Delta Air Lines makes record profit
Delta Air Lines on January 19, 2016 reported financial results for the December 2015 quarter, including adjusted pre-tax income of US$1.45 billion, a US$430 million increase year over year.
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Adjusted net income was US$926 million or US$1.18 per diluted share, up 51 per cent from the December quarter of 2014.
According to a release issued on its website, “Our 2015 performance was a record for Delta on all fronts – with industry-leading operational performance, superior customer satisfaction, and a US$5.9 billion adjusted pre-tax profit”, it said.
It also said “These results show the commitment of the Delta people to running the best airline in the world every day. It's an honour to reward their performance with US$1.5 billion in profit sharing for the year," Chief Executive Officer of Delta, Mr Richard Anderson, said in the release.
He added, "As we look ahead to 2016, we have a significant opportunity to improve our performance even further. With over US$3 billion in potential savings from lower fuel prices and numerous commercial, operational and cost initiatives already in place, we expect to again perform in the top tier of the S&P Industrials on earnings growth, margins, and cash flows this year despite global economic challenges."
Revenue environment
Delta's operating revenue for the December quarter decreased two per cent, or US$145 million, due to US$160 million in foreign currency pressures.
Passenger unit revenues declined 1.6 per cent, which includes approximately two points of impact from foreign currency.
"The success of our network actions and commercial initiatives in 2015 allowed us to grow our top line and our unit revenue premium to the industry, while overcoming nearly US$700 million of revenue pressure from foreign currency," Delta's President, Mr Ed Bastian said.
Cost performance
Adjusted fuel expense declined by US$726 million compared to the same period in 2014, on 40 per cent lower market fuel prices. For the quarter, the refinery produced a profit of US$8 million. Settled hedge losses were US$336 million, including US$60 million of early hedge settlements.
Delta's debt reduction initiative continued to improve the company's interest expense, producing US$35 million in interest savings for the quarter, compared to the same period in 2014.
Non-operating expense includes a US$75 million loss for the write-off of Delta's remaining cash holdings in Venezuela.
Cash flow, shareholder returns, and adjusted net debt
Delta generated US$1.4 billion of adjusted operating cash flow and US$300 million of free cash flow during the quarter. The company used this strong cash generation to reinvest US$1.1 billion back into the business, including US$900 million for aircraft acquisition, fleet modifications and six slot pairs at London's Heathrow Airport.
For full year, the company returned US$2.6 billion to shareholders, comprising US$360 million of dividends and US$2.2 billion of share repurchases for 48 million shares at an average price of US$45.50 per share.
Adjusted net debt at the end of the year stood at US$6.7 billion; a more than US$10 billion reduction since Delta began its balance sheet improvement strategy in 2009.
Delta in Ghana
Delta became the first airline to fly direct from Accra to New York after the collapse of the country’s airline, Ghana Airways.
This year, the airline is set to celebrate its 10th anniversary.