Dal Q1
04-21-2009, 03:52 AM
#1
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Joined APC: Dec 2008
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Dal Q1
ATLANTA, April 21 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL - News) today reported financial results for the March 2009 quarter. Key points include:
(Logo: http://www.newscom.com/cgi-bin/prnh/20090202/DELTALOGO )
Delta completed its merger with Northwest Airlines on Oct. 29, 2008. Unless otherwise indicated, Delta presents financial results on a GAAP basis(2) which reflects both Delta and Northwest financial results for the March 2009 quarter, but only Delta standalone results for the March 2008 quarter. Delta believes this presentation is not meaningful in comparing year-over-year performance. As a result, the company also presents financial and operating information on a "combined basis". The combined basis compares Delta's GAAP results for the March 2009 quarter to results for the March 2008 quarter including both Delta and Northwest results for the entire period.
Revenue Environment
Delta's operating revenue on a GAAP basis grew 40% to $6.7 billion in the March 2009 quarter as a result of its merger with Northwest Airlines. However, on a combined basis, operating revenue declined $1.2 billion, or 15% year-over-year.
(in millions) 1Q09 1Q08 Incr 1Q09 1Q08 Incr GAAP(3) GAAP(3) (Decr) GAAP(3) Combined(4) (Decr) Passenger 5,601 4,100 37% 5,601 6,808 (18%) Cargo 185 134 38% 185 331 (44%) Other, net 898 532 69% 898 761 18% Total Operating Revenue 6,684 4,766 40% 6,684 7,900 (15%)
On a combined basis:
Increase (Decrease) 1Q09 (GAAP(3)) versus 1Q08 (Combined(4)) -------------------------------------- 1Q09 Change Unit Yield Capacity ($M) YOY Revenue GAAP(3) Passenger Revenue Domestic(5) $2,648 (21.4%) (10.8%) (10.7%) (12.3%) Atlantic 843 (18.6%) (19.7%) (11.6%) 1.3% Latin America 321 (9.8%) (10.6%) (3.2%) 1.1% Pacific 555 (7.5%) (2.8%) 1.0% (4.8%) Total mainline 4,367 (18.6%) (12.2%) (9.2%) (7.3%) Regional 1,234 (14.6%) (13.8%) (10.8%) (0.8%) Consolidated $5,601 (17.7%) (12.1%) (9.0%) (6.4%)
"Despite signs of stabilization in recent demand trends, we expect the revenue environment to continue to be under significant pressure for the remainder of the year," said Edward Bastian, Delta's president. "We believe lower fuel prices, combined with a focus on accelerating merger synergies and other initiatives will more than offset the revenue decline. The fundamentals of our business remain strong, and once the economic outlook improves, Delta will be best positioned to take advantage of the global recovery."
Response to Global Recession
In response to the global recession, Delta is implementing the following initiatives in 2009 to increase revenues, reduce costs and preserve liquidity:
- Delta's net loss for the March 2009 quarter was $693 million, excluding the special items described below(1), or $0.84 per diluted share.
- Excluding $684 million in realized fuel hedge losses and special items, Delta's results were breakeven.
- Delta's reported net loss for the March 2009 quarter was $794 million, or $0.96 per diluted share.
- In the March 2009 quarter, Delta realized approximately $100 million in synergy benefits from its merger with Northwest Airlines.
- Delta generated approximately $600 million in operating cash flow and ended the quarter with $5 billion in unrestricted liquidity, which was unchanged from the balance at Dec. 31, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090202/DELTALOGO )
Delta completed its merger with Northwest Airlines on Oct. 29, 2008. Unless otherwise indicated, Delta presents financial results on a GAAP basis(2) which reflects both Delta and Northwest financial results for the March 2009 quarter, but only Delta standalone results for the March 2008 quarter. Delta believes this presentation is not meaningful in comparing year-over-year performance. As a result, the company also presents financial and operating information on a "combined basis". The combined basis compares Delta's GAAP results for the March 2009 quarter to results for the March 2008 quarter including both Delta and Northwest results for the entire period.
