View All News April 13, 2023 March quarter revenue and earnings results in-line with guidance Record March quarter operating cash flow enabled accelerated debt reduction Expect record June quarter revenue, mid-teens operating margin, and EPS of $2.00 to $2.25 Reiterating 2023 outlook for significant EPS growth to $5 to $6 and free cash flow of more than $2 billion ATLANTA, April 13, 2023 /PRNewswire/ -- Delta Air Lines (NYSE:DAL) today reported financial results for the March quarter and provided its outlook for the June quarter 2023. Highlights of the March quarter, including both GAAP and adjusted metrics, are on page five and incorporated here. "Thanks to the outstanding work and dedication of the Delta team, 2023 is off to a strong start. We provided well-deserved pay increases for our people and paid more profit sharing than the rest of the industry combined. Delta is building momentum, with the best people in the industry generating nearly $5 billion of operating profit over the last twelve months," said Ed Bastian, Delta's chief executive officer. "For the June quarter, we expect to deliver record revenue, and an adjusted operating margin of 14 to 16 percent with earnings per share of $2.00 to $2.25." "With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2 billion," Bastian said. March Quarter 2023 GAAP Financial Results March Quarter 2023 Adjusted Financial Results * Includes cash and cash equivalents, short-term investments and undrawn revolving credit facilities June Quarter and Full Year Outlook1 2Q23 Forecast FY 2023 Forecast2 Total Revenue YoY +15% - 17% +15% - 20% Operating Margin 14% - 16% 10% - 12% Earnings Per Share $2.00 - $2.25 $5 - $6 1 Non-GAAP measures; Refer to Non-GAAP reconciliations for comparison figures 2 Reiteration of FY2023 guidance initially provided in December 2022 Additional metrics for financial modeling can be found in the Supplemental Information section under Quarterly Results on ir.delta.com. Revenue Environment and Outlook "We delivered record March quarter revenue with total unit revenue that was 16 percent higher than the same period in 2019. These results reflect the strength in the underlying demand environment and continued momentum in premium products and loyalty revenue," said Glen Hauenstein, Delta's president. "With record advance bookings for the summer, we expect June quarter revenue to be 15 to 17 percent higher on capacity growth of 17 percent year over year." * Corporate sales include tickets sold to corporate contracted customers, including tickets for travel during and beyond the referenced time period Cost Performance and Outlook "Non-fuel costs are progressing as expected. For the June quarter, we expect non-fuel unit costs to be 1 to 3 percent higher year over year," said Dan Janki, Delta's chief financial officer. "We remain confident in our ability to deliver unit cost declines in the second half of 2023, while generating industry-leading operating margins of 10 to 12 percent for the full year." March Quarter 2023 Cost Performance Balance Sheet, Cash and Liquidity "Record March quarter free cash flow of $1.9 billionenabled $1.2 billionof debt repayment and positions us to complete our full year planned debt reduction in the first half of the year," Janki said. "We are on track to reduce leverage to 3x to 3.5x in 2023 and remain committed to returning to investment grade metrics by next year. The recent upgrades on our debt rating outlooks by S&P and Fitch recognize our continued progress on delevering our balance sheet." March Quarter Highlights Operations and Fleet Culture and People Customer Experience and Loyalty Environmental, Social and Governance 1 Based on FlightStats data for A14 arrival system-wide for flights flown Jan. 1 – Mar. 31, 2023, compared to US carriers reporting to the DOT March Quarter Results March quarter results have been adjusted primarily for thethird-party refinery sales,one-time expenses