ATLANTA, Jan. 12, 2017 /PRNewswire/ -- Delta Air
Lines (NYSE:DAL) today reported financial results for the December
quarter and full year 2016. Highlights of those results, including
both GAAP and adjusted metrics, are below and incorporated
here.
Adjusted pre-tax income for the December
2016 quarter was $923 million,
a $524 million decrease from the
December 2015 quarter, primarily
driven by the new pilot agreement. For the full year, adjusted
pre-tax income increased 4 percent year over year to $6.1 billion.
"Delta had a year of record-breaking performance in 2016 –
financially, operationally and for our customers – and it's an
honor to recognize our employees' efforts this year with over
$1 billion in profit sharing," said
Ed Bastian, Delta's chief executive
officer. "As we move into 2017, we are seeing our unit revenues
turn positive which should return the company to margin expansion
by the back half of the year. This will allow us to produce the
solid returns and cash flows that investors rely upon from
Delta."
Revenue Environment
Delta's operating revenue for the December quarter was down
$44 million versus prior year.
Passenger unit revenues declined 2.7 percent on a 0.9 percent
increase in capacity.
"Delta's commercial strategies and capacity actions combined
with improving demand continue to drive benefit as we transition
back into sustained positive unit revenues. For the March quarter,
we expect a unit revenue increase of flat to up 2 percent, stemming
the declines that have been ongoing for two years," said
Glen Hauenstein, Delta's president.
"We will remain conservative and keep our capacity growth in check
until we see a further firming of these revenue trends in the
near-term and longer-term, a return to our 17-19 percent operating
margin target."
|
|
|
|
Increase
(Decrease)
|
|
|
|
|
4Q16 versus
4Q15
|
|
|
|
|
Change
|
Unit
|
|
|
Passenger
Revenue
|
4Q16
($M)
|
|
YoY
|
Revenue
|
Yield
|
Capacity
|
|
Mainline
|
4,385
|
|
0.4
%
|
(2.8) %
|
(3.1) %
|
3.3
%
|
|
Regional
|
1,399
|
|
(1.6) %
|
(1.8) %
|
(2.4) %
|
0.1
%
|
Total
Domestic
|
5,784
|
|
(0.1) %
|
(2.7) %
|
(3.1) %
|
2.7
%
|
|
Atlantic
|
1,084
|
|
(6.8) %
|
(6.0) %
|
(2.4) %
|
(0.8) %
|
|
Pacific
|
559
|
|
(14.4) %
|
(8.8) %
|
(8.6) %
|
(6.1) %
|
|
Latin
America
|
547
|
|
5.0
%
|
5.2
%
|
1.2
%
|
(0.1) %
|
Total
Passenger
|
7,974
|
|
(1.9) %
|
(2.7) %
|
(2.7) %
|
0.9
%
|
Cargo
Revenue
|
174
|
|
(9.8) %
|
|
|
|
Other
Revenue
|
1,310
|
|
10.6
%
|
|
|
|
Total
Revenue
|
9,458
|
|
(0.5) %
|
|
|
|
March 2017
Quarter Guidance
For the March quarter, Delta is expecting pressures on margins
as the pace of change in unit revenue will not match the cost
impact of higher fuel prices and employee wage increases. This
margin pressure is likely to peak in the March quarter, and the
company expects margins to expand beginning in the second half of
the year.
|
1Q17
Forecast
|
Operating
margin*
|
11% - 13%
|
Passenger unit
revenue (compared to 1Q16)
|
Up 0% - 2%
|
Fuel price, including
taxes and refinery impact*
|
$1.68 -
$1.73
|
CASM – Ex including
profit sharing (compared to 1Q16)*
|
Up 5% - 7%
|
System Capacity
(compared to 1Q16)
|
Down 0% -
1%
|
*See note A for information about reconciliation of these
projected non-GAAP financial measures
Cost Performance
Adjusted fuel expense2 declined $240 million compared to the same period in 2015,
as 12 percent higher market prices were offset by prior year hedge
losses. Delta's adjusted fuel price per gallon for the December
quarter was $1.60.
CASM-Ex3 including profit sharing increased 10.6
percent for the December 2016 quarter
compared to the prior year period primarily driven by the impact of
the new pilot agreement ratified on December
1, 2016 with retroactive effect to January 1, 2016. Results for the December quarter
include the full 2016 impact of the new contract totaling
$475 million of expense, of which
$380 million relates to the first
three quarters of the year.
Non-operating expense declined $116
million for the quarter due to a $75
million loss in prior year for the write-off of Venezuela currency and $10 million of lower interest expense from
Delta's debt reduction initiatives.
"Delta's cost and capital discipline has allowed us to
consistently invest in our people and the customer experience, and
do so in a way that keeps our unit cost growth manageable over time
and generates sufficient cash flow for debt reduction and
shareholder returns," said Paul
Jacobson, Delta's chief financial officer. "We'll continue
to take this balanced approach – investing across the business to
drive future earnings growth, further strengthening our investment
grade balance sheet, and returning cash to our owners – as we drive
sustainability for the long term."
