Delta Airlines Announces December Quarter, Full Year 2018 Profit

 

 full year 2018 GAAP pre-tax income of $5.2 bn and earnings per diluted share of $5.67, resulting in $1.3bn profit sharing for Delta people

 

Posted by Sade Williams

 

Delta Airlines has reported financial results for the December quarter and full year 2018.  Highlights of those results, including generally accepted accounting principle (GAAP) and adjusted metrics, are below and incorporated here.

 

Adjusted pre-tax income for the December quarter 2018 was $1.2 billion driven by over $700 million of revenue growth, allowing the company to fully recapture the $508 million increase in adjusted fuel expense and produce an 11 percent adjusted pre-tax margin.  Adjusted earnings per share increased by 42 percent year over year to $1.30.

 

For the full year, adjusted pre-tax income was $5.1 billion, a $137 million decrease relative to 2017 as the company overcame approximately 90 percent of the $2 billion increase in fuel expense.  Full year adjusted earnings per share were $5.65, up 19 percent compared to the prior year as the company recognized benefits from tax reform and a four percent lower share count.

 

“2018 was a successful year for Delta with record operational reliability, increasing customer satisfaction, and solid financial results in the face of higher fuel costs.  Delta people are the foundation of our success and I am honored to recognize their efforts with $1.3 billion in profit sharing for 2018,” said Ed Bastian, Delta’s chief executive officer.  “As we move into 2019, we expect to drive double-digit earnings growth through higher revenues, maintaining a cost trajectory below inflation, and the modest benefit from lower fuel costs.  Margin expansion is a business imperative and we remain confident in our full-year earnings guidance of $6 to $7 per share.”

 

 

Revenue Environment

 

Delta’s adjusted operating revenue of $10.7 billion for the December quarter improved 7.5 percent, or $747 million versus the prior year.  Total unit revenues excluding refinery sales (TRASM, adjusted) increased 3.2 percent during the period driven by healthy leisure and corporate demand offsetting an approximately 0.5 point headwind from unfavorable foreign exchange rates.

 

For the full year, adjusted operating revenue grew to nearly $44 billion, up eight percent versus prior year on an increasingly diverse revenue base, with 52 percent of revenues from premium products and non-ticket sources.  Premium product ticket revenues increased 14 percent along with double-digit percentage increases from cargo, loyalty, and Maintenance, Repair and Overhaul revenue.

 

“Delta’s strong brand momentum was evident across the business with positive unit revenue growth in all geographic entities for the full year, a record revenue premium to the industry, and double-digit revenue growth from premium products and non-ticket sources,” said Glen Hauenstein, Delta’s president.

 

“Our March quarter adjusted unit revenue growth is expected to be flat to up two percent including impacts from the timing of Easter, increasing currency headwinds, and the ongoing government shutdown.”

 

 

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