related to the new pilot agreement, unrealized gains on investments and loss on extinguishment of debt as described in the reconciliations in Note A. GAAP $ % ($ in millions except per share and unit costs) 1Q23 1Q22 Operating loss (277) (783) 506 65% Operating margin (2.2)% (8.4)% 6.2 pts 74% Pre-tax loss (506) (1,200) 694 58% Pre-tax margin (4.0)% (12.8)% 8.8 pts 69% Net loss (363) (940) 577 61% Loss per share (0.57) (1.48) 0.91 61% Operating revenue 12,759 9,348 3,411 36% Total revenue per available seat mile (TRASM) (cents) 20.80 18.04 2.76 15% Operating expense 13,036 10,131 2,905 29% Cost per available seat mile (CASM) (cents) 21.25 19.56 1.69 9% Fuel expense 2,676 2,092 584 28% Average fuel price per gallon 3.01 2.79 0.22 8% Operating cash flow 2,235 1,771 464 26% Capital expenditures 1,000 1,766 (766) (43)% Total debt and finance lease obligations 21,958 25,557 (3,599) (14)% Adjusted $ % ($ in millions except per share and unit costs) 1Q23 1Q22 Operating income/(loss) 546 (793) 1,339 NM Operating margin 4.6% (9.7)% 14.3 pts NM Pre-tax income/(loss) 217 (1,037) 1,254 NM Pre-tax margin 1.8% (12.7)% 14.5 pts NM Net income/(loss) 163 (784) 947 NM Diluted earnings/(loss) per share 0.25 (1.23) 1.48 NM Operating revenue 11,842 8,161 3,681 45% TRASM (cents) 19.30 15.75 3.55 23% Operating expense 11,296 8,954 2,342 26% Non-fuel cost 8,506 6,858 1,648 24% Non-fuel unit cost (CASM-Ex) (cents) 13.86 13.24 0.62 4.7% Fuel expense 2,718 2,097 621 30% Average fuel price per gallon 3.06 2.79 0.27 10% Operating cash flow 2,942 1,758 1,184 67% Free cash flow 1,853 197 1,656 NM Gross capital expenditures 1,090 1,565 (475) (30)% Adjusted net debt 20,964 20,863 101 —% 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 tailored to every customer. 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 safely serving as many as 200 million customers annually, with industry-leading customer service, 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, London-Heathrow, 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. It has been recognized by Cirium for operational excellence, as the top U.S. airline by the Wall Street Journal, among Fast Company's most innovative companies, the World's Most Admired Airline according to Fortune, as one of Glassdoor's Best Places to Work, and a top employer for diversity, veterans and best workplaces for women by Forbes. 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 impact of incurring significant debt in response to the COVID-19 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, which could compromise the data stored within them, as well as failure to comply with ever-evolving global privacy and security regulatory obligations or adequately address increasing customer focus on privacy issues and data security; 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 on our business of seasonality and other factors beyond our control, including severe weather conditions, natural disasters or other environmental events, including from the impact of climate change; 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; significant damage to our reputation and brand, including from exposure to significant adverse publicity or inability to achieve certain sustainability goals; our ability to retain senior management and other key employees, and to maintain our company culture; disease outbreaks, such as the COVID-19 pandemic or similar public health threats, and measures implemented to combat them; 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, 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 March 31, (in millions, except per share data) 2023 2022 $ Change % Change Operating Revenue: Passenger $ 10,411 $ 6,907 $ 3,504 51% Cargo 209 289 (80) (28)% Other 2,139 2,152 (13) (1)% Total operating revenue 12,759 9,348 3,411 36% Operating Expense: Salaries and related costs 3,386 2,826 560 20% Aircraft fuel and related taxes 2,676 2,092 584 