Cash Flow, Shareholder Returns, and Adjusted
Net Debt
Delta generated $1.2 billion of
adjusted operating cash flow and $640
million of free cash flow during the quarter. The company
used this strong cash generation to invest $600 million into the business for aircraft
modifications, facilities upgrades and technology improvements.
For the December quarter, the company returned $449 million to shareholders, comprised of
$149 million of dividends and
$300 million of share repurchases.
Delta returned $3.1 billion to its
owners in 2016 through dividends and share repurchases.
Adjusted net debt4 at the end of the quarter stood at
$6.1 billion, a $500 million reduction compared to the end of
2015.
December Quarter and Full Year Results
|
GAAP
|
Adjusted
|
GAAP
|
Adjusted
|
($ in millions except
per share and unit costs)
|
4Q16
|
4Q15
|
4Q16
|
4Q15
|
FY16
|
FY15
|
FY16
|
FY15
|
Pre-tax
income
|
952
|
1,533
|
923
|
1,447
|
6,636
|
7,157
|
6,071
|
5,865
|
Net income
|
622
|
980
|
604
|
926
|
4,373
|
4,526
|
4,017
|
3,709
|
Diluted earnings per
share
|
0.84
|
1.25
|
0.82
|
1.18
|
5.79
|
5.63
|
5.32
|
4.61
|
Fuel expense
(including regional carriers)
|
1,492
|
1,652
|
1,503
|
1,743
|
5,985
|
7,579
|
6,435
|
8,880
|
Average fuel price
per gallon
|
1.59
|
1.75
|
1.60
|
1.85
|
1.49
|
1.90
|
1.60
|
2.23
|
Consolidated unit
cost (CASM/CASM-Ex)
|
14.37
|
13.38
|
11.25
|
10.17
|
12.98
|
13.33
|
10.13
|
9.77
|
Operating cash
flow
|
1,125
|
1,479
|
1,217
|
1,441
|
7,205
|
7,927
|
6,954
|
7,429
|
Total debt and
capital leases
|
7,332
|
8,329
|
6,144
|
6,675
|
7,332
|
8,329
|
6,144
|
6,675
|
About Delta
Delta Air Lines serves nearly 180
million customers each year. In 2016, Delta was named to Fortune's
top 50 Most Admired Companies in addition to being named the most
admired airline for the fifth time in six years. Additionally,
Delta has ranked No.1 in the Business Travel News Annual Airline
survey for an unprecedented six consecutive years. With an
industry-leading global network, Delta and the Delta Connection
carriers offer service to 323 destinations in 57 countries on six
continents. Headquartered in Atlanta, Delta employs more than 80,000
employees worldwide and operates a mainline fleet of more than 800
aircraft. The airline is a founding member of the SkyTeam global
alliance and participates in the industry's leading
transatlantic joint venture with Air France-KLM and Alitalia
as well as a joint venture with Virgin Atlantic. Including its
worldwide alliance partners, Delta offers customers more than
15,000 daily flights, with key hubs and markets including
Amsterdam, Atlanta, Boston, Detroit, Los Angeles, Minneapolis/St.
Paul, New York-JFK and LaGuardia, London-Heathrow, Paris-Charles de
Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Delta has
invested billions of dollars in airport facilities, global products
and services, and technology to enhance the customer experience in
the air and on the ground. Additional information is available on
the Delta News Hub, as well as delta.com, Twitter @DeltaNewsHub,
Google.com/+Delta, and Facebook.com/delta.
End Notes
(1)
|
Note A to the
attached Consolidated Statements of Operations provides a
reconciliation of non-GAAP financial measures used in this release
to the comparable GAAP metric and provides the reasons management
uses those measures.
|
(2)
|
Adjusted fuel expense
reflects, among other things, the impact of mark-to-market ("MTM")
adjustments and settlements. 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. Settlements represent cash received or paid on
hedge contracts settled during the period. These items adjust fuel
expense to show the economic impact of hedging, including cash
received or paid on hedge contracts during the period. See Note A
for a reconciliation of adjusted fuel expense and average fuel
price per gallon to the comparable GAAP metric.
|
(3)
|
CASM - Ex, including
profit sharing: In addition to fuel expense, Delta
believes adjusting for certain other expenses is helpful to
investors because other expenses are not related to the generation
of a seat mile. These expenses include aircraft maintenance and
staffing services Delta provides to third parties, Delta's vacation
wholesale operations and refinery cost of sales to third parties.
The amounts excluded were $338 million and $213
million for the December 2016 and December
2015 quarters, respectively and $1.2 billion for both years
ended December 31, 2016 and 2015. Management believes this
methodology provides a more consistent and comparable reflection of
Delta's airline operations.
|
(4)
|
Adjusted net debt
includes $38 million and $119 million as of December 31, 2016 and
December 31, 2015, respectively, of hedge margin receivable, which
is cash that we have posted with counterparties as hedge margin.
