Delta Air Lines Announces September Quarter 2024 Financial Results

Delivering industry-leading operational and financial performance year-to-date

Expect record December quarter revenue and an 11% - 13% operating margin, expanding over prior year

Generating strong Return on Invested Capital, exceeding cost of capital by 5 points

Upgraded to investment grade credit rating by Fitch, recognizing continued progression on debt reduction

ATLANTA, Oct. 10, 2024 /PRNewswire/ -- Delta Air Lines (NYSE: DAL) today reported financial results for the September quarter and provided its outlook for the December quarter.  Highlights of the September quarter, including both GAAP and adjusted metrics, are on page five and incorporated here.

"Thanks to the exceptional work of the entire Delta team, we continue to lead the industry operationally and financially, with a double-digit operating margin and nearly $3 billion of free cash flow generation year-to-date.  In recognition of the outstanding efforts of our employees this year, we have accrued almost $1 billion of profit sharing towards the upcoming February payout," said Ed Bastian, Delta's chief executive officer.

"With an improving industry backdrop and strong demand for travel on Delta, we are positioned to finish the year strong.  We expect our December quarter pre-tax profit to grow 30 percent over last year to $1.4 billion, which would mark one of the most profitable fourth quarters in our history."

September Quarter 2024 GAAP Financial Results

Operating revenue of $15.7 billion

Operating income of $1.4 billion with an operating margin of 8.9 percent

Pre-tax income of $1.6 billion with a pre-tax margin of 10.0 percent

Earnings per share of $1.97

Operating cash flow of $1.3 billion

Payments on debt and finance lease obligations of $263 million

Total debt and finance lease obligations of $17.7 billion at quarter end

September Quarter 2024 Non-GAAP Financial Results (including the impact of the CrowdStrike-caused outage)

Operating revenue of $14.6 billion

Operating income of $1.4 billion with an operating margin of 9.4 percent

Pre-tax income of $1.3 billion with a pre-tax margin of 8.6 percent

Earnings per share of $1.50

Operating cash flow of $1.3 billion

Free cash flow of $95 million, $2.7 billion year-to-date

Adjusted debt to EBITDAR of 2.9x

Financial Impact Of The CrowdStrike-Caused Outage

On August 8, Delta disclosed the financial impact of the CrowdStrike-caused outage for the September quarter.  The direct revenue impact of the incident was approximately $380 million, primarily driven by refunding customers for cancelled flights and providing customer compensation in the form of cash and SkyMiles.  The non-fuel expense impact was $170 million, primarily due to customer expense reimbursements and crew-related costs.  Fuel expense was $50 million lower than it would have been as a result of the 7,000 flight cancellations over the five-day period.

CrowdStrike-Caused Outage Impact on 3Q24

Operating Margin

(2.3) pts

Earnings Per Share

(45)¢

Year-Over-Year Metrics

Total Revenue

(2.6) pts

ASMs

(1.5) pts

TRASM

(1.1) pts

Non-Fuel CASM

3.2 pts

Financial Guidance1

4Q24 Forecast

Total Revenue YoY

Up 2% - 4%

Operating Margin

11% - 13%

Earnings Per Share

$1.60 - $1.85

1Non-GAAP measures; Refer to Non-GAAP reconciliations for historical 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

"Through the September quarter, unit revenue growth improved sequentially in all geographic entities, reflecting an improved equilibrium between demand and supply as industry growth moderated," said Glen Hauenstein, Delta's president. 

"For the December quarter, we expect the improved trends to continue and bookings for the holiday period are strong.  We anticipate a 1 point impact to total unit revenue from reduced travel demand around the election.  With this, total revenue growth is expected to be up 2 percent to 4 percent compared to prior year on capacity growth of 3 percent to 4 percent.  Industry supply growth continues to rationalize, positioning Delta well in the final quarter of the year and as we move into 2025."

Unit revenue growth improved sequentially through the September quarter: Delta delivered September quarter revenue of $14.6 billion, including the $380 million impact from the CrowdStrike-caused outage. Adjusted total unit revenue (TRASM) was down 3.6 percent versus 2023, including a 1.1 point impact from the outage. In the month of September, Domestic and Transatlantic unit revenue growth inflected positive.

Diversified revenue streams driving Delta's differentiation: Delta's diversified revenue base, led primarily by premium and loyalty, made up 57 percent of total revenue in the September quarter. Premium revenue growth continued to outpace main cabin in Domestic and International. Total loyalty revenue grew 6 percent year-over-year driven by award redemptions and growth in co-brand card spend. American Express remuneration was $1.8 billion, 6 percent higher than the September quarter of 2023. Cargo revenue grew 27 percent over prior year on international volume strength.

