Delta Air Lines today reported financial results for the December quarter and full year 2023 and provided its outlook for the March quarter and full year 2024. Highlights of the December quarter and full year 2023, including both GAAP and adjusted metrics, are on page six and incorporated here.
“2023 was a great year for Delta with industry-leading operational and financial performance. Our people and their commitment to deliver unmatched service excellence for our customers is at the foundation of Delta’s success. We are thrilled to recognize their outstanding work with $1.4 billion in profit sharing payments next month,” said Ed Bastian, Delta’s chief executive officer. “In 2024, demand for air travel remains strong and our customer base is in a healthy financial position with travel a top priority. We expect to grow full year earnings to $6 to $7 per share and generate free cash flow of $3 to $4 billion, further strengthening our financial foundation.”
DECEMBER QUARTER 2023 GAAP FINANCIAL RESULTS
- Operating revenue of $14.2 billion
- Operating income of $1.3 billion with an operating margin of 9.3 percent
- Pre-tax income of $2.3 billion with a pre-tax margin of 16.0 percent
- Earnings per share of $3.16
- Operating cash flow of $545 million
- Payments on debt and finance lease obligations of $361 million
DECEMBER QUARTER 2023 ADJUSTED FINANCIAL RESULTS
- Operating revenue of $13.7 billion, 11 percent higher than the December quarter 2022
- Operating income of $1.3 billion with an operating margin of 9.7 percent
- Pre-tax income of $1.1 billion with a pre-tax margin of 7.8 percent
- Earnings per share of $1.28
- Operating cash flow of $499 million
FULL YEAR 2023 GAAP FINANCIAL RESULTS
- Operating revenue of $58.0 billion
- Operating income of $5.5 billion with an operating margin of 9.5 percent
- Pre-tax income of $5.6 billion with a pre-tax margin of 9.7 percent
- Earnings per share of $7.17
- Operating cash flow of $6.5 billion
- Payments on debt and finance lease obligations of $4.1 billion
- Total debt and finance lease obligations of $20.1 billion at year end
FULL YEAR 2023 ADJUSTED FINANCIAL RESULTS
- Operating revenue of $54.7 billion, 20 percent higher than the full year 2022
- Operating income of $6.3 billion with an operating margin of 11.6 percent
- Pre-tax income of $5.2 billion with a pre-tax margin of 9.5 percent
- Earnings per share of $6.25
- Operating cash flow of $7.2 billion
- Free cash flow of $2.0 billion
- Adjusted debt to EBITDAR of 3.0x, down from 5.0x at the end of 2022
- Return on invested capital of 13.4 percent, up 5 points over 2022
Revenue Environment and Outlook
“With industry-leading operational performance and best-in-class service delivered by our people, more customers
than ever are choosing Delta. In 2023 we delivered a record $54.7 billion in revenue, 20 percent higher than 2022.
Premium and non-ticket revenue has reached 55 percent of total revenue, supporting Delta's differentiated financial
results from the industry,” said Glen Hauenstein, Delta’s president. “With strong demand for international travel and
a positive inflection in the domestic environment, we expect March quarter adjusted revenue to be 3 to 6 percent
higher than the prior year.”
“With our outlook for continued revenue growth, we expect March quarter unit revenues to be flat to down 3 percent
over 2023,” Glen said. “The midpoint of this outlook implies a two-point sequential improvement in unit revenues on
a year-over-year basis. The March quarter includes a headwind from higher international mix, the normalization of
travel credit utilization and lapping a competitor’s operational challenges in the year ago period.”
Industry-leading operational results with strong leisure and business demand continuing: Delta
delivered record December quarter revenue with the highest holiday travel volumes in its history.
Operational performance was best-in-class with leading system-wide completion factor and on-time
performance. Corporate sales accelerated into year end, including double-digit year-over-year growth in
the month of December. Technology and Financial Services led momentum for the December quarter, with
Media and Auto sectors seeing notable traction following strike resolutions. Recent corporate survey results
indicate that 93 percent of companies surveyed expect their travel volumes to increase sequentially or stay
the same in the March quarter and into 2024.
- International demand remains strong: International passenger revenue was 25 percent higher versus the
December quarter 2022 with double-digit revenue and capacity growth in the Transatlantic, Pacific and Latin
entities. Transatlantic performance led with passenger unit revenues up 9 percent versus the December
quarter 2022. Full year results generated record margins across all three international regions. - Premium and Loyalty driving revenue diversification: Premium revenue grew 15 percent versus the
December quarter 2022 on record paid load factors, outperforming Main Cabin. Loyalty revenue improved
11 percent, driven by strong co-brand spend growth. Remuneration from American Express for the
December quarter was $1.7 billion, approximately 11 percent higher than the December quarter 2022, and
full year remuneration of $6.8 billion grew 22 percent year-over-year. For the full year, diversified revenue
streams, including Loyalty, Premium, Cargo, and MRO comprised 55 percent of total revenues.
Cost Performance and Outlook
“We closed the year strong, with full-year operating margin expanding by four points to 11.6 percent.” said Dan
Janki, Delta’s chief financial officer. “In 2024 we are entering a period of optimization and expect to unlock
efficiencies that will fund continued investment in our people, our operation and our customers. We expect to
deliver earnings and cash flow growth for the full year, with non-fuel unit costs up low-single digits over 2023.”
Balance Sheet, Cash and Liquidity
“Delta delivered $2 billion of free cash flow in the year, while reinvesting in the business and repaying $4.1 billion of
gross debt. During the year, we reduced leverage to 3x and reinstated the quarterly dividend,” Janki said. “We
expect 2024 free cash flow of $3 to $4 billion, an up to $2 billion improvement driven by continued earnings growth,
lower capital expenditures and a higher mix of cash sales. With strong cash generation, we expect to continue
reducing debt and growing our unencumbered asset base, progressing our balance sheet towards investment
grade.”
- Adjusted net debt of $21.4 billion at December quarter end, a reduction of $879 million from the end of 2022
- Payments on debt and finance lease obligations for the full year of $4.1 billion
- Weighted average interest rate of 4.6 percent with 90 percent fixed rate debt and 10 percent variable rate
debt - Borrowed $878 million in connection with tax-exempt bond financing to provide a majority of funding to
complete the generational terminal transformation at LaGuardia airport - Adjusted operating cash flow in the December quarter of $499 million and gross capital expenditures of
$1.2 billion - Full year adjusted operating cash flow of $7.2 billion and gross capital expenditures of $5.3 billion, resulting
in $2.0 billion free cash flow - Air Traffic Liability ended the year at $7.0 billion
- Liquidity* of $6.8 billion at year-end, including $2.9 billion in undrawn revolver capacity
*Includes cash and cash equivalents, short-term investments and undrawn revolving credit facilities
Fleet Update
Today, Delta announced it reached an agreement with Airbus to purchase twenty A350-1000s, with options for
twenty additional widebody aircraft. Deliveries of the aircraft are scheduled to begin in 2026. In addition to
improved fuel efficiency, these aircraft will add higher gauge, more premium seating and greater cargo capabilities
to the international widebody fleet. The company also announced a service agreement with Rolls Royce to service
its Trent XWB-97 engines. The order for the aircraft is within Delta’s previously announced capital expenditure and
capacity targets.
Read the full release on PR Newswire or via download.
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.