See Note A for additional information about our calculation of
adjusted net debt.
|
Forward Looking Statements
Statements in this investor update that are not historical
facts, including statements regarding our estimates, expectations,
beliefs, intentions, projections or strategies for the future, may
be "forward-looking statements" as defined in the Private
Securities Litigation Reform Act of 1995. 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 and strategies
reflected in or suggested by the forward-looking statements. These
risks and uncertainties include, but are not limited to, the
effects of terrorist attacks or geopolitical conflict; the cost of
aircraft fuel; the impact of rebalancing our hedge portfolio,
recording mark-to-market adjustments or posting collateral in
connection with our fuel hedge contracts; the availability of
aircraft fuel; the possible effects of accidents involving our
aircraft; the restrictions that financial covenants in our
financing agreements will have on our financial and business
operations; labor issues; interruptions or disruptions in service
at one of our hub or gateway airports; disruptions or security
breaches of our information technology infrastructure; our
dependence on technology in our operations; the effects of weather,
natural disasters and seasonality on our business; the effects of
an extended disruption in services provided by third party regional
carriers; failure or inability of insurance to cover a significant
liability at Monroe's Trainer
refinery; the impact of environmental regulation on the Trainer
refinery, including costs related to renewable fuel standard
regulations; our ability to retain management and key employees;
competitive conditions in the airline industry; the effects of
extensive government regulation on our business; the sensitivity of
the airline industry to prolonged periods of stagnant or weak
economic conditions, including the effects of Brexit; and the
effects of the rapid spread of contagious illnesses.
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, 2015 and our
Quarterly Report on Form 10-Q for the quarterly period ended
June 30, 2016. Caution should
be taken not to place undue reliance on our forward-looking
statements, which represent our views only as of January 12, 2017, and which we have no current
intention to update.
DELTA AIR LINES,
INC.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Year
Ended
|
|
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
(in millions, except
per share data)
|
2016
|
2015
|
$
Change
|
%
Change
|
|
2016
|
2015
|
$
Change
|
%
Change
|
Operating
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Passenger:
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
|
$
6,575
|
$
6,703
|
$
(128)
|
(2)%
|
|
$
28,105
|
$
28,898
|
$
(793)
|
(3)%
|
|
|
Regional
carriers
|
1,399
|
1,422
|
(23)
|
(2)%
|
|
5,672
|
5,884
|
(212)
|
(4)%
|
|
|
Total passenger
revenue
|
7,974
|
8,125
|
(151)
|
(2)%
|
|
33,777
|
34,782
|
(1,005)
|
(3)%
|
|
Cargo
|
174
|
193
|
(19)
|
(10)%
|
|
668
|
813
|
(145)
|
(18)%
|
|
Other
|
1,310
|
1,184
|
126
|
11%
|
|
5,194
|
5,109
|
85
|
2%
|
|
|
Total operating
revenue
|
9,458
|
9,502
|
(44)
|
NM
|
|
39,639
|
40,704
|
(1,065)
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expense:
|
|
|
|
|
|
|
|
|
|
|
Salaries and related
costs
|
2,869
|
2,213
|
656
|
30%
|
|
10,034
|
8,776
|
1,258
|
14%
|
|
Aircraft fuel and
related taxes
|
1,256
|
1,433
|
(177)
|
(12)%
|
|
5,133
|
6,544
|
(1,411)
|
(22)%
|
|
Regional carriers
expense
|
|
|
|
|
|
|
|
|
|
|
|
Fuel
|
236
|
219
|
17
|
8%
|
|
852
|
1,035
|
(183)
|
(18)%
|
|
|
Other
|
854
|
799
|
55
|
7%
|
|
3,459
|
3,206
|
253
|
8%
|
|
Contracted
services
|
511
|
473
|
38
|
8%
|
|
1,991
|
1,848
|
143
|
8%
|
|
Depreciation and
amortization
|
472
|
451
|
21
|
5%
|
|
1,902
|
1,835
|
67
|
4%
|
|
Aircraft maintenance
materials and outside repairs
|
466
|
418
|
48
|
11%
|
|
1,823
|
1,848
|
(25)
|
(1)%
|
|
Passenger commissions
and other selling expenses
|
419
|
402
|
17
|
4%
|
|
1,710
|
1,672
|
38
|
2%
|
|
Landing fees and
