Delta Air Lines Announces September Quarter Profit
OREANDA-NEWS. Delta Air Lines (NYSE: DAL) today reported financial results for the September 2014 quarter. Key points include:
Delta's pre-tax income for the September 2014 quarter was USD 1.6 billion, excluding special items1, an increase of USD 431 million over the September 2013 quarter on a similar basis. Delta's net income for the September 2014 quarter was USD 1.0 billion, or USD 1.20 per diluted share, and its operating margin was 15.8 percent, excluding special items.
On a GAAP basis including special items, Delta's pre-tax income was USD 579 million, operating margin was 7.5 percent and net income was USD 357 million, or USD 0.42 per diluted share.
Results include USD 384 million in profit sharing expense in recognition of Delta employees' contributions toward achieving the company's financial goals, which makes a year-to-date profit sharing accrual of USD 823 million.
Delta generated USD 910 million of free cash flow during the September 2014 quarter. The company used its strong cash generation in the quarter to reduce its adjusted net debt to USD 7.4 billion and return USD 325 million to shareholders through dividends and share repurchases.
"With another record profit, solid margin expansion and nearly USD 1 billion of free cash flow, Delta's results are consistent with high-quality S&P 500 industrials," said Richard Anderson, Delta's chief executive officer. "While we have more work ahead of us to achieve our long-term financial goals, we expect a record fourth quarter of 2014 with an operating margin of 10-12%. For the full year, we expect a pre-tax profit in excess of USD 4 billion. We have the right foundation in place for an even stronger 2015, proven strategies for Delta, and 80,000 Delta employees who are the very best in the industry."
Revenue Environment
Delta's operating revenue improved 7 percent, or USD 688 million, in the September 2014 quarter compared to the September 2013 quarter, driven by continued strength in corporate and domestic revenues. Traffic increased 3.7 percent on a 3.2 percent increase in capacity.
Passenger revenue increased 6 percent, or USD 522 million, compared to the prior year period. Passenger unit revenue (PRASM) increased 2.4 percent year-over-year with a 1.9 percent improvement in yield. Seat-related products and other merchandising initiatives increased revenues by nearly USD 50 million versus the prior year period.
Cargo revenue increased 7 percent, or USD 15 million, on higher freight yields and volumes.
Other revenue increased 15 percent, or USD 151 million, driven by joint venture, SkyMiles revenues, and third-party refinery sales.
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