14 July, 2021

Delta Air Lines Announces June Quarter 2021 Financial Results

Delta Air Lines reported financial results for the June quarter of 2021 and provided its outlook for the September quarter 2021. Highlights of the June quarter 2021 results, including both GAAP and adjusted metrics, are on page six and are incorporated here.

“With the best employees and operation in the industry and an accelerating demand environment, we achieved significant milestones in the quarter including a solid pre-tax profit in the month of June, positive free cash flow for the June quarter, and our people and our brand being recognized with the top spot in the J.D. Power 2021 Airline Study,” said Ed Bastian, Delta’s chief executive officer. “Looking forward, we are harnessing the power of our differentiated brand and resilient competitive advantages to drive towards sustainable profitability in the second half of 2021 and enable long-term value creation.”

“Domestic leisure travel is fully recovered to 2019 levels and there are encouraging signs of improvement in business and international travel. With the recovery picking up steam, we are making investments to support our industry-leading operation. We are also opportunistically acquiring aircraft and creating upside flexibility to accelerate our capacity restoration in 2022 and beyond in a capital-disciplined manner,” he said.

June Quarter Financial Results

Adjusted pre-tax loss of $881 million excludes $1.5 billion of benefit related to the first and second payroll support program extensions (PSP2 and PSP3, respectively) and mark-to-market adjustments on our investments 
Adjusted operating revenue of $6.3 billion, which excludes refinery sales, declined 49 percent on 39 percent lower sellable capacity (see Note A) versus June quarter 2019 
Total operating expense, which includes $1.5 billion of benefit related to PSP2 and PSP3, decreased $4.1 billion relative to the June quarter 2019.  Adjusted for the benefit related to the PSP programs and third-party refinery sales, total operating expense decreased $3.3 billion or 32 percent in the June quarter 2021 versus the comparable 2019 period 
Generated $1.9 billion of operating cash flow, $1.5 billion of free cash flow and $195 million of free cash flow, adjusted in the June quarter 
At the end of the June quarter, the company had $17.8 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit facilities. The company had total debt and finance lease obligations of $29.1 billion with adjusted net debt of $18.3 billion

Revenue Environment “With accelerating demand for air travel and growing affinity for Delta’s best-in-class products, June quarter adjusted operating revenue improved 76 percent from the March quarter. Increasing customer engagement is evident with spend on the American Express co-brand credit card already exceeding 2019 levels and a record number of new customers signing up for SkyMiles accounts during the June month,” said Glen Hauenstein, Delta’s president. “I am excited to see this momentum continuing in the September quarter as business travel rebounds and international markets continue to reopen.” 

“We have the industry’s best domestic and global network, an increasingly efficient and simplified fleet, a decommoditized product, a highly valued brand, and the industry’s best employees,” Hauenstein continued. “Combined with our more efficient cost structure, we are on a path to improve on pre-pandemic margins and generate sustainably free cash flow.” 

Adjusted operating revenue of $6.3 billion for the June quarter improved 76 percent from March quarter 2021. Compared to the same period in 2019, adjusted operating revenue declined 49 percent, an improvement from the company’s guidance update in June of down 50 to 52 percent. Passenger revenue declined 53 percent in the June quarter 2021 compared to June quarter 2019 on 32 percent lower scheduled capacity and 39 percent lower sellable capacity, which included the blocking of the middle seat through the month of April 2021. 

Total unit revenue, adjusted was 45.4 percent higher than the March quarter 2021 as adjusted operating revenue grew 76 percent on a 21 percent increase in scheduled capacity over the same period. Compared to the March quarter 2021, system yields improved 4.8 percent and load factors improved 24 points.

Aircraft Acquisition

The company recently announced it will add seven A350s and 29 737-900ER pre-owned aircraft to its fleet. This follows the announcement in April to exercise 25 A321neo options. The A350s and 737-900ERs will enter service over the next 24 months, starting in summer 2022. These fleet decisions align with the fleet renewal strategy and will drive improved unit costs going forward by replacing older, less-efficient aircraft. The company will lease the seven A350s and acquire the 29 737-900ERs, driving incremental capex of approximately $700 million in the second half of this year. The company now anticipates a full-year 2021 total gross capex of approximately $3.2 billion

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