28% Ancillary businesses and refinery 1,125 1,382 (257) (19)% Contracted services 1,010 753 257 34% Pilot agreement and related expenses 864 — 864 NM Aircraft maintenance materials and outside repairs 585 465 120 26% Landing fees and other rents 584 504 80 16% Depreciation and amortization 564 506 58 11% Regional carrier expense 559 491 68 14% Passenger commissions and other selling expenses 500 312 188 60% Passenger service 416 275 141 51% Aircraft rent 132 122 10 8% Profit sharing 72 — 72 NM Other 563 403 160 40% Total operating expense 13,036 10,131 2,905 29% Operating Loss (277) (783) 506 (65)% Non-Operating Expense: Interest expense, net (227) (274) 47 (17)% Gain/(loss) on investments, net 122 (147) 269 NM Loss on extinguishment of debt (22) (25) 3 (12)% Pension and related (expense)/benefit (61) 73 (134) NM Miscellaneous, net (41) (44) 3 (7)% Total non-operating expense, net (229) (417) 188 (45)% Loss Before Income Taxes (506) (1,200) 694 (58)% Income Tax Benefit 143 260 (117) (45)% Net Loss $ (363) $ (940) $ 577 (61)% Basic Loss Per Share $ (0.57) $ (1.48) Diluted Loss Per Share $ (0.57) $ (1.48) Basic Weighted Average Shares Outstanding 639 637 Diluted Weighted Average Shares Outstanding 639 637 DELTA AIR LINES, INC. Passenger Revenue (Unaudited) Three Months Ended March 31, (in millions) 2023 2022 $ Change % Change Ticket - Main cabin $ 5,223 $ 3,448 $ 1,775 51% Ticket - Premium products 4,016 2,538 1,478 58% Loyalty travel awards 743 543 200 37% Travel-related services 429 378 51 13% Total passenger revenue $ 10,411 $ 6,907 $ 3,504 51% DELTA AIR LINES, INC. Other Revenue (Unaudited) Three Months Ended March 31, (in millions) 2023 2022 $ Change % Change Refinery $ 916 $ 1,187 $ (271) (23)% Loyalty program 726 571 155 27% Ancillary businesses 231 209 22 11% Miscellaneous 266 185 81 44% Total other revenue $ 2,139 $ 2,152 $ (13) (1)% DELTA AIR LINES, INC. Total Revenue (Unaudited) Increase (Decrease) 1Q23 vs 1Q22 Revenue 1Q23 ($M) Change Unit Revenue Yield Capacity Domestic $ 7,594 37% 27% 21% 7% Atlantic 1,244 131% 38% 20% 67% Latin America 1,132 66% 50% 33% 11% Pacific 441 253% 79% (19)% 97% Total Passenger $ 10,411 51% 27% 17% 18% Cargo Revenue 209 (28)% Other Revenue 2,139 (1)% Total Revenue $ 12,759 36% 15% Third Party Refinery Sales (916) Total Revenue, adjusted $ 11,842 45% 23% DELTA AIR LINES, INC. Three Months Ended March 31, 2023 2022 Change Revenue passenger miles (millions) 49,687 38,700 28 % Available seat miles (millions) 61,351 51,810 18 % Passenger mile yield (cents) 20.95 17.85 17 % Passenger revenue per available seat mile (cents) 16.97 13.33 27 % Total revenue per available seat mile (cents) 20.80 18.04 15 % TRASM, adjusted - see Note A (cents) 19.30 15.75 23 % Cost per available seat mile (cents) 21.25 19.56 9 % CASM-Ex - see Note A (cents) 13.86 13.24 5 % Passenger load factor 81% 75% 6 pts Fuel gallons consumed (millions) 888 751 18 % Average price per fuel gallon $ 3.01 $ 2.79 8 % Average price per fuel gallon, adjusted - see Note A $ 3.06 $ 2.79 10 % DELTA AIR LINES, INC. Consolidated Statements of Cash Flows (Unaudited) Three Months Ended March 31, (in millions) 2023 2022 Cash Flows From Operating Activities: Net Loss $ (363) $ (940) Depreciation and amortization 564 506 Changes in air traffic liability 2,927 2,751 Changes in profit sharing (491) (108) Changes in balance sheet and other, net (402) (438) Net cash provided by operating activities 2,235 1,771 Cash Flows From Investing Activities: Property and equipment additions: Flight equipment, including advance payments (630) (1,276) Ground property and equipment, including technology (370) (490) Purchase of short-term investments (999) (226) Redemption of short-term investments 897 1,346 Purchase of equity investments — (100) Other, net 2 (3) Net cash used in investing activities (1,100) (749) Cash Flows From Financing Activities: Payments on debt and finance lease obligations (1,166) (1,443) Other, net (13) (13) Net cash used in financing activities (1,179) (1,456) Net Decrease in Cash, Cash Equivalents and Restricted Cash Equivalents (44) (434) Cash, cash equivalents and restricted cash equivalents at beginning of period 3,473 $ 8,569 Cash, cash equivalents and restricted cash equivalents at end of period $ 3,429 $ 8,135 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 $ 3,215 $ 7,705 Restricted cash included in prepaid expenses and other 160 170 Other assets: Restricted cash included in other noncurrent assets 54 260 Total cash, cash equivalents and restricted cash equivalents $ 3,429 $ 8,135 DELTA AIR LINES, INC. Consolidated Balance Sheets (Unaudited) March 31, December 31, (in millions) 2023 2022 ASSETS Current Assets: Cash and cash equivalents $ 3,215 $ 3,266 Short-term investments 3,396 3,268 Accounts receivable, net 3,224 3,176 Fuel inventory, expendable parts and supplies inventories, net 1,379 1,424 Prepaid expenses and other 2,187 1,877 Total current assets 13,401 13,011 Property and Equipment, Net: Property and equipment, net 33,249 33,109 Other Assets: Operating lease right-of-use assets 7,067 7,036 Goodwill 9,753 9,753 Identifiable intangibles, net 5,990 5,992 Equity investments 2,249 2,128 Deferred income taxes, net 432 325 Other noncurrent assets 993 934 Total other assets 26,484 26,168 Total assets $ 73,134 $ 72,288 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Current maturities of debt and finance leases $ 2,136 $ 2,359 Current maturities of operating leases 724 714 Air traffic liability 11,187 8,160 Accounts payable 4,754 5,106 Accrued salaries and related benefits 2,828 3,288 Loyalty program deferred revenue 3,685 3,434 Fuel card obligation 1,100 1,100 Other accrued liabilities 2,003 1,779 Total current liabilities 28,417 25,940 Noncurrent Liabilities: Debt and finance leases 19,823 20,671 Pension, postretirement and related benefits 3,730 3,707 Loyalty program deferred revenue 4,413 4,448 Noncurrent operating leases 6,877 6,866 Other noncurrent liabilities 3,614 4,074 Total noncurrent liabilities 38,457 39,766 Commitments and Contingencies Stockholders' Equity: 6,260 6,582 Total liabilities and stockholders' equity $ 73,134 $ 72,288 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 made to provide comparability between the reported periods, if applicable, and for the reasons indicated below: 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. One-time pilot agreement expenses.In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735million. Additionally, we recorded adjustments to other benefit-related items of approximately $130million. Adjusting for these expenses allows investors to better understand and analyze our core cost performance. 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. During 2022, we recognized adjustments to certain of those restructuring charges, representing changes in our estimates. 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. Loss on extinguishment of debt. This adjustment relates to early termination of a portion of our debt. 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. 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 Income/(Loss), adjusted Three Months Ended March 31, December 31, September 30, June 30, March 31, (in millions) 2023 2022 2022 2022 2022 Operating (Loss)/Income $ (277) $ 1,470 $ 1,456 $ 1,519 $ (783) Adjusted for: MTM adjustments and settlements on hedges (41) 70 36 (73) (4) One-time pilot agreement expenses 864 — — — — Restructuring charges — (118) 1 (1) (5) Operating Income/(Loss), adjusted $ 546 $ 1,422 $ 1,492 $ 1,445 $ (793) Twelve months ended March 31, 2023 operating income, $ 4,905 Operating Revenue, adjusted and Total Revenue Per Available Seat Mile ("TRASM"), adjusted Three Months Ended 1Q23 vs 1Q22 1Q23 vs 1Q19 (in millions) March 31, 2023 June 30, 2022 March 31, 2022 March 31, 2019 % Change % Change Operating revenue $ 12,759 $ 13,824 $ 9,348 $ 10,472 Adjusted for: Third-party refinery sales (916) (1,514) (1,187) (48) Delta Private Jets adjustment — — — (43) Operating revenue, adjusted $ 11,842 $ 12,311 $ 8,161 $ 10,381 45% 14% Year Ended (in millions) December 31, 2022 Operating revenue $ 50,582 Adjusted for: Third-party refinery sales (4,977) Operating revenue, adjusted $ 45,605 Three Months Ended 1Q23 vs 1Q22 1Q23 vs 1Q19 March 31, 2023 March 31, 2022 March 31, 2019 % Change % Change TRASM (cents) 20.80 18.04 16.78 Adjusted for: Third-party refinery sales (1.49) (2.29) (0.08) Delta Private Jets adjustment — — (0.07) TRASM, adjusted 19.30 15.75 16.63 23% 16% Operating Margin, adjusted Three Months Ended March 31, 2023 March 31, 2022 Operating margin (2.2)% (8.4)% Adjusted for: MTM adjustments and settlements on hedges (0.3) — Third-party refinery sales 0.3 (1.2) One-time pilot agreement expenses 6.8 — Restructuring charges — (0.1) Operating margin, adjusted 4.6% (9.7)% Pre-Tax (Loss)/Income, Net (Loss)/Income, and (Loss)/DilutedEarnings per Share, adjusted Three Months Ended Three Months Ended March 31, 2023 March 31, 2023 Pre-Tax Income Net (Loss)/Earnings (in millions, except per share data) (Loss)/Income Tax (Loss)/Income Per Diluted Share GAAP $ (506) $ 143 $ (363) $ (0.57) Adjusted for: Loss on extinguishment of debt 22 MTM adjustments and settlements on hedges (41) MTM adjustments on investments (122) One-time pilot agreement expenses 864 Non-GAAP $ 217 $ (53) $ 163 $ 0.25 Three Months Ended Three Months Ended March 31, 2022 March 31, 2022 Pre-Tax Income Net Loss (in millions, except per share data) Loss Tax Loss Per Diluted Share GAAP $ (1,200) $ 260 $ (940) $ (1.48) Adjusted for: Loss on extinguishment of debt 25 MTM adjustments and settlements on hedges (4) MTM adjustments on investments 148 Restructuring charges (5) Non-GAAP $ (1,037) $ 253 $ (784) $ (1.23) Pre-Tax Margin, adjusted Three Months Ended March 31, 2023 March 31, 2022 Pre-tax margin (4.0)% (12.8)% Adjusted for: Loss on extinguishment of debt 0.2 0.3 MTM adjustments and settlements on hedges (0.3) — MTM adjustments on investments (1.0) 1.6 Third-party refinery sales 0.1 (1.6) One-time pilot agreement expenses 6.8 — Restructuring charges — (0.1) Pre-tax margin, adjusted 1.8% (12.7)% Operating Cash Flow, adjusted.We present operating cash flow, adjusted because management believes adjusting for the following items 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 is core to our operations in the periods shown. Pilot agreement payment.In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735million. We adjust for this item to provide investors a better understanding of our recurring cash flow generated by our operations. Three Months Ended (in millions) March 31, 2023 March 31, 2022 Net cash provided by operating activities $ 2,235 $ 1,771 Adjustments: Net cash flows related to certain airport construction projects and other (28) (13) Pilot agreement payment 735 — Net cash provided by operating activities, adjusted $ 2,942 $ 1,758 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 2023 incentive compensation program. Free cash flow is defined as net cash from operating activities and net cash from investing activities, adjusted for (i) net purchases/(redemptions) of short-term investments, (ii) strategic investments and related, (iii) net cash flows related to certain airport construction projects and other, (iv) financed aircraft acquisitions and (v) pilot agreement payment. These adjustments are made for the following reasons: Net purchases/(redemptions) of short-term investments.Net purchases/(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.Certain 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. Pilot agreement payment.In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during thefour-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735million. We adjust for this item to provide investors a better understanding of