other rents
|
367
|
329
|
38
|
12%
|
|
1,490
|
1,493
|
(3)
|
NM
|
|
Profit
sharing
|
193
|
380
|
(187)
|
(49)%
|
|
1,115
|
1,490
|
(375)
|
(25)%
|
|
Passenger
service
|
233
|
208
|
25
|
12%
|
|
907
|
872
|
35
|
4%
|
|
Aircraft
rent
|
81
|
67
|
14
|
21%
|
|
285
|
250
|
35
|
14%
|
|
Other
|
481
|
393
|
88
|
22%
|
|
1,986
|
2,033
|
(47)
|
(2)%
|
|
|
Total operating
expense
|
8,438
|
7,785
|
653
|
8%
|
|
32,687
|
32,902
|
(215)
|
(1)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
1,020
|
1,717
|
(697)
|
(41)%
|
|
6,952
|
7,802
|
(850)
|
(11)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Operating
Expense:
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
(93)
|
(102)
|
9
|
(9)%
|
|
(388)
|
(481)
|
93
|
(19)%
|
|
Miscellaneous,
net
|
25
|
(82)
|
107
|
NM
|
|
72
|
(164)
|
236
|
NM
|
|
|
Total non-operating
expense, net
|
(68)
|
(184)
|
116
|
(63)%
|
|
(316)
|
(645)
|
329
|
(51)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Before
Income Taxes
|
952
|
1,533
|
(581)
|
(38)%
|
|
6,636
|
7,157
|
(521)
|
(7)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax
Provision
|
(330)
|
(553)
|
223
|
(40)%
|
|
(2,263)
|
(2,631)
|
368
|
(14)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
$
622
|
$
980
|
$
(358)
|
(37)%
|
|
$
4,373
|
$
4,526
|
$
(153)
|
(3)%
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Earnings Per
Share
|
$
0.85
|
$
1.26
|
|
|
|
$
5.82
|
$
5.68
|
|
|
Diluted Earnings
Per Share
|
$
0.84
|
$
1.25
|
|
|
|
$
5.79
|
$
5.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic Weighted
Average Shares Outstanding
|
732
|
778
|
|
|
|
751
|
797
|
|
|
Diluted Weighted
Average Shares Outstanding
|
737
|
785
|
|
|
|
755
|
804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DELTA AIR LINES,
INC.
|
Statistical
Summary
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
December 31,
|
|
|
Year Ended
December 31,
|
|
|
2016
|
2015
|
Change
|
|
2016
|
2015
|
Change
|
Consolidated:
|
|
|
|
|
|
|
|
Revenue passenger
miles (millions)
|
49,985
|
49,573
|
0.8%
|
|
213,098
|
209,625
|
1.7%
|
Available seat miles
(millions)
|
58,715
|
58,199
|
0.9%
|
|
251,867
|
246,764
|
2.1%
|
Passenger mile yield
(cents)
|
15.95
|
16.39
|
(2.7%)
|
|
15.85
|
16.59
|
(4.5%)
|
Passenger revenue per
available seat mile (cents)
|
13.58
|
13.96
|
(2.7%)
|
|
13.41
|
14.10
|
(4.9%)
|
Operating cost per
available seat mile (cents)
|
14.37
|
13.38
|
7.4%
|
|
12.98
|
13.33
|
(2.6%)
|
CASM-Ex, including
profit sharing - see Note A (cents)
|
11.25
|
10.17
|
10.6%
|
|
10.13
|
9.77
|
3.7%
|
Passenger load
factor
|
85.1%
|
85.2%
|
(0.1) pts
|
|
84.6%
|
84.9%
|
(0.3) pts
|
Fuel gallons consumed
(millions)
|
941
|
945
|
(0.4%)
|
|
4,016
|
3,988
|
0.7%
|
Average price per
fuel gallon
|
$
1.59
|
$
1.75
|
(9.1%)
|
|
$
1.49
|
$
1.90
|
(21.6%)
|
Average price per
fuel gallon, adjusted - see Note A
|
$
1.60
|
$
1.85
|
(13.5%)
|
|
$
1.60
|
$
2.23
|
(28.3%)
|
Number of aircraft in
fleet, end of period
|
966
|
926
|
40
|
|
|
|
|
Full-time equivalent
employees, end of period
|
83,756
|
82,949
|
1.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline:
|
|
|
|
|
|
|
|
Revenue passenger
miles (millions)
|
44,601
|
44,231
|
0.8%
|
|
191,714
|
188,365
|
1.8%
|
Available seat miles
(millions)
|
52,153
|
51,646
|
1.0%
|
|
225,268
|
220,429
|
2.2%
|
Operating cost per
available seat mile (cents)
|
14.06
|
12.97
|
8.4%
|
|
12.51
|
12.84
|
(2.6%)
|
CASM-Ex, including
profit sharing - see Note A (cents)
|
11.08
|
9.87
|
12.3%
|
|
9.75
|
9.41
|
3.6%
|
Fuel gallons consumed
(millions)
|
790
|
794
|
(0.5%)
|
|
3,405
|
3,383
|
0.7%
|
Average price per
fuel gallon
|
$
1.58
|
$
1.80
|
(12.2%)
|
|
$
1.50
|
$
1.93
|
(22.3%)
|
Average price per
fuel gallon, adjusted - see Note A
|
$
1.60
|
$
1.91
|
(16.2%)
|
|
$
1.63
|
$
2.31
|
(29.4%)
|
Number of aircraft in
fleet, end of period
|
832
|
809
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: except for
full-time equivalent employees and number of aircraft in fleet,
consolidated data presented
includes operations under Delta's contract carrier
arrangements.
|
|
|
|
|
|
|
DELTA AIR LINES,
INC.
