Delta earns $1.6 billion profit, 30% rise in income

Delta Air Lines yesterday posted a profit of $1.6 billion following a successful year that earned 30 per cent more in income.

The groups’ total revenue increased to a record $47 billion, up 7.5 per cent when prior-year period is adjusted for third-party refinery sales and the sale of DAL Global Services (DGS).

Total expense increased 3.9 per cent with non-fuel operating expense on a unit basis (CASM-Ex) up two per cent, in line with the company’s guidance and long-term cost targets.

Delta’s 90,000 employees will share a record $1.6 billion profit-sharing payouts on February 14.

Delta’s Chief Executive Officer (CEO), Ed Bastian, said the Year 2019 was a truly outstanding year on all fronts – “the best in Delta’s history operationally, financially and for our customers.”

“Our people, and their commitment to bringing best-in-class travel experiences to our 200 million customers, are the foundation for our success. I’m pleased to recognize their outstanding performance with a record $1.6 billion in profit sharing for 2019.

“As we enter 2020, demand for travel is healthy and our brand preference is growing, positioning Delta to deliver another year of strong results, including earnings per share of $6.75 to $7.75,” Bastian said.

Delta’s operating revenue of $11.4 billion for the December quarter improved 7.2 per cent or $768 million over the prior year (adjusted for the sale of DGS). This was driven by a nine per cent increase in premium product ticket revenue, an 18 per cent increase in loyalty revenue and a 31 per cent increase in third-party maintenance revenue, which was partially offset by 13 per cent lower cargo revenue.

Domestic revenue grew 7.7 per cent in the quarter on 1.6 per cent higher passenger unit revenue (PRASM) and six per cent higher capacity. Domestic premium product revenue grew 11 per cent and corporate revenue grew six per cent, driven by strength in business and leisure demand through the holiday period. Revenue and margin improved in all domestic hubs with revenue up 10 per cent in coastal hubs and six per cent in core hubs.

Atlantic revenue grew 0.8 per cent in the quarter on 2.4 per cent higher capacity and a 1.6 per cent decline in PRASM, driven almost entirely by foreign exchange rates.

Latin revenue grew 6.7 per cent on a 6.3 per cent increase in unit revenue and 0.4 per cent higher capacity. This revenue improvement was driven by continued double-digit unit revenue growth in Brazil and Mexico.

Pacific revenue was down 0.5 per cent versus prior year on a 4.4 per cent decline in unit revenue primarily due to continued softness in China. This was a 3.2 point improvement versus the September quarter on improved trends in Japan and strong Delta Premium Select performance.

Delta’s president, Glen Hauenstein, said the industry-leading operational performance and the unmatched service the people provide are the reasons more customers than ever are choosing to fly Delta.

“Investments in reliability, product, and service, airports and technology are reshaping customer perception and driving record satisfaction scores and increasing brand preference.

“We delivered $47 billion in revenue in 2019, a more than $3 billion increase when adjusted over the prior year while sustaining a revenue premium to the industry of more than 110 per cent. Demand trends remain healthy and we expect the momentum to continue in 2020, with revenue growth of five to seven per cent in the March quarter,” Hauenstein said.