International trends positive, led by Transatlantic: International demand remains strong with trends improving through the quarter in Transatlantic and Latin. Transatlantic unit revenues inflected positive in the month of September as Paris demand rebounded following the Olympics. Latin America revenue benefited from the continued maturation of Delta's joint venture with LATAM in South America. Network restoration continues in the Pacific, with double-digit revenue growth driven by travel to South Korea and Japan.

Corporate sales growth continues: Managed corporate travel sales* were up 7 percent over the September quarter of 2023, with double-digit growth in the tech, media and banking sectors. Recent corporate survey results indicate that 85 percent of companies expect their travel spend to increase in 2025.

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

Cost Performance and Outlook

"For the December quarter, we expect to return to year-over-year earnings growth and margin expansion with an outlook for December quarter earnings of $1.60 to $1.85 per share on an 11 percent to 13 percent operating margin," said Dan Janki, Delta's chief financial officer.  "Our teams are consistently running a great operation, enabling us to drive efficiency and deliver non-fuel unit cost growth of low-single-digits for the year, consistent with our outlook at the start of the year."

September Quarter 2024 Cost Performance

Operating expense of $14.3 billion and adjusted operating expense of $13.2 billion

Adjusted non-fuel costs of $10.1 billion

Non-fuel CASM was 13.30¢, an increase of 5.7 percent year-over-year

Adjusted fuel expense of $2.8 billion was down 6 percent year-over-year

Adjusted fuel price of $2.53 per gallon decreased 9 percent year-over-year with a refinery loss of 3¢ per gallon

Fuel efficiency, defined as gallons per 1,000 ASMs, was 14.4, a 0.8 percent improvement year-over-year

Balance Sheet, Cash and Liquidity

"Strong cash generation has supported debt repayment of $2.4 billion year-to-date, bringing gross leverage to less than 3 times," Janki said.  "During the quarter, we achieved a meaningful milestone with our balance sheet receiving an upgrade to investment grade from Fitch.  Delta is now investment-grade rated at Moody's and Fitch, and one notch away at S&P with a positive outlook."

Adjusted net debt of $18.7 billion at September quarter end, a reduction of $2.9 billion from the end of 2023

Payments on debt and finance lease obligations for the September quarter of $263 million

Weighted average interest rate of 4.3 percent with 94 percent fixed rate debt and 6 percent variable rate debt

Adjusted operating cash flow in the September quarter of $1.3 billion, and with gross capital expenditures of $1.3 billion, free cash flow was $95 million

Air Traffic Liability ended the quarter at $8.3 billion

September Quarter 2024 Highlights

Operations, Network and Fleet

Operated the most on-time airline year-to-date, leading competitive set in on-time departures and arrivals and network peers in completion factor1

Took delivery of 27 aircraft year-to-date and nine in the September quarter, including the A321neo, A330-900 and A350-900

Building on record performance in 2024, Delta announced its Transatlantic summer schedule for 2025, offering over 700 weekly flights to 33 destinations, including seven new routes

Signed codeshare agreements with Scandinavian Airlines System (SAS), expanding connection opportunities between North America and Scandinavia, and with Saudia Airlines, building on the existing relationship and expanding destination options between North America and the Arabian Peninsula

Announced first-ever nonstop service from SLC - ICN beginning next summer, growing Delta's global network and providing connections to key destinations across Asia

Introduced five new routes from Austin, Texas, beginning in March 2025, providing customers with more options than ever before

Announced five new routes including two new destinations to Mexico this winter, building on Delta's partnership with Aeromexico and increasing connectivity to popular Mexican destinations

Culture and People

Accrued $320 million in profit sharing during the quarter, resulting in $964 million accrued year-to-date

Earned Great Place To Work® Certification™ for the sixth consecutive year based on the Trust Index survey of Delta Employees

Recognized on the 2024 PEOPLE Companies That Care List, the only airline to make the list

Named No. 1 in the Forbes 2024 list of America's Best Employers for New Grads

Achieved the No. 2 spot on the Indeed Workplace Wellbeing 100, an index of public companies that excel in employee wellbeing and outperform the market

Ranked No. 6 on the Forbes list of America's Best Employers for Tech Workers

Contributed $500,000 to the American Red Cross to support Hurricane Helene relief efforts

