Delta Air Lines announces September quarter profit

OCT 15, 2015: Delta Air Lines reported financial results for the September 2015 quarter, including adjusted net income of $1.4 billion or $1.74 per diluted share, up 45 percent from the September quarter of 2014.

“Despite currency volatility and global economic uncertainty which drove a modest decline in revenues, we expanded operating margins by over five points to 21 percent, grew earnings per share by 45 percent, and generated $1.4 billion of free cash flow in the September quarter as demand remains solid and fuel prices have dropped materially. We expect that strong performance to continue in the December quarter with operating margins of 16 to 18 percent and over 40 percent earnings per share growth,” said Richard Anderson, Delta’s chief executive officer. “It’s an honor to recognize the hard work of 80,000 outstanding Delta employees with over $1 billion of profit sharing accrued so far this year. Our team consistently delivers best-in-class operations and service to our customers, develops innovative solutions with our global partners, and produces strong returns for our shareholders.”

Delta’s operating revenue for the September quarter decreased 0.6 percent, or $71 million, including $235 million in foreign currency pressures. Passenger unit revenues declined 4.9 percent, which includes approximately 2.5 points of impact from foreign currency.

“Our commercial initiatives are delivering solid benefits as we’ve expanded our revenue premium to the industry, strengthened our hubs in New York, Seattle and Los Angeles, and deepened our partnerships around the globe. However, low fuel prices and foreign currency have pressured our revenue performance,” said Ed Bastian, Delta’s president. “By keeping our system capacity flat for the December quarter, we are taking action to drive improvement in our unit revenues which we forecast will decline 2.5-4.5 percent for the quarter including 2 points of impact from foreign currency. Our conservative growth in this low fuel environment is evidence of our commitment to getting RASM back on a positive trajectory, which is a key component to achieving our long-term margin targets.”

“We continue to benefit from the decline in fuel prices, which provided a $1 billion-plus tailwind this quarter and, at current prices, will drive a $750 million benefit in the December quarter,” said Paul Jacobson, Delta’s chief financial officer. “With volatile fuel prices and revenues under pressure, we are using the current environment to evaluate and prune costs across all parts of the business, including our overhead functions, making sure we’re investing in the right parts of the airline and at levels we can sustain over time.”