|
Consolidated
Statements of Cash Flows
|
(Unaudited)
|
|
|
Three Months
Ended
|
|
|
December
31,
|
(in
millions)
|
2016
|
|
2015
|
Cash Flows From
Operating Activities:
|
|
|
|
Net
income
|
$
622
|
|
$
980
|
Depreciation and
amortization
|
472
|
|
451
|
Hedge derivative
contracts
|
(52)
|
|
(455)
|
Deferred income
taxes
|
332
|
|
558
|
Pension,
postretirement and postemployment payments greater than
expense
|
78
|
|
76
|
Changes
in:
|
|
|
|
|
Hedge
margin
|
(18)
|
|
262
|
|
Air traffic
liability
|
(516)
|
|
(728)
|
|
Profit
sharing
|
193
|
|
380
|
Other working capital
changes, net
|
14
|
|
(45)
|
|
Net cash provided
by operating activities
|
1,125
|
|
1,479
|
|
|
|
|
|
Cash Flows From
Investing Activities:
|
|
|
|
Property and
equipment additions:
|
|
|
|
|
Flight equipment,
including advance payments
|
(468)
|
|
(640)
|
|
Ground property and
equipment, including technology
|
(326)
|
|
(238)
|
Acquisition of
London-Heathrow slots
|
-
|
|
(276)
|
Net redemptions
(purchases) of short-term investments
|
1,023
|
|
(29)
|
Proceeds for sales of
E190 aircraft
|
185
|
|
-
|
Other, net
|
31
|
|
4
|
|
Net cash provided
by (used in) investing activities
|
445
|
|
(1,179)
|
|
|
|
|
|
Cash Flows From
Financing Activities:
|
|
|
|
Payments on long-term
debt and capital lease obligations
|
(306)
|
|
(407)
|
Repurchases of common
stock
|
(300)
|
|
(425)
|
Cash
dividends
|
(149)
|
|
(105)
|
Fuel card
obligation
|
225
|
|
2
|
Net proceeds from
hedge derivative contracts
|
75
|
|
230
|
Other, net
|
9
|
|
8
|
|
Net cash used in
financing activities
|
(446)
|
|
(697)
|
|
|
|
|
|
Net Increase
(Decrease) in Cash and Cash Equivalents
|
1,124
|
|
(397)
|
Cash and cash
equivalents at beginning of period
|
1,638
|
|
2,369
|
Cash and cash
equivalents at end of period
|
$
2,762
|
|
$
1,972
|
|
|
DELTA AIR LINES,
INC.
|
|
|
|
Consolidated
Balance Sheets
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
(in
millions)
|
2016
|
|
2015
|
|
|
|
ASSETS
|
|
Current
Assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
2,762
|
|
$
1,972
|
|
|
Short-term
investments
|
487
|
|
1,465
|
|
|
Accounts receivable,
net
|
2,064
|
|
2,020
|
|
|
Fuel
inventory
|
519
|
|
379
|
|
|
Expendable parts and
supplies inventories, net
|
372
|
|
318
|
|
|
Hedge derivatives
asset
|
393
|
|
1,987
|
|
|
Prepaid expenses and
other
|
836
|
|
915
|
|
|
|
Total current
assets
|
7,433
|
|
9,056
|
|
|
|
|
|
|
|
|
Property and
Equipment, Net:
|
|
|
|
|
|
Property and
equipment, net
|
24,375
|
|
23,039
|
|
|
|
|
|
|
|
|
Other
Assets:
|
|
|
|
|
|
Goodwill
|
9,794
|
|
9,794
|
|
|
Identifiable
intangibles, net
|
4,844
|
|
4,861
|
|
|
Deferred income
taxes, net
|
3,077
|
|
4,956
|
|
|
Other noncurrent
assets
|
1,733
|
|
1,428
|
|
|
|
Total other
assets
|
19,448
|
|
21,039
|
|
Total
assets
|
$
51,256
|
|
$
53,134
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
Current
Liabilities:
|
|
|
|
|
|
Current maturities of
long-term debt and capital leases
|
$
1,131
|
|
$
1,563
|
|
|
Air traffic
liability
|
4,626
|
|
4,503
|
|
|
Accounts
payable
|
2,572
|
|
2,743
|
|
|
Accrued salaries and
related benefits
|
2,924
|
|
3,195
|
|
|
Hedge derivatives
liability
|
688
|
|
2,581
|
|
|
Frequent flyer
deferred revenue
|
1,648
|
|
1,635
|
|
|
Other accrued
liabilities
|
1,632
|
|
1,306
|
|
|
|
Total current
liabilities
|
15,221
|
|
17,526
|
|
|
|
|
|
|
|
|
Noncurrent
Liabilities:
|
|
|
|
|
|
Long-term debt and
capital leases
|
6,201
|
|
6,766
|
|
|
Pension,
postretirement and related benefits
|
13,461
|
|
13,855
|
|
|
Frequent flyer
deferred revenue
|
2,278
|
|
2,246
|
|
|
Other noncurrent
liabilities
|
1,832
|
|
1,891
|
|
|
|
Total noncurrent
liabilities
|
23,772
|
|
24,758
|
|
|
|
|
|
|
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Equity
|
12,263
|
|
10,850
|
|
Total liabilities and
stockholders' equity
|
$
51,256
|
|
$
53,134
|
|
Note A: The following tables show reconciliations of non-GAAP
financial measures. The reasons Delta uses these measures are
described below.
