27

%

TRASM, adjusted – see Note A (cents)

20.66

17.39

19

%


19.55

16.97

15

%

Cost per available seat mile (cents)

20.11

15.34

31

%


20.12

14.67

37

%

CASM-Ex  – see Note A (cents)

13.14

11.59

13

%


12.87

10.88

18

%

Passenger load factor

85 %

86 %

(1)

pt


84 %

86 %

(2)

pts

Fuel gallons consumed (millions)

869

999

(13)

%


3,412

4,214

(19)

%

Average price per fuel gallon

$          3.28

$          2.01

63

%


$           3.36

$           2.02

66

%

Average price per fuel gallon, adjusted – see Note A

$          3.20

$          1.99

61

%


$           3.36

$           2.01

67

%

DELTA AIR LINES, INC.


Consolidated Statements of Cash Flows


(Unaudited)



Three Months Ended



December 31,


(in millions)

2022

2019


Cash Flows From Operating Activities:




Net income

$                       828

$                    1,099


Depreciation and amortization

554

622


Changes in air traffic liability

(837)

(647)


Changes in balance sheet and other, net

644

(105)


     Net cash provided by operating activities

1,189

969






Cash Flows From Investing Activities:




Property and equipment additions:




Flight equipment, including advance payments

(1,643)

(570)


Ground property and equipment, including technology

(557)

(502)


Purchase of short-term investments

(2,129)


Redemption of short-term investments

221


Purchase of equity investments

(717)


Other, net

89

293


     Net cash used in investing activities

(4,736)

(779)






Cash Flows From Financing Activities:




Payments on debt and finance lease obligations

(285)

(516)


Repurchase of common stock

(225)


Proceeds from long-term obligations

1,557


Cash dividends

(259)


Fuel card obligation

297


Other, net

(20)

(12)


     Net cash (used in)/provided by financing activities

(305)

842






Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash Equivalents

(3,852)

1,032


Cash, cash equivalents and restricted cash equivalents at beginning of period

7,325

2,698


Cash, cash equivalents and restricted cash equivalents at end of period

$                    3,473

$                    3,730






The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:







Current assets:




     Cash and cash equivalents

$                    3,266

$                    2,882


     Restricted cash included in prepaid expenses and other

138

212


Other assets:




     Restricted cash included in other noncurrent assets

69

636


Total cash, cash equivalents and restricted cash equivalents

$                    3,473

$                    3,730











DELTA AIR LINES, INC.

Consolidated Balance Sheets

(Unaudited)








December 31,


December 31,

(in millions)

2022


2021

ASSETS

Current Assets:





Cash and cash equivalents

$                           3,266


$                           7,933


Short-term investments

3,268


3,386


Accounts receivable, net

3,176


2,404


Fuel inventory, expendable parts and supplies inventories, net

1,424


1,098


Prepaid expenses and other

1,877


1,119


     Total current assets

13,011


15,940






Property and Equipment, Net:





Property and equipment, net

33,109


28,749






Other Assets:





Operating lease right-of-use assets

7,036


7,237


Goodwill

9,753


9,753


Identifiable intangibles, net

5,992


6,001


Equity investments

2,128


1,712


Deferred income taxes, net

339


1,294


Other noncurrent assets

907


1,773


     Total other assets

26,155


27,770

Total assets

$                         72,275


$                         72,459






LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:





Current maturities of debt and finance leases

$                           2,359


$                           1,782


Current maturities of operating leases

714


703


Air traffic liability

8,160


6,228


Accounts payable

5,106


4,240


Accrued salaries and related benefits

3,288


2,457


Loyalty program deferred revenue

3,434


2,710


Fuel card obligation

1,100


1,100


Other accrued liabilities

1,780


1,746


     Total current liabilities

25,941


20,966






Noncurrent Liabilities:





Debt and finance leases

20,671


25,138


Noncurrent air traffic liability

100


130


Pension, postretirement and related benefits

3,843


6,035


Loyalty program deferred revenue

4,448


4,849


Noncurrent operating leases

6,866


7,056


Other noncurrent liabilities

3,950


4,398


     Total noncurrent liabilities

39,878


47,606






Commitments and Contingencies









Stockholders’ Equity:

6,456


3,887

Total liabilities and stockholders’ equity

$                         72,275


$                         72,459

Note A: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below. Reconciliations may not calculate due to rounding.

