Delta kicks off 2016 with record quarter
OREANDA-NEWS. April 15, 2016. Delta today reported a \\$1.56 billion adjusted pre-tax profit* for the March quarter of 2016. That’s up \\$966 million over the same timeframe last year, and marks the 12th consecutive quarterly record. On a GAAP basis, pre-tax profit for the March quarter 2016 was \\$1.43 billion.
The March adjusted pre-tax profit was an \\$11 million improvement over the December quarter despite being our seasonally weakest period.
Delta’s operational performance during the first quarter was record setting for the timeframe with an on-time arrival rate of 86.5% and 99.4% completion factor. The airline also posted 49 days of perfect mainline completion factor with zero cancellations.
“We have started 2016 with tremendous momentum,” said incoming Delta CEO Ed Bastian in a press release. “... Delta people have proven again that they are the very best in the industry.
Unit revenues declined 4.6% on foreign currency headwinds and lower ticket pricing due to fuel. While the tragic events in Brussels created a \\$5 million headwind in the quarter, commercial initiatives including Branded Fares and the American Express partnership allowed the airline to maintain its top line financial performance for the quarter.
While the airline is currently enjoying reduced fuel expenses, which are contributing to record profits, Delta continues work to improve unit revenue given a volatile fuel environment and global economic uncertainty.
Glen Hauenstein, Delta’s incoming President said Delta is “... focused on getting unit revenues back to a positive trajectory and we will make adjustments to our fall capacity levels if we are not making sufficient progress over the coming months.”
Where the airline’s costs are concerned, total operating expenses were down more than \\$1 billion as the decline in fuel costs offset wage increases as well as higher profit sharing expense, which increased 100% compared to last year.
Paul Jacobson, Delta’s chief financial officer said, “Our cost discipline, combined with continued low fuel prices and solid outperformance on revenue, is helping to contribute to over \\$8 billion in operating cash flow this year, which we are using to invest in the business, strengthen the balance sheet and continue to return cash to our owners.”
By the end of the first quarter Delta had used its operating and free cash flow to reinvest more than \\$870 million back into the business, including \\$764 million in fleet investments. It also completed \\$1.3 billion in pension funding for the year (including \\$135 million in April), returned millions to shareholders, stayed on track to reduce adjusted net debt to below \\$6 billion by the end of 2016, and accrued \\$272 million in profit sharing.
Delta’s strong financial position was recognized during the first quarter with an investment grade credit rating by Moody’s Investors Services.
*Reconciliation to GAAP measures can be found on Delta’s website at ir.delta.com. http://ir.delta.com/stock-and-financial/earnings-releases/
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