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 U.S. 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 does not reconcile
forward looking non-GAAP financial measures because MTM adjustments
and settlements will not be known until the end of the period and
could be significant.
Pre-Tax Income and Net Income, adjusted. We adjust for
the following items to determine pre-tax income and net income,
adjusted, for the reasons described below:
Mark-to-Market ("MTM")
adjustments and settlements. 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. Settlements represent cash received or paid on
hedge contracts settled during the period. These items adjust fuel
expense to show the economic impact of hedging, including cash
received or paid on hedge contracts during the period. Adjusting
for these items allows investors to better understand and analyze
our core operational performance in the periods shown.
Restructuring and other.
Because of the variability in restructuring and other, the
adjustment for this item is helpful to investors to analyze the
company's recurring core performance in the periods shown.
Virgin Atlantic MTM
adjustments. We record our proportionate share of earnings from
our equity investment in Virgin Atlantic in non-operating expense.
We adjust for Virgin Atlantic's MTM adjustments to allow investors
to better understand and analyze the company's core financial
performance in the periods shown.
Income tax. We included the
income tax effect of adjustments when presenting net income,
adjusted. We believe that presenting the income tax effect of
adjustments allows investors to better understand and analyze the
company's core financial performance in the periods shown.
Operating Cash
Flow, adjusted. We adjusted operating 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 capital expenditures, debt service or general corporate
initiatives. Adjustments include:
|
|
|
|
|
|
|
|
|
Hedge
deferrals. During the March 2015 quarter, we effectively
deferred settlement of a portion of our fuel hedge portfolio by
entering into transactions that, excluding market movements from
the date of inception, would provide approximately $300 million in
cash receipts during the second half of 2015 and require
approximately $300 million in cash payments in 2016. During the
March 2016 quarter, we further deferred settlement of a portion of
our hedge portfolio until 2017 by entering into transactions that,
excluding market movements from the date of inception, would
provide approximately $300 million in cash receipts during the
second half of 2016 and require approximately $300 million in cash
payments in 2017. Operating cash flow is adjusted to include the
impact of these deferral transactions in order to allow investors
to better understand the net impact of hedging activities in the
periods shown.
|
|
|
|
|
|
|
|
|
Hedge margin and
other. Operating cash flow is adjusted for hedge margin as we
believe this adjustment removes the impact of current market
volatility on our unsettled hedges and allows investors to better
understand and analyze the company's core operational performance
in the periods shown.
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
|
(in
millions)
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Net cash provided by
operating activities (GAAP)
|
|
$
1,125
|
|
$
1,479
|
|
Adjustments:
|
|
|
|
|
|
Hedge deferrals
|
|
75
|
|
230
|
|
Hedge margin and
other
|
|
17
|
|
(268)
|
|
Net cash provided by
operating activities, adjusted
|
|
$
1,217
|
|
$
1,441
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
|
(in
millions)
|
|
December 31,
2016
|
|
December 31,
2015
|
|
Net cash provided by
operating activities (GAAP)
|
|
$
7,205
|
|
$
7,927
|
|
Adjustments:
|
|
|
|
|
|
Hedge deferrals
|
|
(159)
|
|
358
|
|
Hedge margin and
other
|
|
(92)
|
|
(856)
|
|
Net cash provided by
operating activities, adjusted
|
|
$
6,954
|
|
$
7,429
|
|
Operating Cash Flow, adjusted. We adjusted operating 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 capital expenditures, debt service or
general corporate initiatives. Adjustments include:
Hedge deferrals. During the
March 2015 quarter, we effectively
deferred settlement of a portion of our fuel hedge portfolio by
entering into transactions that, excluding market movements from
the date of inception, would provide approximately $300 million in cash receipts during the second
half of 2015 and require approximately $300
million in cash payments in 2016. During the March 2016 quarter, we further deferred
settlement of a portion of our hedge portfolio until 2017 by
entering into transactions that, excluding market movements from
the date of inception, would provide approximately $300 million in cash receipts during the second
half of 2016 and require approximately $300
million in cash payments in 2017. Operating cash flow is
adjusted to include the impact of these deferral transactions in
order to allow investors to better understand the net impact of
hedging activities in the periods shown.
Hedge margin and other.
