Delivered highest quarterly revenue and profitability in Delta’s history; Strong June quarter operating cash flow enabled accelerated debt reduction.
ATLANTA – Delta Air Lines reported financial results for the June quarter and provided its outlook for the September quarter 2023.
“Thanks to the incredible work of our entire team, Delta is delivering for our customers by providing strong operational performance and best in class service during this busy summer period. With this performance, we generated record revenue and profitability in the June quarter. Our people are the best professionals in the industry, and I’m proud to recognize their achievements with $667 million in the first half toward next year’s profit sharing payment,” said Ed Bastian, Delta’s chief executive officer.
“Consumer demand for air travel remains robust. Against this constructive backdrop, we are increasing our 2023 earnings guidance to $6 to $7 per share and reiterating our recently updated outlook for $3 billion of free cash flow.”
June Quarter 2023 GAAP Financial Results
- Record operating revenue of $15.6 billion
- Record operating income of $2.5 billion with an operating margin of 16.0 percent
- Pre-tax income of $2.3 billion with a pre-tax margin of 14.9 percent
- Earnings per share of $2.84
- Operating cash flow of $2.6 billion
- Payments on debt and finance lease obligations of $1.8 billion
- Total debt and finance lease obligations of $20.2 billion at quarter end
June Quarter 2023 Adjusted Financial Results
- Record operating revenue of $14.6 billion, 19 percent higher than the June quarter 2022
- Record operating income of $2.5 billion with an operating margin of 17.1 percent
- Pre-tax income of $2.2 billion with a pre-tax margin of 15.2 percent
- Earnings per share of $2.68
- Operating cash flow of $2.6 billion
- Free cash flow of $1.1 billion
- Adjusted net debt of $19.8 billion at quarter end
Revenue Environment and Outlook
“We delivered record revenue in the June quarter, with total revenues 19 percent higher than the June quarter of 2022. These results reflect the strength of the demand environment, the hard work of our people and the momentum of Delta’s brand,” said Glen Hauenstein, Delta’s president. “Robust demand is continuing into the September quarter where we expect total revenue to be similar to the June quarter, up 11 percent to 14 percent compared to the September quarter 2022 on capacity that is 16 percent higher.”
- Unit revenue strength continues: June quarter total unit revenue (TRASM) was up 1 percent versus 2022 on 17 percent higher capacity driven by improved load factors and yields.
- Record international performance: Record June quarter international passenger revenue was 61 percent higher year over year with record profitability. Transatlantic was driven by strong U.S. consumer demand, with southern European destinations leading results. Transpacific benefited from the re-opening of Japan and performance of the Korean Air joint venture. Latin America strength continued, driven by demand for travel to South America and the Caribbean with integration of the LATAM joint venture progressing well.
- Domestic demand remains robust: June quarter domestic passenger revenue was up 8 percent year over year on a similar increase in capacity. Corporate revenue grew year over year with recent corporate survey results indicating that 93 percent of companies expect their travel will increase or stay the same sequentially in the September quarter.
- Premium and Loyalty revenue drive revenue diversification: Premium revenue growth continues to outpace main cabin, increasing 25 percent year over year. Loyalty revenue improved 20 percent driven by strong co-brand acquisitions and spend growth. American Express remuneration for the June quarter was $1.7 billion, approximately 22 percent higher than June quarter 2022.
Cost Performance and Outlook
“Non-fuel unit costs have reached an important inflection point with our rebuild substantially behind us, core maintenance normalizing and the benefits of scale and efficiency increasing into the second half,” said Dan Janki, Delta’s chief financial officer. “We expect September quarter non-fuel unit costs to decline 1 percent to 3 percent year over year, consistent with our outlook for low-single digit declines in the second half of the year.”
Delta Air Lines discloses order for 12 additional A220 aircraft
Also, under its current agreement, Delta Air Lines has disclosed an order for 12 additional A220-300 aircraft, bringing the airline’s total firm order for A220s to 131 aircraft – 45 A220-100s and 86 A220-300. Throughout the years, Delta has reordered the A220 five times and is today the largest A220 customer and operator in the world.
“The A220-300 offers efficient performance and flexibility,” said Kristen Bojko, Vice President of Fleet. “The continuing expansion of Delta’s A220 family is an integral investment in the future of sustainable aviation.”
“This additional order from the largest A220 customer and operator is yet another strong endorsement for the value and opportunities offered by this latest generation aircraft family. The A220 provides Delta the flexibility to right-size its operations, gaining in efficiency and offering superior single-aisle comfort. In service with Delta, the A220 has proven to be a game changer in its size category in highly competitive North America markets,” said Christian Scherer, Airbus Chief Commercial Officer and Head of International.
In addition to its positive cabin experience, the aircraft plays an important role in helping decrease airline operating costs and environmental impact. Offering 25% lower fuel burn and CO2 emissions per seat compared to previous generation aircraft, the A220 is the only aircraft purpose-built for the 100-150 seat market. Combining state-of-the-art aerodynamics, advanced materials and Pratt & Whitney’s latest-generation GTF engines, the A220 brings customers a 50% reduced noise footprint and around 50% lower NOx emissions than industry standards.
Delta took delivery of its first Airbus A220 in October 2018, and was the first U.S. carrier to operate the aircraft type. Delta currently operates a fleet of 433 Airbus aircraft, including 61 A220 aircraft, 280 A320 Family aircraft, 64 A330s and 28 A350-900 aircraft.
With 271 A220s delivered* to 16 airlines operating on four continents, the A220 is the optimal aircraft to offer operational flexibility for both regional as well as long-distance routes. To date, more than 90 million passengers have flown on the A220. The fleet is currently flying on over 1,100 routes and over 375 destinations worldwide. As of the end of June 2023, around 30 customers have ordered more than 800 A220 aircraft – confirming its leading position in the small single-aisle market.
*At the end of June 2023
Vicky is the co-founder of TravelDailyNews Media Network where she is the Editor-in Chief. She is also responsible for the daily operation and the financial policy. She holds a Bachelor's degree in Tourism Business Administration from the Technical University of Athens and a Master in Business Administration (MBA) from the University of Wales.
She has many years of both academic and industrial experience within the travel industry. She has written/edited numerous articles in various tourism magazines.