Delta sometimes uses information (“non-GAAP financial measures”) that is derived from the Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). Under the Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The tables below show reconciliations of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures.

Forward Looking Projections. Delta is not able to reconcile forward looking non-GAAP financial measures without unreasonable effort because the adjusting items such as those used in the reconciliations below will not be known until the end of the period and could be significant. 

Adjustments. These reconciliations include certain adjustments to GAAP measures, that are directly related to the impact of COVID-19 and our response. These adjustments are made to provide comparability between the reported periods, if applicable, as indicated below:

Restructuring charges. During 2020, we recorded restructuring charges for items such as fleet impairments and voluntary early retirement and separation programs following strategic business decisions in response to the COVID-19 pandemic. In the December quarter 2022 and year ended December 2022, we recognized $118 million and $124 million, respectively, of net adjustments to certain of those restructuring charges, representing changes in our estimates.

Loss on extinguishment of debt. This adjustment relates to early termination of a portion of our debt.

We also regularly adjust certain GAAP measures for the following items, if applicable, for the reasons indicated below:

Third-party refinery sales. Refinery sales to third parties, and related expenses, are not related to our airline segment. Excluding these sales therefore provides a more meaningful comparison of our airline operations to the rest of the airline industry.

Delta Private Jets adjustment. Because we combined Delta Private Jets with Wheels Up in January 2020, we have excluded the impact of Delta Private Jets from 2019 results for comparability.

MTM adjustments and settlements on hedges. Mark-to-market (MTM”) adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period, and therefore we remove this impact to allow investors to better understand and analyze our core performance. Settlements represent cash received or paid on hedge contracts settled during the applicable period.

MTM adjustments on investments. Unrealized gains/losses result from our equity investments that are accounted for at fair value in non-operating expense. The gains/losses are driven by changes in stock prices, foreign currency fluctuations and other valuation techniques for investments in companies without publicly-traded shares. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.

Equity investment MTM adjustments. We adjust for our proportionate share of our equity method investee, Virgin Atlantic’s, hedge portfolio MTM adjustments (recorded in non-operating expense) to allow investors to understand and analyze our core operational performance in the periods shown.

Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to better understand and analyze our non-fuel costs and year-over-year financial performance.

Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.

Operating Revenue, adjusted and Total Revenue Per Available Seat Mile (“TRASM”), adjusted 




Three Months Ended


4Q22 vs 4Q19

% Change

(in millions)

December 31, 2022

December 31, 2019

March 31, 2019


Operating revenue

$                           13,435

$                           11,439

$                           10,472



Adjusted for:






     Third-party refinery sales

(1,142)

(2)

(48)



     Delta Private Jets adjustment

(53)

(43)



Operating revenue, adjusted

$                           12,292

$                           11,384

$                           10,381


8 %










Year Ended


FY22 vs FY19

% Change

(in millions)

December 31, 2022

December 31, 2021

December 31, 2019


Operating revenue

$                           50,582

$                           29,899

$                           47,007



Adjusted for:






Third-party refinery sales

(4,977)

(3,229)

(97)



Delta Private Jets adjustment

(192)



Operating revenue, adjusted

$                           45,605

$                           26,670

$                           46,718


(2) %
























Three Months Ended



4Q22 vs 4Q19

% Change


December 31, 2022

December 31, 2019



TRASM (cents)

22.58

17.47




Adjusted for:






     Third-party refinery sales

(1.92)




     Delta Private Jets adjustment

(0.08)




TRASM, adjusted

20.66

17.39



19 %










Year Ended



FY22 vs FY19

% Change


December 31, 2022

December 31, 2019



TRASM (cents)

21.69

17.07




Adjusted for:






     Third-party refinery sales

(2.13)

(0.04)




     Delta Private Jets adjustment

(0.07)




TRASM, adjusted

19.55

16.97



15 %

Operating Income, adjusted



Three Months Ended

(in millions)

December 31, 2022

December 31, 2019

Operating Income

$                               1,470

$                               1,399

Adjusted for:



Restructuring charges

(118)

MTM adjustments and settlements on hedges

70

22

Delta Private Jets adjustment

2

Operating Income, adjusted

$                               1,422

$                               1,423


Year Ended

(in millions)