Operating cash flow is adjusted for hedge margin as we believe this
adjustment removes the impact of current market volatility on our
unsettled hedges and allows investors to better understand and
analyze the company's core operational performance in the periods
shown.
|
|
|
Three Months
Ended
|
|
Three Months
Ended
|
(in
millions)
|
|
December 31,
2016
|
|
December 31,
2015
|
Net cash provided by
operating activities (GAAP)
|
|
$
1,125
|
|
$
1,479
|
Adjustments:
|
|
|
|
|
Hedge deferrals
|
|
75
|
|
230
|
Hedge margin and
other
|
|
17
|
|
(268)
|
Net cash provided by
operating activities, adjusted
|
|
$
1,217
|
|
$
1,441
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
Year
Ended
|
(in
millions)
|
|
December 31,
2016
|
|
December 31,
2015
|
Net cash provided by
operating activities (GAAP)
|
|
$
7,205
|
|
$
7,927
|
Adjustments:
|
|
|
|
|
Hedge deferrals
|
|
(159)
|
|
358
|
Hedge margin and
other
|
|
(92)
|
|
(856)
|
Net cash provided by
operating activities, adjusted
|
|
$
6,954
|
|
$
7,429
|
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. Adjustments
include:
Hedge deferrals. During the
March 2016 quarter, we entered into
transactions to defer settlement of a portion of our hedge
portfolio until 2017. These deferral transactions, excluding market
movements from the date of inception, would provide approximately
$300 million in cash receipts during
the second half of 2016 and require approximately $300 million in cash payments in 2017. Free cash
flow is adjusted to include these deferral transactions in order to
allow investors to better understand the net impact of hedging
activities in the period shown.
Hedge margin and other.
Free cash flow is adjusted for hedge margin as we believe this
adjustment removes the impact of current market volatility on our
unsettled hedges and allows investors to better understand and
analyze the company's core operational performance in the periods
shown.
Net purchases of short-term
investments and other investing. Net purchases 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 free cash flow for this activity, net,
to provide investors a better understanding of the company's free
cash flow position core to operations.
|
|
|
|
Three Months
Ended
|
(in
millions)
|
|
|
December 31,
2016
|
Net cash provided by
operating activities
|
|
|
$
1,125
|
Net cash provided by
investing activities
|
|
|
445
|
Adjustments:
|
|
|
|
Hedge deferrals
|
|
|
75
|
Hedge margin and
other
|
|
|
17
|
Net purchases of short-term
investments and other investing
|
(1,022)
|
Total free cash
flow
|
|
|
$
640
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
(in
millions)
|
|
|
December 31,
2016
|
Net cash provided by
operating activities
|
|
|
$
7,205
|
Net cash used in
investing activities
|
|
|
(2,155)
|
Adjustments:
|
|
|
|
Hedge deferrals
|
|
|
(159)
|
Hedge margin and
other
|
|
|
(92)
|
Net purchases of short-term
investments and other investing
|
(967)
|
Total free cash
flow
|
|
|
$
3,832
|
Fuel expense, adjusted and Average fuel price per gallon,
adjusted. The tables below show the components of fuel expense,
including the impact of the refinery segment and hedging on fuel
expense and average price per gallon. We then adjust for MTM
adjustments and settlements for the reason described below:
MTM adjustments and
settlements. 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. Settlements represent cash received or paid on hedge
contracts settled during the period. These items adjust fuel
expense to show the economic impact of hedging, including cash
received or paid on hedge contracts during the period. Adjusting
for these items allows investors to better understand and analyze
our core operational performance in the periods shown.
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Price Per
Gallon
|
|
|
|
|
Three Months
Ended
|
|
|
Three Months
Ended
|
|
|
|
|
December
31,
|
|
|
December
31,
|
(in millions, except
per gallon data)
|
|
|
2016
|
2015
|
|
|
2016
|
2015
|
Fuel purchase
cost
|
|
|
$
1,461
|
$
1,415
|
|
|
$
1.56
|
$
1.50
|
Airline segment fuel
hedge gains
|
|
|
(11)
|
245
|
|
|
(0.01)
|
0.26
|
Refinery segment
impact
|
|
|
42
|
(8)
|
|
|
0.04
|
(0.01)
|
Total fuel
expense
|
|
|
$
1,492
|
$
1,652
|
|
|
$
1.59
|
$
1.75
|
MTM adjustments and
settlements
|
|
|
11
|
91
|
|
|
0.01
|
0.10
|
Total fuel expense,
adjusted
|
|
|
$
1,503
|
$
1,743
|
|
|
$
1.60
|
$
1.85
|
Change
year-over-year
|
|
|
$
(240)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
Ended
|
|
|
Year
Ended
|
|
|
|
|
December
31,
|
|
|
December
31,
|
(in millions, except
per gallon data)
|
|
|
2016
|
2015
|
|
|
2016
|
2015
|
Fuel purchase
cost
|
|
|
$
5,579
|
$
6,934
|
|
|
$
1.39
|
$
1.74
|
Airline segment fuel
hedge gains
|
|
|
281
|
935
|
|
|
0.07
|
0.23
|
Refinery segment
impact
|
|
|
125
|
(290)
|
|
|
0.03
|
(0.07)
|
Total fuel
expense
|
|
|
$
5,985
|
$
7,579
|
|
|
$
1.49
|
$
1.90
|
MTM adjustments and
settlements
|
|
|
450
|
1,301
|
|
|
0.11
|
0.33
|
Total fuel expense,
adjusted
|
|
|
$
6,435
|
$
8,880
|
|
|
$
1.60
|
$
2.23
|
|
|
|
|
|
|
|
|
|
Mainline:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
|
December
31,
|
|
|
December
31,
|
|
|
|
|
2016
|
2015
|
|
|
2016
|
2015
|
Mainline average
price per gallon
|
|
|
$
1.58
|
$
1.80
|
|
|
$
1.50
|
$
1.93
|
MTM adjustments and
settlements
|
|
|
0.02
|
0.11
|
|
|
0.13
|
0.38
|
Mainline average
price per gallon, adjusted
|
|
|
$
1.60
|
$
1.91
|
|
|
$
1.63
|
$
2.31
|
Non-Fuel Unit Cost or Cost per Available Seat Mile, Including
Profit Sharing ("CASM-Ex"). We adjust CASM for the following
items to determine CASM-Ex, including profit sharing for the
reasons described below:
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 (including our regional carriers)
allows investors to better understand and analyze our non-fuel
costs and year-over-year financial performance.
