Delta Airlines, a major airline in the United States has announced total operating revenue of $29.9 billion and a full year 2021 GAAP pre-tax income of $398 million.
The airline also announced its fourth-quarter 2021 GAAP pre-tax loss of $395 million, pre-tax margin of (4.2) percent and loss per share of $0.64 on total operating revenue of $9.5 billion.
“2021 was a year like no other for Delta, with significant progress in our recovery supported by growing brand preference, enabling us to be the only major U.S. airline to deliver profitability across the second half of the year,” said Ed Bastian, Delta’s chief executive officer. “As always, our people drove this success, which is why we were happy to announce this morning a special profit-sharing payment for all eligible employees.”
“While the rapidly spreading omicron variant has significantly impacted staffing levels and disrupted travel across the industry, Delta’s operation has stabilized over the last week and returned to pre-holiday performance,” Bastian said.
“Omicron is expected to temporarily delay the demand recovery for 60 days, but as we look past the peak, we are confident in a strong spring and summer travel season with significant pent-up demand for consumer and business travel.”
The airline’s domestic revenue recovery progressed on strong holiday demand: Domestic passenger revenue was 78 percent restored compared to December quarter 2019, a six point sequential improvement in the rate of recovery versus the September quarter 2021 driven by robust leisure demand, improving corporate travel and strong holiday bookings.
International passenger revenue recovered to 50 percent of December quarter 2019 levels, an 8 point improvement sequentially.
Domestic and short-haul Latin premium product revenue recovery outpaced main cabin by approximately 10 points, flat sequentially, with Domestic premium revenues 84 percent recovered compared to December quarter 2019.
Business travel continues to progress with domestic passenger volumes approaching 60 percent restored during the December quarter 2021. This includes both managed corporate and Small and Medium Enterprises.
American Express remuneration exceeded 2019 levels: American Express remuneration of $1.2 billion in the quarter was up 11 percent compared to December quarter 2019 and up 8 points sequentially.
Co-brand spend was 121 percent of December quarter 2019, driven by strong holiday retail spend and T&E spend that exceeded December quarter 2019. Co-brand card acquisitions were 86 percent recovered compared to December quarter 2019.
Cargo revenue increased to $304 million, a 63 percent improvement compared to the December quarter 2019 and up 24 points sequentially on strong holiday demand and yields.
“The Delta team executed incredibly well in 2021, delivering another profitable quarter in an environment that remains dynamic,” said Dan Janki, Delta’s chief financial officer.
“With omicron impacting our near-term outlook, we expect losses in January and February months with a return to profitability in the month of March. Despite expectations for a loss in the March quarter, we remain positioned to generate a healthy profit in the June, September and December quarters, resulting in a meaningful profit in 2022.”
For 2021, total operating expense, adjusted of $29.2 billion decreased 27 percent compared to full-year 2019, driven by lower salaries and related benefits, fuel and volume and selling-related expenses. Non-fuel CASM for 2021 increased 11.4 percent versus 2019, on 29 percent lower capacity over the same period.
Total operating expense, adjusted of $8.1 billion in the December quarter 2021 increased 3 percent sequentially, driven by both higher fuel and non-fuel costs from the continued restoration of the airline.
Fuel expense, adjusted of $1.6 billion in the December quarter 2021 increased 4 percent, or $55 million compared to the September quarter 2021.
Adjusted fuel price of $2.10 per gallon was up 8 percent compared to the September quarter 2021 driven by higher market prices and partially offset by continued refinery contribution and an improvement in RINs pricing and volume obligations.
During the December quarter 2021, fuel efficiency, defined as gallons per 1,000 ASMs, improved 4.3 percent versus the same period in 2019 as a result of our fleet renewal efforts. In addition, carbon offsets expensed during the quarter drove a 3¢ impact on fuel prices as Delta supports its commitment to carbon neutrality by pursuing high quality, verified offsets.
Non-fuel cost, adjusted of $6.5 billion, was up 3 percent sequentially on a 4 percent decrease in capacity. This was driven primarily by people-related and seasonal costs. Compared to the December quarter of 2019, non-fuel unit costs (CASM-Ex) were 8.3 percent higher, including a 1.2 point impact primarily due to omicron disruptions in the last two weeks of the December quarter.
Non-operating expense for the December quarter 2021 was $658 million including equity method losses, mark-to-market losses on certain investments and losses on the extinguishment of debt. Non-operating expense, adjusted was $175 million.
“During 2021, we made significant progress restoring our balance sheet, reducing gross debt by $6 billion and fully funding our pension plans on a PPA basis,” Janki said.
“Reducing debt remains a top financial priority as operating cash flow improves to support the return of our balance sheet back to investment grade metrics by 2024.”
At the end of the December quarter 2021, the company had total debt and finance lease obligations of $26.9 billion with adjusted net debt of $20.6 billion and a weighted average interest rate of 4.2 percent.
Operating cash flow during the December quarter 2021 was $555 million. Free cash flow was negative $441 million for the quarter with gross capital expenditures reinvested in the business of $948 million.
The company’s Air Traffic Liability was $6.4 billion at December quarter-end, approximately flat compared to the end of the September quarter.
Delta ended the December quarter with $14.2 billion in liquidity, including $2.9 billion in undrawn revolver capacity.