March quarter 2022 GAAP operating loss of $783 million and loss per share of $1.48 on total operating revenue of $9.3 billion March quarter 2022 adjusted operating loss of $793 million and adjusted loss per share of $1.23 on adjusted operating revenue of $8.2 billion
With an improving demand environment, achieved a solid operating margin in the month of March ATLANTA, Apr. 13, 2022 – Delta Air Lines (NYSE:DAL) today reported financial results for the March quarter 2022 and provided its outlook for the June quarter 2022. Highlights of the March quarter 2022 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.
March Quarter 2022 Financial Results
• Adjusted operating loss of $793 million excludes a net gain of $9 million
• Pre-tax loss of $1.2 billion with adjusted pre-tax loss of $1.0 billion, excluding a net expense of $164 million
• Adjusted operating revenue of $8.2 billion, which excludes third-party refinery sales, was 79 percent
recovered versus March quarter 2019 on capacity that was 83 percent restored
• Total operating expense of $10.1 billion increased $679 million compared to the March quarter 2019
• Adjusted for costs primarily from third-party refinery sales, total operating expense of $9.0 billion decreased
$400 million or 4 percent in the March quarter 2022 versus the comparable 2019 period
• Generated $1.8 billion of operating cash flow and $197 million of free cash flow, after investing $1.6 billion
into the business, primarily related to aircraft purchases and modifications
• At the end of the March quarter, the company had $12.8 billion in liquidity, including cash and cash
equivalents, short-term investments and undrawn revolving credit facilities
“With a strong rebound in demand as omicron faded, we returned to profitability in the month of March, producing a
solid adjusted operating margin of almost 10 percent. and strong free cash flow in the June quarter,” said Ed Bastian, Delta’s chief executive officer.
As our brand preference and demand momentum grow, we are successfully recapturing higher fuel prices, driving our outlook for a 12 to 14 percent adjusted operating margin
the Delta people, who once again enabled our best-in-class operational performance, provided an unmatched
“I would like to thank customer experience and continue to power our industry leadership each and every day.”
Revenue Environment
“Delta is well-positioned to capitalize on robust consumer demand and an accelerating return of business and international travel. The strength of Delta’s brand has never been more evident with record-setting performance for co-brand card acquisitions, co-brand spend and SkyMiles acquisitions in March,” said Glen Hauenstein, Delta’s president. “In the June quarter, we are successfully recapturing higher fuel prices and expect our revenue recovery to accelerate to 93 to 97 percent with unit revenue up double digits compared to 2019.”
Adjusted operating revenue of $8.2 billion for the March quarter 2022 was 79 percent restored to March quarter 2019 levels, 5 points ahead of the mid-point of the company’s initial guidance. Compared to the March quarter 2019, total passenger revenue was 75 percent recovered on system capacity that was 83 percent restored. Domestic passenger revenue was 83 percent recovered, and international passenger revenue was 54 percent restored in the March quarter.
Consumer demand accelerated through the quarter, highlighted by strong spring break performance. As omicron faded, offices reopened and travel restrictions were lifted, resulting in an improvement in business travel demand and a stronger fare environment.
Revenue-related Highlights:
• Unit revenue exceeds 2019 levels in March month for the first time in two years: March quarter adjusted total unit revenue (TRASM) was 5 percent lower than the same period in 2019. As demand improved, March month adjusted TRASM inflected to positive versus 2019, marking the first month of positive unit revenue versus 2019 since the start of the pandemic. This strength was led by premium revenue and diversified revenue streams, including loyalty and cargo.
• Business travel recovery boosted by improvement in corporate: Domestic corporate sales* for the quarter were ~50 percent recovered, with March improving to ~70 percent versus 2019. International corporate sales for the quarter were ~35 percent recovered, with March improving to ~50 percent versus 2019. Internationally, Transatlantic improved the most as European countries reopened.
• Premium cabin revenue recovery outpacing Main Cabin: Premium products continued to lead the recovery with Domestic premium revenue approximately 100 percent restored to 2019 levels in the month of March. Domestic and Latin premium product revenue recovery outpaced Main Cabin by approximately 10 points during the March quarter.
*Corporate sales include tickets sold to corporate contracted customers, including tickets for travel during and beyond the referenced time period
American Express remuneration 25 percent higher than 2019 levels: American Express remuneration of $1.2 billion in the quarter was up 25 percent compared to March quarter 2019. Co-brand spend was up 35 percent compared to March quarter 2019, reflecting a significant increase in T&E spend, with air travel spend outpacing lodging in the month of March for the first time since 2019. Co-brand acquisitions were nearly 95 percent recovered compared to March quarter 2019.