December 31, 2022

December 31, 2019

Operating Income

$                               3,661

$                               6,618

Adjusted for:



Restructuring charges

(124)

MTM adjustments and settlements on hedges

29

14

Delta Private Jets adjustment

3

Operating Income, adjusted

$                               3,566

$                               6,636

Operating Margin, adjusted





Three Months Ended


December 31, 2022

December 31, 2019

Operating margin

10.9 %

12.2 %

Adjusted for:



Restructuring charges

(0.9)

MTM adjustments and settlements on hedges

0.5

0.2

Third-party refinery sales

1.0

0.1

Operating margin, adjusted

11.6 %

12.5 %



Year Ended


December 31, 2022

December 31, 2019

Operating margin

7.2 %

14.1 %

Adjusted for:



Restructuring charges

(0.2)

MTM adjustments and settlements on hedges

0.1

Third-party refinery sales

0.8

0.1

Operating margin, adjusted

7.8 %

14.2 %

Pre-Tax Income, Net Income, and Diluted Earnings per Share, adjusted







Three Months Ended


Three Months Ended


December 31, 2022


December 31, 2022


Pre-Tax

Income

Net


Earnings

(in millions, except per share data)

Income

Tax

Income


Per Diluted Share

GAAP

$                1,120

$                 (292)

$                   828


$                                  1.29

Adjusted for:






Restructuring charges

(118)





MTM adjustments and settlements on hedges

70





MTM adjustments on investments

170





Non-GAAP

$                1,242

$                 (292)

$                   950


$                                  1.48














Three Months Ended


Three Months Ended


December 31, 2019


December 31, 2019


Pre-Tax

Income

Net


Earnings

(in millions, except per share data)

Income

Tax

Income


Per Diluted Share

GAAP

$                1,397

$                 (298)

$                1,099


$                                  1.71

Adjusted for:






MTM adjustments and settlements on hedges

22





Equity investment MTM adjustments

(1)





MTM adjustments on investments

(3)





Delta Private Jets adjustment

2





Non-GAAP

$                1,417

$                 (319)

$                1,098


$                                  1.70














Year Ended


Year Ended


December 31, 2022


December 31, 2022


Pre-Tax

Income

Net


Earnings

(in millions, except per share data)

Income

Tax

Income


Per Diluted Share

GAAP

$                1,914

$                 (596)

$                1,318


$                                  2.06

Adjusted for:






Restructuring charges

(124)





MTM adjustments and settlements on hedges

29





Loss on extinguishment of debt

100





MTM adjustments on investments

784





Non-GAAP

$                2,703

$                 (650)

$                2,053


$                                  3.20








Year Ended


Year Ended


December 31, 2019


December 31, 2019


Pre-Tax

Income

Net


Earnings

(in millions, except per share data)

Income

Tax

Income


Per Diluted Share

GAAP

$                6,198

$              (1,431)

$                4,767


$                                  7.30

Adjusted for:






MTM adjustments and settlements on hedges

14





Equity investment MTM adjustments

(14)





MTM adjustments on investments

13





Delta Private Jets adjustment

3





Non-GAAP

$                6,214

$              (1,438)

$                4,776


$                                  7.32

Pre-Tax Margin, adjusted




Three Months Ended


December 31, 2022

December 31, 2019

Pre-tax margin

8.3 %

12.2 %

Adjusted for:



Restructuring charges

(0.9)

MTM adjustments and settlements on hedges

0.5

0.2

MTM adjustments on investments

1.3

Third-party refinery sales

0.9

0.1

Pre-tax margin, adjusted

10.1 %

12.4 %











Year Ended


December 31, 2022

December 31, 2019

Pre-tax margin

3.8 %

13.2 %

Adjusted for:



Restructuring charges

(0.2)

Loss on extinguishment of debt

0.2

MTM adjustments and settlements on hedges

0.1

MTM adjustments on investments

1.5

Third-party refinery sales

0.6

0.1

Pre-tax margin, adjusted

5.9 %

13.3 %

Operating Cash Flow, adjusted. We present operating cash flow, adjusted because management believes adjusting for the following item provides a more meaningful measure for investors:

Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company’s operating cash flow that are core to our operations in the periods shown.





