ATLANTA, April 21 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL - News) today reported financial results for the March 2009 quarter. Key points include:
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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.
