Delta Posts Record Q1 Revenue, US$363m Net Loss

Delta Posts Record Q1 Revenue, US$363m Net Loss

DALLAS — Delta Air Lines (DL) reported today its financial results for the March Quarter. Although a record US$12.8bn in operating revenue was recorded, the company experienced a net quarterly loss of US$363m due, in part, to a one-time US$735m bonus payout to pilots which was part of a new contract that prevented a potential devastating shutdown.

“Thanks to the outstanding work and dedication of the Delta team, 2023 is off to a strong start. We provided well-deserved pay increases for our people and paid more profit sharing than the rest of the industry combined.  Delta is building momentum, with the best people in the industry generating nearly $5 billion of operating profit over the last twelve months,” said Ed Bastian, Delta’s chief executive officer. 

The CEO added that for the June quarter, DL expected to deliver record revenue and an adjusted operating margin of 14 to 16 percent with earnings per share of US$2.00 to US$2.25.

“With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of US$5 to US$6 per share, and free cash flow of over US$2bn,” Bastian said.

The record revenue was due to increased demand for flights, higher prices, and more customers paying for premium seating and services. Bastian said every new DL plane has about 1/3 of the seats in premium cabins as that is the area of the highest growth in demand.

N419DX, Delta Air Lines Airbus A330neo. Photo: Michael Rodeback/Airways

Pilot Bonus

The pilot bonus was equivalent to 14% of their pay last year plus 4% of their pay for each of the previous two years. The new contract also gave them an initial pay raise of 18%.

“We wanted to ensure that we have the very best contract to attract the very best pilots in this industry to come work for Delta,” Bastian said in an interview with The Atlanta Journal-Constitution.

But this demand also has its challenges and highlights the industry-wide staffing shortage. Like all airlines, DL is having difficulty keeping up with the legions of passengers.

Bastian had previously hoped that DL’s flight capacity would be restored to pre-pandemic levels this summer, but he now says the airline has cut some flights from its schedule “to make sure that we’re able to reliably manage the summer.”

Now, it’s more likely that Delta’s flight capacity will be fully restored towards the end of this year, he said.

The Atlanta Journal-Constitution reports that “Delta and other airlines have reduced flight schedules into airports in New York and Washington, D.C. after the Federal Aviation Administration warned of air traffic controller shortages in those areas. Bastian said Delta was pleased to make the adjustments because it “would otherwise be in very difficult shape for the summer.”

Delta filled 81% of its seats during the quarter, up from 75% in the same quarter in 2022.

N370NW Delta Air Lines Airbus A320-200. Photo: Mateo Skinner/Airways

Quarterly Highlights

The airline said revenue was in line with guidance and record operating cash flow enabled accelerated payment of debt.

Highlights of the March quarter results are:

  • Operating revenue of US$12.8bn
  • Operating loss of US$277m with an operating margin of (2.2) percent
  • Pre-tax loss of US$506m with a pre-tax margin of (4) percent
  • EPS of ($0.57)
  • Operating cash flow of US$2.2bn
  • Payments on debt and finance lease obligations of US$1.2bn
  • Total debt and finance lease obligations of US$22bn at quarter end
Salt Lake City (SLC) airport Delta Air Lines ramp overview. Photo: Michael Rodeback/Airways

The Future

Ticket sales are strong. Delta has seen record advance bookings and recently had its 10-highest sales days in the company’s history.

“That portends very, very well for the strong spring and summer travel season,” Bastian said.

Featured imagE: Delta Air Lines N186DN Boeing 767-300ER | Photo: Tony Bordelais/Airways

John Huston is a marketer, writer, and videographer who's always loved planes, clocked 10 whole hours in a Cessna and can spend hours wandering around ATL. Based in Atlanta, GA, United States.

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