• Cargo strength continues with record revenue month in March: Cargo revenue was $289 million for the March quarter, a 51 percent increase compared to the same period in 2019 on strong demand and yields.
Cost Performance
Total adjusted operating expense of $9.0 billion in the March quarter 2022 increased 11 percent sequentially, driven by higher fuel prices and costs from the continued restoration of the airline. Adjusted fuel expense was $2.1 billion in the March quarter 2022. Adjusted fuel price of $2.79 per gallon was up 33 percent compared to the December quarter 2021 driven by higher market prices, including a 7¢ refinery contribution.
Adjusted non-fuel cost of $6.9 billion was up 6 percent sequentially. This was primarily driven by a normalization in maintenance expense. Compared to the March quarter of 2019, non-fuel unit costs (CASM-Ex) were 15 percent higher on 17 percent less capacity.
Balance Sheet, Cash and Liquidity
At the end of the March quarter 2022, the company had total debt and finance lease obligations of $25.6 billion with adjusted net debt of $20.9 billion and a weighted average interest rate of 4.3 percent. During the quarter, the company repaid $1.4 billion of gross debt.
Operating cash flow during the March quarter 2022 was $1.8 billion. Free cash flow was $197 million for the quarter with $1.6 billion of gross capital expenditures reinvested in the business. The company’s Air Traffic Liability was $9.1 billion at March quarter-end, up $2.8 billion compared to the end of the December quarter and up $2.5 billion compared to the March quarter 2019.
Delta ended the March quarter with $12.8 billion in liquidity, including $2.9 billion in undrawn revolver capacity.
Fleet and Partner Updates
In the March quarter, Aeroméxico emerged from its bankruptcy proceedings and in connection with the consummation of the transaction, Delta now holds a 20 percent equity stake in the reorganized company. Delta will recognize the 20 percent share of Aeroméxico’s results under the equity accounting method within non-operating expense in the company’s income statement beginning in the June quarter.
As part of Delta’s fleet renewal initiatives, the company took delivery of its first A321neo aircraft at the end of March 2022 and expects to take delivery of 26 A321neos in total this year. The introduction of these next-generation aircraft to the fleet contributes to Delta’s 2022 goal of using at least 6 percent less fuel per available seat mile compared to 2019. In total, Delta has committed to purchase 155 A321neos through 2027.
“Thanks to the team’s hard work, we maintained a competitive cost structure in the March quarter amid a dynamic
operating environment, an important driver of our financial recovery,” said Dan Janki, Delta’s chief financial officer.
“As demand continues to recover and we restore additional capacity in the second half of the year, we expect our
non-fuel unit cost comparisons to 2019 will improve to up mid-single digits, keeping us within our full year non-fuel
unit cost guidance range. Our intense focus on non-fuel costs will serve us well moving ahead as we scale the
airline and better utilize our fleet and our facilities.”
“During the March quarter we generated free cash flow, continued to pay down debt and finished the quarter with
nearly $13 billion in liquidity,” Janki said. “Reducing debt is our top financial priority as we target investment-grade
metrics and $15 billion of adjusted net debt by the end of 2024.”