900+ Delta people volunteered across the U.S. on 9/11 with the 9/11 Day organization to assemble meals for Americans facing food insecurity

Customer Experience and Loyalty

Expanded the introduction of fast, free Wi-Fi for SkyMiles members with over 90 percent of domestic mainline network now equipped

Completed the new Delta One Lounge in LAX (opened to customers October 10), spanning over 10,000 square feet, the second Delta One Lounge debuted in 2024, with a lounge now available at both ends of JFK - LAX flights

Expanded Delta Sync seatback product to over 330 aircraft in the first year since its debut

Rolled out Delta Premium Select on select transcontinental flights in September with continued rollout throughout the remainder of the year

Debuted Delta Business Traveler, a complimentary program that provides individual business travelers with exclusive offers from Delta and partners

Named official airline of the WNBA, transporting all 12 of the league's teams throughout the regular season and playoffs

Expanded Global Corporate Priority benefits program to include LATAM Airlines, further enhancing the travel experience for business customers

Environmental, Social and Governance

Partnered with Flint Hills Resources to develop a 30-million gallon per year Sustainable Aviation Fuel (SAF) blending facility in Minneapolis (MSP), Delta's second largest hub

Elevated partnership with Greater MSP and Minnesota SAF Hub by sponsoring the first ever SAF delivered to MSP airport, which was used for the inaugural SAF flight from MSP - LGA as part of Climate Week

Delta's Carbon Council led cross-enterprise initiatives, saving over 16 million gallons of fuel year-to-date via weight reductions, speed optimization and lowering Auxiliary Power Unit (APU) utilization

Held the inaugural Sustainable Skies Challenge, a project in partnership with Junior Achievement (JA) Europe aimed to formulate innovative sustainable aviation solutions among young European students

Hosted annual Women Inspiring the Next Generation (WING) flight, bringing 130 girls to NASA's Kennedy Space Center on a flight operated entirely by women, exposing girls to career opportunities in aviation

1FlightStats preliminary data for Delta flights mainline system, Delta's competitive set (AA, UA, B6, AS, WN, and DL) and Delta's network peers (AA, UA, and DL) from Jan 1 - Sep 30, 2024. On-time is defined as A0

September Quarter 2024 Results

September quarter results have been adjusted primarily for the third-party refinery sales and unrealized gains/losses on investments as described in the reconciliations in Note A.

GAAP

$ Change

% Change

($ in millions except per share and unit costs)

3Q24

3Q23

Operating income

1,397

1,984

(587)

(30) %

Operating margin

8.9 %

12.8 %

       (3.9) pts

(30) %

Pre-tax income

1,561

1,521

40

3 %

Pre-tax margin

10.0 %

9.8 %

      0.2 pts

2 %

Net income

1,272

1,108

164

15 %

Diluted earnings per share

1.97

1.72

0.25

15 %

Operating revenue

15,677

15,488

189

1 %

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

20.58

21.15

(0.57)

(3) %

Operating expense

14,280

13,504

776

6 %

Cost per available seat mile (CASM) (cents)

18.75

18.44

0.31

2 %

Fuel expense

2,747

2,936

(189)

(6) %

Average fuel price per gallon

2.51

2.76

(0.25)

(9) %

Operating cash flow

1,274

1,076

198

18 %

Capital expenditures

1,328

1,269

59

5 %

Total debt and finance lease obligations

17,697

19,513

(1,816)

(9) %

Adjusted

$ Change

% Change

($ in millions except per share and unit costs)

3Q24

3Q23

Operating income

1,373

1,963

(590)

(30) %

Operating margin

9.4 %

13.5 %

       (4.1) pts

(30) %

Pre-tax income

1,254

1,719

(465)

(27) %

Pre-tax margin

8.6 %

11.8 %

       (3.2) pts

(27) %

Net income

971

1,308

(337)

(26) %

Diluted earnings per share

1.50

2.03

(0.53)

(26) %

Operating revenue

14,594

14,553

41

— %

TRASM (cents)

19.16

19.87

(0.71)

(3.6) %

Operating expense

13,221

12,590

631

5 %

Non-fuel cost

10,130

9,216

914

10 %

Non-fuel unit cost (CASM-Ex) (cents)

13.30

12.59

0.71

5.7 %

Fuel expense

2,771

2,957

(186)

(6) %

Average fuel price per gallon

2.53

2.78

(0.25)

(9) %

Operating cash flow

1,276

1,127

149

13 %

Free cash flow

95

(250)

345

NM

Gross capital expenditures

1,270

1,442

(172)

(12) %

Adjusted net debt

18,682

20,384

(1,702)

(8) %

About Delta Air Lines  Through exceptional service and the power of innovation, Delta Air Lines (NYSE:DAL) never stops looking for ways to make every trip feel tailored to every customer.

