Delta Air Lines reported financial results on Thursday for the September Quarter of 2022. The airline reported a record operating revenue of $14 billion during Q3. The earnings are solid, and the airline is confident about strong demand and returns to best-in-class operational performance.
For the third quarter, Delta reported a net income of $695 million, down 54% from the same period in 2019, due to increased fuel prices. The adjusted revenue was up 3 percent compared to 2019, and the airline is working to restore its capacity to pre-pandemic levels by next summer as business and leisure demand rises.
Commenting on the Results, Delta's chief executive officer, Ed Bastian said: "Thanks to the incredible work of our entire team, Delta delivered a strong September quarter with record quarterly revenues and a double-digit operating margin. The travel recovery continues as consumer spend shifts to experiences and demand improves in corporate and international. In this environment, we expect December quarter revenue growth to accelerate versus 2019 with an operating margin of approximately 10 percent."
"With strong demand and a return to best-in-class operational performance, we are ahead of our plan for the year on profitability and expect to be free cash flow positive. We’re working towards full network restoration by summer of 2023, which supports a meaningful step up in profitability and cash flow next year on our path to earn over $7 of EPS and $4 billion of free cash flow in 2024," Bastian said.
Glen Hauenstein, Delta's president said: “With corporate travel improving and robust domestic and international demand, we expect December quarter revenue to be up 5 to 9 percent compared to December quarter 2019."
Dan Janki, Delta's chief financial officer, said: “We delivered $1.5 billion of operating profit with a 12 percent operating margin in the September quarter despite costs related to our rebuild efforts as well as inflationary impacts felt across the industry. With capacity expected to be 91 to 92 percent restored to 2019 in the December quarter, non-fuel unit costs are expected to be 12 to 13 percent higher, improving 10 points sequentially. Improving asset utilization and efficiency remain key priorities as we move into the final stages of rebuilding the airline and work to drive a competitive cost structure.”
“We repaid $1.8 billion of debt during the quarter, bringing year-to-date debt repayment to more than $4 billion. We remain committed to strengthening our balance sheet, targeting adjusted net debt of $15 billion and investment grade metrics by 2024.”
September Quarter Revenue Environment and Outlook:
Consumer demand remains robust with improving demand for international travel. Transatlantic demand was driven by leisure destinations such as Italy, Spain and Greece and improving Business demand.
September quarter co-brand card spending was up 44 percent compared to 2019.
The impact of Hurricane Ian on September month revenue was $35 million, driven by cancellations and related booking softness to affected areas. A similar impact is expected in October.
Delta has an agreement with Boeing to purchase 100 Boeing 737-10 aircraft with options for 30 more, and the deliveries of the aircraft will begin in 2025. In addition to improved fuel efficiency, these aircraft will have higher guage and more premium seating.
Partnership with Joby Aviation for eVTOL Services:
The partnership will leverage Delta's expertise to develop Joby's transformational home-to-airport transportation service for Delta customers.
In the Customer Experience and Loyalty segment, Delta welcomed a record number of new SkyMiles members and achieved record American Express co-brand spending.
Delta is upbeat about robust domestic and international travel and expects December quarter revenue to accelerate relative to 2019.