Other Highlights from the March Quarter 2022
Culture and People
• Awarded a special profit-sharing payment of $1,250 to eligible employees in appreciation for extraordinary efforts resulting in a profitable second half of 2021
• Announced a 4 percent base pay increase for eligible employees worldwide, effective May 1, 2022
• Recognized by Glassdoor as one of its Best Places to Work for a 6th year in a row. Delta was the highest-
ranking U.S. airline on the list and ranked No. 18 on the 2022 list of 100 large companies
• Honored by Fortune as one of the World’s Most Admired Companies for the 9th year in a row, and ranked
higher than any other airline on the list
• Hosted celebrations with employees and family of Team USA Olympic and Paralympic athletes traveling on
Delta planes to and from the 2022 Winter Olympic Games in Beijing
Customer Experience and Loyalty
• Ranked No. 1 U.S. airline by the Wall Street Journal, including the best performance in on-time arrivals, completion factor, preventing extreme delays and the lowest levels of U.S. DOT complaints
• Unveiled major airport infrastructure milestones at Delta’s Los Angeles and Seattle global hubs, as part of a $12 billion, decade-long effort to modernize and elevate the customer journey
• Increased flexibility by extending ticket validity through year-end 2023 and rolling over all Medallion Qualification Miles from 2021 to 2022
• Enhanced in-flight experience with the return of hot meals on flights over 900 miles in First Class, and introduced plant-based and vegetarian menu items
• Reintroduced and refreshed Delta One services with multi-step, three-course meal service, more pre- departure beverage options, new cocktail bites and more dessert options
• Announced summer service schedule to Europe, with more than 500 weekly flights to Europe, including new flights between New York-JFK and Stockholm, Salt Lake City and London-Heathrow and restarting service from New York-JFK to Zurich, Brussels, Edinburgh, Copenhagen and Prague
Environmental, Social and Governance
• Released Diversity, Equity and Inclusion report outlining progress against the company’s commitments to advancing racial justice and diversity within its business
• Published a Climate Lobbying Report detailing global advocacy activities and policy engagements that support and complement Delta’s Paris Agreement-aligned climate goals
• Expanded partnership with sustainable aviation fuel (SAF) maker Gevo to increase supply of SAF and bring Delta closer to the goal of fueling 10 percent of its airline operation with SAF by the end of 2030
• Announced collaboration with Airbus on industry-leading research to accelerate the development of hydrogen-powered aircraft
• Created first Propel Collegiate Pilot Career Path Program with Hampton University, the airline’s first such partnership with a historically Black university
• Contributed $1 million to the American Red Cross and Global Red Cross Movement in support of humanitarian relief efforts in Ukraine
• Launched new, more sustainable onboard products; together the new products are expected to reduce single-use plastic onboard by approximately 4.9 million pounds annually
About Delta Air Lines More than 4,000 Delta Air Lines (NYSE: DAL) flights take off every day, connecting people across more than 275 destinations on six continents with award-winning operational excellence, customer service, safety and innovation. As the leading global airline, Delta’s mission is to create opportunities, foster understanding and expand horizons by connecting people and communities to each other and their potential.
Delta’s more than 75,000 employees believe our customers should never have to choose between seeing the world and saving the planet. Delta is leading the travel industry in building a foundation for sustainable aviation with its Flight to Net ZeroTM and its intention to set science-based targets for greenhouse gas emissions aligned with the Paris Agreement. And we are continuing to take action to advance diversity, equity and inclusion and to reflect the world and the passengers we serve.
Our people lead the way in delivering a world-class customer experience, and we’re continuing to ensure the future of travel is personalized, enjoyable and stress-free. Our people’s genuine and enduring motivation is to make every customer feel welcomed and respected across every point of their journey with us.
Forward Looking Statements
Statements made in this press release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments or strategies for the future, should be considered “forward-looking statements” under the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees or promised outcomes and should not be construed as such. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections, goals, aspirations, commitments and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the material adverse effect that the COVID-19 pandemic has had on our business; the impact of incurring significant debt in response to the pandemic; failure to comply with the financial and other covenants in our financing agreements; the possible effects of accidents involving our aircraft or aircraft of our airline partners; breaches or lapses in the security of technology systems on which we rely; disruptions in our information technology infrastructure; our dependence on technology in our operations; our commercial relationships with airlines in other parts of the world and the investments we have in certain of those airlines; the effects of a significant disruption in the operations or performance of third parties on which we rely; failure to realize the full value of intangible or long-lived assets; labor issues; the effects of weather, natural disasters and seasonality on our business; the cost of aircraft fuel; the availability of aircraft fuel; failure or inability of insurance to cover a significant liability at Monroe’s Trainer refinery; failure to comply with existing and future environmental regulations to which Monroe’s refinery operations are subject, including costs related to compliance with renewable fuel standard regulations; our ability to retain senior management and other key employees, and to maintain our company culture; significant damage to our reputation and brand, including from exposure to significant adverse publicity; the effects of terrorist attacks, geopolitical conflict or security events; competitive conditions in the airline industry; extended interruptions or disruptions in service at major airports at which we operate or significant problems associated with types of aircraft or engines we operate; the effects of extensive government regulation we are subject to; the impact of environmental regulation, including increased regulation to reduce emissions and other risks associated with climate change, on our business; and unfavorable economic or political conditions in the markets in which we operate or volatility in currency exchange rates.
Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of the date of this press release, and which we undertake no obligation to update except to the extent required by law.