DALLAS – Delta Air Lines (DL) today announced its June quarter financials. Highlights include recording the highest quarterly revenue in the company’s history, strong operating cash flow that allowed early payment on US$1 billion in debt, and the raising of full-year earnings per share to between US$6 and US$7 with a free cash flow guide of US$3 billion.

Delta also expects record September quarter revenue and earnings per share of US$2.20 to US$2.50 for that period. The June quarter 2023 Adjusted Financial results are:

• Record operating revenue of US$14.6 billion, 19 percent higher than the June quarter of 2022
• Record operating income of US$2.5 billion with an operating margin of 17.1 percent
• Pre-tax income of US$2.2 billion with a pre-tax margin of 15.2 percent
• Earnings per share of US$2.68
• Operating cash flow of US$2.6 billion
• Free cash flow of US$1.1 billion
• Adjusted net debt of US$19.8 billion at quarter end

Strong International Travel

In the June quarter, DL international passenger revenue was 61% higher year over with record profitability. The airline says that transatlantic travel was led by consumer demand to Southern European destinations.

Also, transpacific travel increased due to the reopening of Japan and the “performance of the Korean Air joint venture. Latin American revenue remained strong driven by demand for travel to South America and the Caribbean. Delta says the integration of the LATAM joint venture is progressing well.

US domestic revenue was up 8% year over year with a similar increase in capacity. Corporate revenue grew and the airline notes that 93% of companies expect their travel to increase or remain the same through the September quarter.

Delta’s Premium and Loyalty revenue growth continued to outpace main cabin revenue with a gain of 25% year over year.

Fuel Costs Declining

"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."

Importantly, the price of fuel declined 34% versus 2022 to US$2.52 per gallon. Fuel efficiency, defined as gallons per 1,000 ASMs (Airline Seat Miles) was 14.4, up 1% over 2022.

Cash Flow and Debt Payment

"Delta delivered $2.9 billion of free cash flow in the first half of the year, while consistently reinvesting in the business," Janki said.  "With an outlook for $3 billion of free cash flow in 2023, we are accelerating debt repayment to retire over $4 billion in debt this year.  We are on track to reduce leverage to 3x by the end of this year and achieve investment-grade metrics in 2024.  During the quarter, we also reinstated the quarterly dividend, an important milestone that opens the shareholder base to yield-focused investors."

Other, nonfinancial highlights included:

• Earned the #1 spot on The Points Guy's list of best U.S. Airlines for the fifth year in a row, consistently scoring high in reliability, customer experience, network, and the loyalty program
• Implemented largest ever trans-Atlantic summer schedule in Delta's history with more than 650 weekly flights to 32 destinations and a 20 percent increase in seat capacity versus summer 2022
• Delta and LATAM announced new and enhanced service, with U.S.-Colombia routes and LATAM's first Atlanta route
• Signed an agreement with EL AL Israel Airlines to launch a strategic partnership with more convenient connections for customers, reciprocal codeshare, and frequent flyer benefits
• Took delivery of 18 aircraft this year and 12 this quarter, including the A321neo, A220-300, and A330-900; exercised option to purchase 12 additional A220s and added one A330-900 to the order book

A complete look at the June Quarter financials is available at this link.

Delta Comments on Revenue Environment

"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. 

Hauenstein added, "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."

"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 US$6 to US$7 per share and reiterating our recently updated outlook for US$3 billion of free cash flow."

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