Delta Airlines has reported financial results for the December quarter and full year 2019 and provided its outlook for the next quarter.
Total revenue grew to $11.4 billion, up seven percent over prior year when prior year period is adjusted for sale of DAL Global Services (DGS).
Adjusted earnings per share of $1.70, a 31 percent increase year over year; above guidance of $1.20 to $1.50 on stronger revenue, lower fuel and a nine-cent net gain related to the unwinding of the GOL relationship
Total unit revenue (TRASM), adjusted, increased 2.4 percent, exceeding expectations on strong holiday travel demand
Non-fuel operating expense on a unit basis (CASM-Ex) up 4.4 percent compared to the prior year period, in line with the company’s expectations of four percent to five percent.
Full year financial highlights
Adjusted earnings per share of $7.31, a 30 percent increase year over year
Total revenue increased to a record $47 billion, up 7.5 percent when prior year period is adjusted for third-party refinery sales and the sale of DGS.
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Total expense increased 3.9 percent with CASM-Ex up two percent, in line with the company’s guidance and long-term cost targets. Delta’s 90,000 employees will share a record $1.6 billion profit sharing payout on Feb. 14
The airline generated $8.4 billion of operating cash flow and $4.2 billion of free cash flow and returned $3 billion to shareholders through dividends and share repurchases.
“2019 was a truly outstanding year on all fronts – the best in Delta’s history operationally, financially and for our customers. Our people, and their commitment to bringing best-in-class travel experiences to our 200 million customers, are the foundation for our success. I’m pleased to recognize their outstanding performance with a record $1.6 billion in profit sharing for 2019,” Ed Bastian, Delta’s chief executive officer, said.
“As we enter 2020, demand for travel is healthy and our brand preference is growing, positioning Delta to deliver another year of strong results, including earnings per share of $6.75 to $7.75.”
Revenue environment
For the full year, operating revenue grew to nearly $47 billion, up 7.5 percent when prior year period is adjusted for third-party refinery sales and the sale of DGS. Premium product ticket revenue increased nine percent along with strong double-digit percentage increases from loyalty and third-party maintenance revenue.
Delta’s operating revenue of $11.4 billion for the December quarter improved 7.2 percent or $768 million over the prior year (adjusted for the sale of DGS). This was driven by a nine percent increase in premium product ticket revenue, an 18 percent increase in loyalty revenue and a 31 percent increase in third-party maintenance revenue, which was partially offset by 13 percent lower cargo revenue.
December quarter passenger revenue by geographic region:
Domestic revenue grew 7.7 percent in the quarter on 1.6 percent higher passenger unit revenue (PRASM) and six percent higher capacity. Domestic premium product revenue grew 11 percent and corporate revenue grew six percent, driven by strength in business and leisure demand through the holiday period. Revenue and margin improved in all domestic hubs with revenue up 10 percent in coastal hubs and six percent in core hubs.
Atlantic revenue grew 0.8 percent in the quarter on 2.4 percent higher capacity and a 1.6 percent decline in PRASM, driven almost entirely by foreign exchange rates.
Latin revenue grew 6.7 percent on a 6.3 percent increase in unit revenue and 0.4 percent higher capacity. This revenue improvement was driven by continued double-digit unit revenue growth in Brazil and Mexico.
Pacific revenue was down 0.5 percent versus prior year on a 4.4 percent decline in unit revenue primarily due to continued softness in China. This was a 3.2 point improvement versus the September quarter on improved trends in Japan and strong Delta Premium Select performance.