Revenue Environment
Delta's operating revenue on a GAAP basis grew 40% to $6.7 billion in the March 2009 quarter as a result of its merger with Northwest Airlines. However, on a combined basis, operating revenue declined $1.2 billion, or 15% year-over-year.
(in millions) 1Q09 1Q08 Incr 1Q09 1Q08 Incr GAAP(3) GAAP(3) (Decr) GAAP(3) Combined(4) (Decr) Passenger 5,601 4,100 37% 5,601 6,808 (18%) Cargo 185 134 38% 185 331 (44%) Other, net 898 532 69% 898 761 18% Total Operating Revenue 6,684 4,766 40% 6,684 7,900 (15%)
On a combined basis:
- Passenger revenue decreased 18%, or $1.2 billion, compared to the prior year period due to the global economic recession and a 6% decline in capacity. Passenger unit revenue (PRASM) declined 12%, driven by a 9% decline in yield and a 3 point decline in load factor;
- Cargo revenue declined 44%, or $146 million. This decline reflects significant weakness in demand and yields due to the global economic recession and declining fuel surcharge revenue, as well as reductions of dedicated freighter capacity; and
- Other, net revenue grew 18%, or $137 million, primarily due to increased revenue from baggage fees implemented in 2008.
Increase (Decrease) 1Q09 (GAAP(3)) versus 1Q08 (Combined(4)) -------------------------------------- 1Q09 Change Unit Yield Capacity ($M) YOY Revenue GAAP(3) Passenger Revenue Domestic(5) $2,648 (21.4%) (10.8%) (10.7%) (12.3%) Atlantic 843 (18.6%) (19.7%) (11.6%) 1.3% Latin America 321 (9.8%) (10.6%) (3.2%) 1.1% Pacific 555 (7.5%) (2.8%) 1.0% (4.8%) Total mainline 4,367 (18.6%) (12.2%) (9.2%) (7.3%) Regional 1,234 (14.6%) (13.8%) (10.8%) (0.8%) Consolidated $5,601 (17.7%) (12.1%) (9.0%) (6.4%)
"Despite signs of stabilization in recent demand trends, we expect the revenue environment to continue to be under significant pressure for the remainder of the year," said Edward Bastian, Delta's president. "We believe lower fuel prices, combined with a focus on accelerating merger synergies and other initiatives will more than offset the revenue decline. The fundamentals of our business remain strong, and once the economic outlook improves, Delta will be best positioned to take advantage of the global recovery."
Response to Global Recession
In response to the global recession, Delta is implementing the following initiatives in 2009 to increase revenues, reduce costs and preserve liquidity:
- Effective today, for international travel beginning July 1, Delta will charge customers a $50 fee to check a second bag, which the company expects to generate more than $100 million annually.
- To improve profitability in its cargo operation, Delta will ground its entire fleet of 14 B747-200 freighter aircraft effective Dec. 31, 2009 due to that fleet's age and inefficiency.
- As previously announced, Delta will reduce international capacity by 10%, compared to the prior year, beginning in September 2009. As a result, in the December 2009 quarter, Delta expects system capacity to be down 6%-8%, and international capacity to be down 9%-11%, year-over-year.
- Delta is accelerating merger synergies to the extent possible, including certain initiatives related to cross-fleeting, technology, and loyalty programs, among others.
- More than 2,500 employees participated in Delta's voluntary early out and early retirement programs offered in January 2009. Most of the employees who elected to participate in these programs are expected to leave the company following the summer travel season.
04-21-2009, 04:32 AM
#3
Gets Weekends Off
Joined APC: Nov 2008
Position: I'm here, i'm there, i'm everywhere...
Posts: 1,508
Looks like management dropped the ball big time on the fuel hedges...and they've been getting a ton of stock!!! I wish I could perform so bad and get all that.
I hope this doesn't turn out to be Leo Mullin part 2.
I hope this doesn't turn out to be Leo Mullin part 2.