Restructuring and other.
Because of the variability in restructuring and other, the
adjustment for this item is helpful to investors to analyze our
recurring core performance in the periods shown.
Other expenses. Other
expenses include aircraft maintenance and staffing services we
provide to third parties, our vacation wholesale operations, and
refinery cost of sales to third parties. Because these businesses
are not related to the generation of a seat mile, we adjust for the
costs related to these sales to provide a more meaningful
comparison of the costs of our airline operations to the rest of
the airline industry.
Consolidated
CASM-Ex:
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
CASM
(cents)
|
|
|
14.37
|
|
13.38
|
|
12.98
|
|
13.33
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
|
(2.54)
|
|
(2.84)
|
|
(2.38)
|
|
(3.07)
|
Restructuring and
other
|
|
-
|
|
-
|
|
-
|
|
(0.01)
|
Other expenses
|
|
(0.58)
|
|
(0.37)
|
|
(0.47)
|
|
(0.48)
|
CASM-Ex
|
11.25
|
|
10.17
|
|
10.13
|
|
9.77
|
Year-over-year
change
|
|
|
10.6 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mainline
CASM-Ex:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Year
Ended
|
|
|
|
|
December 31,
2016
|
|
December 31,
2015
|
|
December 31,
2016
|
|
December 31,
2015
|
Mainline CASM
(cents)
|
|
|
14.06
|
|
12.97
|
|
12.51
|
|
12.84
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
Aircraft fuel and related
taxes
|
|
(2.40)
|
|
(2.78)
|
|
(2.27)
|
|
(2.97)
|
Other expenses
|
|
(0.58)
|
|
(0.32)
|
|
(0.49)
|
|
(0.46)
|
Mainline
CASM-Ex
|
11.08
|
|
9.87
|
|
9.75
|
|
9.41
|
Adjusted Net Debt. Delta uses adjusted total debt,
including aircraft rent, in addition to long-term adjusted debt and
capital leases, to present estimated financial obligations. Delta
reduces adjusted debt by cash, cash equivalents and short-term
investments, and hedge margin receivable, 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. Management has
reduced adjusted debt by the amount of hedge margin receivable,
which reflects cash posted to counterparties, as we believe this
removes the impact of current market volatility on our unsettled
hedges and is a better representation of the continued progress we
have made on our debt initiatives.
(in
millions)
|
|
December 31,
2016
|
|
December 31,
2015
|
Debt and capital
lease obligations
|
|
$
7,332
|
|
|
$
8,329
|
|
Plus: unamortized
discount, net and debt issuance costs
|
|
104
|
|
|
152
|
|
Adjusted debt and
capital lease obligations
|
|
|
7,436
|
|
|
8,481
|
Plus: 7x last twelve
months' aircraft rent
|
|
|
1,995
|
|
|
1,750
|
Adjusted total
debt
|
|
|
9,431
|
|
|
10,231
|
Less: cash, cash
equivalents and short-term investments
|
|
|
(3,249)
|
|
|
(3,437)
|
Less: hedge margin
receivable
|
|
|
(38)
|
|
|
(119)
|
Adjusted net
debt
|
|
|
$
6,144
|
|
|
$
6,675
|
Capital Expenditures, net. Capital expenditures, net is
adjusted for proceeds for sales of E190 aircraft because management
believes investors should be informed that these proceeds
effectively offset the cash paid for these aircraft earlier in the
year. This provides a more meaningful measure of cash outflows for
capital expenditures.
|
|
Three Months
Ended
|
(in
millions)
|
|
December 31,
2016
|
Property and
equipment additions
|
|
$
794
|
|
|
|
Proceeds for sales of
E190 aircraft
|
|
(185)
|
Capital expenditures,
net
|
|
$
609
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/delta-air-lines-announces-december-quarter-and-full-year-2016-profit-300390024.html
SOURCE Delta Air Lines