There are 100,000 Delta people leading the way to deliver a world-class customer experience on over 5,000 daily flights to more than 290 destinations on six continents, connecting people to places and to each other.

Delta served more than 190 million customers in 2023 -- safely, reliably and with industry-leading customer service innovation, and was recognized by J.D. Power this year for being No. 1 in First/Business and Premium Economy Passenger Satisfaction. The airline also was again recognized as North America's most on-time airline by Cirium.

We remain committed 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 cared for across every point of their journey with us.

Headquartered in Atlanta, Delta operates significant hubs and key markets in Amsterdam, Atlanta, Bogota, Boston, Detroit, Lima, London-Heathrow, Los Angeles, Mexico City, Minneapolis-St. Paul, New York-JFK and LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Santiago (Chile), Sao Paulo, 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 to their own 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's premium product line is elevated by its unique partnership with Wheels Up Experience.

Delta is America's most-awarded airline thanks to the dedication, passion and professionalism of its people. In addition to the awards from J.D. Power and Cirium, Delta has been recognized as the top U.S. airline by the Wall Street Journal; among Fast Company's Most Innovative Companies; the World's Most Admired Airline and one of the Best 100 Companies to Work For according to Fortune; and as one of Glassdoor's Best Places to Work. In addition, Delta has been named to the Civic 50 by Points of Light for the past seven years as one of the most community minded companies in the U.S.

Forward Looking StatementsStatements 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 possible effects of serious accidents involving our aircraft or aircraft of our airline partners; breaches or lapses in the security of technology systems we use and rely on, which could compromise the data stored within them, as well as failure to comply with 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; increases 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 that operates the Trainer refinery; failure to receive the expected results or returns from 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 comply with the financial and other covenants in our financing agreements; labor issues; the effects on our business of seasonality and other factors beyond our control, such as changes in value in our equity investments, severe weather conditions, natural disasters or other environmental events, including from the impact of climate change; failure or inability of insurance to cover a significant liability at Monroe's 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 regulation of hazardous substances, 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 (SEC) filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and subsequent quarterly reports and other filings filed with the SEC from time to time. 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

Nine Months Ended

September 30,

September 30,

(in millions, except per share data)

2024

2023

$ Change

% Change

2024

2023

$ Change

% Change

Operating Revenue:

Passenger

$      13,107

$      13,119

$           (12)

— %

$     38,079

$     36,735

$       1,344

4 %

Cargo

196

154

42

27 %

574

535

39

7 %

Other

2,374

2,215

159

7 %

7,431

6,555

876

13 %

   Total operating revenue

15,677

15,488

189

1 %

46,084

43,825

2,259

5 %

Operating Expense:

Salaries and related costs

4,231

3,760

471

13 %

12,035

10,838

1,197

11 %

Aircraft fuel and related taxes

2,747

2,936

(189)

(6) %

8,157

8,128

29

— %

Ancillary businesses and refinery

1,250

1,128

122

11 %

4,083

3,427

656

19 %

Contracted services

1,069

1,004

65

6 %

3,134

3,009

125

4 %

Landing fees and other rents

832

679

153

23 %

2,347

1,880

467

25 %

Aircraft maintenance materials and outside repairs

627

661

(34)

(5) %

1,990

1,860

130

7 %

Depreciation and amortization

643

594

49

8 %

1,878

1,731

147

8 %

Passenger commissions and other selling expenses

643

618

25

4 %

1,865

1,770

95

5 %

Regional carrier expense

600

546

54

10 %

1,731

1,664

67

4 %

Passenger service

463

449

14

3 %

1,339

1,307

32

2 %

Profit sharing

320

417

(97)

(23) %

964

1,084

(120)

(11) %

Aircraft rent

137

131

6

5 %

411

395

16

4 %

Pilot agreement and related expenses

—

—

—

— %

—

864

(864)

NM

Other

718

581

137

24 %

1,872

1,669

203

12 %

   Total operating expense

14,280

13,504

776

6 %

41,806

39,626

2,180

6 %

Operating Income

1,397

1,984

(587)

(30) %

4,278

4,199

79

2 %

Non-Operating Income/(Expense):

Interest expense, net

(173)

(196)

23

(12) %

(567)

(627)