04-21-2009, 05:34 AM
#5
No longer cares
Joined APC: Mar 2008
Position: 767er Captain
Posts: 12,109
Originally Posted by Justdoinmyjob
Everybody dropped the ball on fuel hedges, including Southwest. If they couldn't get it right, nobody could.
04-21-2009, 05:39 AM
#6
Looking for a laugh
Joined APC: Feb 2008
Posts: 4,099
Originally Posted by tsquare
What, like SWA had some special insight into fuel hedging? It takes cash to hedge bra... When all the legacy airlines were awash in bankruptcy and red ink, they were unable to hedge. It's not a matter of being smarter (necessarily). Oh, I forgot... SWA great... the rest of us just suck.
Not being a cheerleader here for SW, nor a company apologist, just that in this ONE instance, you can't blame Delta's failure to make the right call on fuel on total incompetence. Now if Delta was the only carrier to record a loss on fuel hedges for the quarter......
04-21-2009, 05:49 AM
#7
Happy to be here
Joined APC: Jun 2006
Position: A-320A
Posts: 18,563
Anyone who hedged lost their shirt. No one could have seen 35 dollar a barrel oil. The low estimates were showing 80 bucks. If that would have been the case we were well insulated with the layered hedges we had in place.
Because of the total meltdown of the economy, we were able to help the oilmen once again.
This should be the last of the major fuel hedge write downs. Looks for better numbers for the last three quarters.
Because of the total meltdown of the economy, we were able to help the oilmen once again.
This should be the last of the major fuel hedge write downs. Looks for better numbers for the last three quarters.
04-21-2009, 06:03 AM
#8
Gets Weekends Off
Joined APC: Jan 2007
Position: Flying both desk and jet
Posts: 147
Hedging fuel in any market is like going to LAS and gambling. Sometimes you win sometimes you lose. In this case alot of major's, including SWA, are losing on those bets they placed. Last July, no one knew where fuel was going. Some analyst thought it was going to $200 others thought $50.
I be the first to blame managment for alot of things, but hedging fuel is not one of them.
If any pilot feels they can do it better and get it correct 90% of the time. feel free to step up. You can make better money, than flying airplanes.
I be the first to blame managment for alot of things, but hedging fuel is not one of them.
If any pilot feels they can do it better and get it correct 90% of the time. feel free to step up. You can make better money, than flying airplanes.
04-21-2009, 06:54 AM
#9
Prime Minister/Moderator
Joined APC: Jan 2006
Position: Engines Turn Or People Swim
Posts: 39,297
Originally Posted by tsquare
What, like SWA had some special insight into fuel hedging? It takes cash to hedge bra... When all the legacy airlines were awash in bankruptcy and red ink, they were unable to hedge. It's not a matter of being smarter (necessarily). Oh, I forgot... SWA great... the rest of us just suck.
SWA made a killing a few tears ago because they were the only US airline which had the financial position and credit rating to actually hedge (it is risky, so you have to be able to pay up if it goes the wrong way).
Actually Lufthansa is the REAL hedge-master...they have a large unit dedicated to doing nothing but moving fuel positions around. I think they are even ahead of the game this year.
04-21-2009, 06:55 AM
#10
Moderator
Joined APC: Oct 2006
Position: B757/767
Posts: 13,088
Originally Posted by acl65pilot
Anyone who hedged lost their shirt. No one could have seen 35 dollar a barrel oil. The low estimates were showing 80 bucks. If that would have been the case we were well insulated with the layered hedges we had in place.
Because of the total meltdown of the economy, we were able to help the oilmen once again.
This should be the last of the major fuel hedge write downs. Looks for better numbers for the last three quarters.
Because of the total meltdown of the economy, we were able to help the oilmen once again.
This should be the last of the major fuel hedge write downs. Looks for better numbers for the last three quarters.
Just think what we will see for UAL and CAL. If people think we lost bad on hedging, they are gonna have their socks blown off by CAL and UAL.
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