our recurring free cash flow generated by our operations. Three Months Ended (in millions) March 31, 2023 March 31, 2022 Net cash provided by operating activities $ 2,235 $ 1,771 Net cash used in investing activities (1,100) (749) Adjusted for: Net purchases/(redemptions) of short-term investments 102 (1,120) Strategic investments and related — 107 Net cash flows related to certain airport construction projects and other 19 188 Financed aircraft acquisitions (137) — Pilot agreement payment 735 — Free cash flow $ 1,853 $ 197 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, 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) March 31, 2023 December 31, 2022 March 31, 2022 1Q23 vs 4Q22 Debt and finance lease obligations $ 21,958 $ 23,030 $ 25,557 Plus: sale-leaseback financing liabilities 1,924 2,180 2,221 Plus: unamortized discount/(premium) and debt issue cost, net and other 120 138 193 Adjusted debt and finance lease obligations $ 24,002 $ 25,349 $ 27,971 Plus: 7x last twelve months' aircraft rent 3,627 3,558 3,138 Adjusted total debt $ 27,630 $ 28,906 $ 31,109 Less: cash, cash equivalents and short-term investments (6,666) (6,603) (10,246) Adjusted net debt $ 20,964 $ 22,303 $ 20,863 $ (1,339) Operating revenue, adjusted related to premium products and diverse revenue streams Three Months Ended (in millions) March 31, 2023 Operating revenue $ 12,759 Adjusted for: Third-party refinery sales (916) Operating revenue, adjusted $ 11,842 Less: main cabin revenue (5,223) Operating revenue, adjusted related to premium products and diverse revenue streams $ 6,619 Percent of operating revenue, adjusted related to premium products and diverse revenue streams 56% Adjusted Non-Fuel Cost and Non-Fuel Unit Cost or Cost per Available Seat Mile, ("CASM-Ex") Three Months Ended (in millions) March 31, 2023 June 30, 2022 March 31, 2022 Operating Expense $ 13,036 $ 12,305 $ 10,131 Adjusted for: Aircraft fuel and related taxes (2,676) (3,223) (2,092) Third-party refinery sales (916) (1,514) (1,187) Profit sharing (72) (54) — One-time pilot agreement expenses (864) — — Restructuring charges — 1 5 Non-Fuel Cost $ 8,506 $ 7,516 $ 6,858 Three Months Ended 1Q23 vs 1Q22 % Change March 31, 2023 June 30, 2022 March 31, 2022 CASM (cents) 21.25 20.89 19.56 Adjusted for: Aircraft fuel and related taxes (4.36) (5.47) (4.04) Third-party refinery sales (1.49) (2.57) (2.29) Profit sharing (0.12) (0.09) — One-time pilot agreement expenses (1.41) — — Restructuring charges — — 0.01 CASM-Ex 13.86 12.76 13.24 4.7% Operating Expense, adjusted Three Months Ended (in millions) March 31, 2023 March 31, 2022 Operating expense $ 13,036 $ 10,131 Adjusted for: MTM adjustments and settlements on hedges 41 4 Third-party refinery sales (916) (1,187) One-time pilot agreement expenses (864) — Restructuring charges — 5 Operating expense, adjusted $ 11,296 $ 8,954 Total fuel expense, adjusted and Average fuel price per gallon, adjusted Average Price Per Gallon Three Months Ended Three Months Ended March 31, March 31, 1Q23 vs % Change March 31, March 31, (in millions, except per gallon data) 2023 2022 2023 2022 Total fuel expense $ 2,676 $ 2,092 $ 3.01 $ 2.79 Adjusted for: MTM adjustments and settlements on hedges 41 4 0.05 0.01 Total fuel expense, adjusted $ 2,718 $ 2,097 30% $ 3.06 $ 2.79 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) March 31, 2023 March 31, 2022 Flight equipment, including advance payments $ 630 $ 1,276 Ground property and equipment, including technology 370 490 Adjusted for: Financed aircraft acquisitions 137 — Net cash flows related to certain airport construction projects (48) (201) Gross capital expenditures $ 1,090 $ 1,565 SOURCE Delta Air Lines View All News Delta Air Lines Announces March Quarter 2023 Financial Results
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Delta Air Lines Announces March Quarter 2023 Financial Results (2024)
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