Three Months Ended

(in millions)



December 31, 2022

December 31, 2019

Net cash provided by operating activities


$                              1,189

$                                 969

Adjustments:




Net cash flows related to certain airport construction projects and other


22

(133)

Net cash provided by operating activities, adjusted


$                              1,211

$                                 837

















Year Ended

(in millions)



December 31, 2022

December 31, 2019

Net cash provided by operating activities


$                              6,364

$                              8,425

Adjustments:




Net cash flows related to certain airport construction projects and other


(154)

52

Net cash provided by operating activities, adjusted


$                              6,210

$                              8,476

Free Cash Flow. We present free cash flow because management believes this metric is helpful to investors to evaluate the company’s ability to generate cash that is available for use for debt service or general corporate initiatives. Free cash flow is also used internally as a component of our 2022 incentive compensation program. Free cash flow is defined as net cash from operating activities and net cash from investing activities, adjusted for (i) net redemptions of short-term investments, (ii) strategic investments and related, (iii) net cash flows related to certain airport construction projects and other and (iv) financed aircraft acquisitions. These adjustments are made for the following reasons:

Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company’s free cash flow generated by our operations.

Strategic investments and related. Cash flows related to our investments in and related transactions with other airlines are included in our GAAP investing activities. We adjust for this activity because it provides a more meaningful comparison to our airline industry peers.

Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company’s free cash flow and capital expenditures that are core to our operations in the periods shown.

Financed aircraft acquisitions. This adjustment reflects aircraft deliveries that are leased as capital expenditures. The adjustment is based on their original contractual purchase price or an estimate of the aircraft’s fair value and provides a more meaningful view of our investing activities. 





Year Ended

(in millions)



December 31, 2022

Net cash provided by operating activities


$                              6,364

Net cash used in investing activities


(6,924)

Adjusted for:



Net redemptions of short-term investments


(100)

Strategic investments and related


701

Net cash flows related to certain airport construction projects and other


409

Financed aircraft acquisitions


(206)

Free cash flow


$                                 244






Adjusted Net Debt. Delta uses adjusted total debt, including aircraft rent, in addition to adjusted debt and finance leases, to present estimated financial obligations. Delta reduces adjusted total debt by cash, cash equivalents and short-term investments, and LGA restricted cash, resulting in adjusted net debt, to present the amount of assets needed to satisfy the debt. Management believes this metric is helpful to investors in assessing the company’s overall debt profile.





(in millions)


December 31, 2022

December 31, 2019

Debt and finance lease obligations


$                            23,030

$                            11,160

Plus: sale-leaseback financing liabilities


2,180

Plus: unamortized discount/(premium) and debt issue cost, net and other


138

(115)

Adjusted debt and finance lease obligations


$                            25,349

$                            11,044

Plus: 7x last twelve months’ aircraft rent


3,558

2,963

Adjusted total debt


$                            28,906

$                            14,007

Less: cash, cash equivalents and short-term investments


(6,534)

(2,882)

Less: LGA restricted cash


(69)

(636)

Adjusted net debt


$                            22,303

$                            10,489





Adjusted Non-Fuel Cost and Non-Fuel Unit Cost or Cost per Available Seat Mile, (“CASM-Ex”)

 












Three Months Ended




4Q22 vs 4Q19

% Change

(in millions)


December 31, 2022

December 31, 2019




Operating Expense

$                       11,965

$                       10,040





Adjusted for:







Restructuring charges

118





Aircraft fuel and related taxes

(2,849)

(2,012)





Third-party refinery sales

(1,142)

(2)





Profit sharing

(272)

(387)





Delta Private Jets adjustment

(49)





Non-Fuel Cost

$                         7,821

$                         7,590




3 %













Year Ended




FY22 vs FY19

% Change

(in millions)


December 31, 2022

December 31, 2019




Operating Expense

$                       46,921

$                       40,389





Adjusted for:







Restructuring charges

124





Aircraft fuel and related taxes

(11,482)

(8,519)





Third-party refinery sales

(4,977)

(97)





Profit sharing

(563)

(1,643)





Delta Private Jets adjustment

(168)





Non-Fuel Cost

$                       30,024

$                       29,962




— %













Three Months Ended


4Q22 vs 4Q19

% Change




December 31, 2022

September 30, 2022

December 31, 2019

September 30, 2019


CASM (cents)

