Delta Air Lines Announces $549 Million Profit Excluding Special Items
ATLANTA, July 19 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE
AL - News) today reported financial results for the June 2010 quarter. Key points include:
* Delta's net income for the June 2010 quarter was $549 million, or $0.65 per diluted share, excluding special items(1). This is a $748 million improvement year over year.
* Delta's net income was $467 million, or $0.55 per diluted share, for the June 2010 quarter.
* Results include $90 million in profit sharing expense, in recognition of Delta employees' achievements toward meeting the company's financial targets.
* Delta generated more than $1 billion in operating cash flow and
ended the June 2010 quarter with $6.0 billion in unrestricted liquidity.
"Delta's profit this quarter is our best result in a decade and proof that our plan has positioned us well as the economy begins its recovery," said Richard Anderson, Delta's chief executive officer. "
These results would not have been possible without the dedication and determination of Delta people. We're happy to recognize our employees' contributions with $90 million in profit sharing."
Revenue Environment
Delta's operating revenue grew $1.2 billion, or 17% in the June 2010 quarter compared to the 2009 quarter.
* Passenger revenue increased 19%, or $1.1 billion, compared to the prior year period on 1% lower capacity. Passenger unit revenue (PRASM) increased 19.4%, driven by a 17% improvement in yield and a 1.9 point improvement in load factor.
* Cargo revenue increased 22%, or $38 million, on higher cargo volume and yield.
* Other, net revenue increased 3%, or $24 million, primarily due to increased baggage fees
Liquidity Position
As of June 30, 2010, Delta had
$6.0 billion in unrestricted liquidity, including $4.4 billion in cash and $1.6 billion in undrawn revolving credit facilities. During the quarter, the company
prepaid its $914 million revolving credit facility, which is now fully undrawn and available for future cash needs.
Operating cash flow during the June 2010 quarter was $1 billion, driven by the company's profitability and advance ticket sales, and free cash flow was $778 million. In the June quarter, Delta contributed nearly
$500 million to its pension plans and completed its required 2010 pension funding. Year to date, Delta has generated $2.0 billion in operating cash flow and $1.4 billion in free cash flow.
Capital expenditures during the quarter were $283 million, which included $154 million for investments in aircraft, parts and modifications.
Subsequent to the end of the quarter, Delta completed its $450 million 2010-1A enhanced equipment trust certificate (EETC) offering. The certificates will be secured by 22 aircraft that are currently included in Delta's 2000-1 EETC, which matures in November 2010, and two 777LR aircraft which were delivered in March 2010.
Total debt payments in the June 2010 quarter were $345 million, of which $70 million was paid before scheduled maturity. At June 30,
Delta's adjusted net debt was $15.6 billion, an $800 million reduction from March 31, 2010.
"Delta exhibited strong cost performance this quarter as merger synergies and productivity offset cost pressures in the business. Synergies have exceeded our expectations and will be a key factor as we strive to keep our non-fuel unit costs flat for the full year," said Hank Halter, Delta's chief financial officer. "In addition, we continue to make excellent progress in delevering our balance sheet – generating nearly $800 million in free cash flow this quarter and reducing adjusted net debt to $15.6 billion."
LOOK AT Q 3 FORECAST!
Fuel price, including taxes and hedges $ 2.33
Operating margin 10 – 12%
Capital expenditures $ 250 million
Total liquidity at end of period $ 6.3 billion
Of note we are seeing a 20% YOY in revenue