20.11

19.87

15.34

13.85



Adjusted for:







Restructuring charges

0.20



     Aircraft fuel and related taxes

(4.78)

(5.26)

(3.08)

(2.96)



     Third-party refinery sales

(1.92)

(1.80)

(0.01)



     Profit sharing

(0.46)

(0.38)

(0.59)

(0.68)



     Delta Private Jets adjustment

(0.07)

(0.05)



CASM-Ex

13.14

12.43

11.59

10.15


13 %













Year Ended




FY22 vs FY19

% Change




December 31, 2022

December 31, 2019




CASM (cents)

20.12

14.67





Adjusted for:







Restructuring charges

0.05





     Aircraft fuel and related taxes

(4.92)

(3.10)





     Third-party refinery sales

(2.13)

(0.04)





     Profit sharing

(0.24)

(0.60)





     Delta Private Jets adjustment

(0.06)





CASM-Ex

12.87

10.88




18 %

















Operating Expense, adjusted






Three Months Ended

(in millions)

December 31, 2022

December 31, 2019

Operating expense

$                      11,965

$                      10,040

Adjusted for:



Restructuring charges

118

MTM adjustments and settlements on hedges

(70)

(22)

Third-party refinery sales

(1,142)

(2)

Delta Private Jets adjustment

(55)

Operating expense, adjusted

$                      10,871

$                        9,961






Year Ended

(in millions)

December 31, 2022

December 31, 2019

Operating expense

$                      46,921

$                      40,389

Adjusted for:



Restructuring charges

124

MTM adjustments and settlements on hedges

(29)

(14)

Third-party refinery sales

(4,977)

(97)

Delta Private Jets adjustment

(196)

Operating expense, adjusted

$                      42,039

$                      40,082




Total fuel expense, adjusted and Average fuel price per gallon, adjusted












Average Price Per Gallon



Three Months Ended


Three Months Ended



December 31,

December 31,


December 31,

December 31,

(in millions, except per gallon data)

2022

2019


2022

2019

Total fuel expense

$              2,849

$          2,012


$                3.28

$            2.01

Adjusted for:






MTM adjustments and settlements on hedges

(70)

(22)


(0.08)

(0.02)

Delta Private Jets adjustment

(6)


(0.01)

Total fuel expense, adjusted

$              2,778

$          1,983


$                3.20

$            1.99

























Average Price Per Gallon



Year Ended


Year Ended



December 31,

December 31,


December 31,

December 31,

(in millions, except per gallon data)

2022

2019


2022

2019

Total fuel expense

$            11,482

$          8,519


$                3.36

$            2.02

Adjusted for:






MTM adjustments and settlements on hedges

(29)

(14)


(0.01)

Delta Private Jets adjustment

(28)


(0.01)

Total fuel expense, adjusted

$            11,453

$          8,477


$                3.36

$            2.01

Gross Capital Expenditures. We adjust capital expenditures for the following items to determine gross capital expenditures for the reasons described below:

Financed aircraft acquisitions. This adjusts capital expenditures to reflect aircraft deliveries that are leased as capital expenditures. The adjustment is based on their original contractual purchase price or an estimate of the aircraft’s fair value and provides a more meaningful view of our investing activities.

Net cash flows related to certain airport construction projects. Cash flows related to certain airport construction projects are included in capital expenditures. We have adjusted for these items because management believes investors should be informed that a portion of these capital expenditures from airport construction projects are either funded with restricted cash specific to these projects or reimbursed by a third party. 



Three Months Ended

(in millions)

December 31, 2022

December 31, 2019

Flight equipment, including advance payments

$                         1,643

$                            570

Ground property and equipment, including technology

557

502

Adjusted for:



Net cash flows related to certain airport construction projects

(87)

(118)

Gross capital expenditures

$                         2,113

$                            954







Year Ended

(in millions)

December 31, 2022

December 31, 2019

Flight equipment, including advance payments

$                         4,495

$                         3,344

Ground property and equipment, including technology

1,871

1,592

Adjusted for:



Financed aircraft acquisitions

206

818

Net cash flows related to certain airport construction projects

(564)

(448)

Gross capital expenditures

$                         6,008

$                         5,306





SOURCE Delta Air Lines

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