DAL - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, everyone and welcome to the Delta Air Lines September Quarter Financial Results Conference Call. My name is Aaron and I will be your coordinator. At this time, all participants are in a listen-only mode, until we conduct a question-and-answer session, following the presentation.

As a reminder, today’s call is being recorded. I’d now like to turn the conference over to Ms. of President Vice Greer, Investor Relations. Jill ahead. go Please

Jill Greer

joining Thanks, September our for Aaron. morning, everyone. Good us quarter for Thanks call.

Paul Joining us Glen CFO, President, Ed Bastian; from Atlanta today Hauenstein; are and CEO, our Jacobson. our

could cash with in cost the many the leadership Q&A To Ed questions or yourself Paul differ to forward-looking a Today’s as revenue flows. performance. events. overview environment and possible open Q&A, the cause will from Glen is performance an beliefs conclude please materially Our call give Delta’s that statements room contains and session. about and as expectations during team brief a the statements. the to limit the of forward-looking actual statements discussion in us our our risks All for and with will and results review the of here one represent forward-looking financial get future then that question will involve follow-up. address uncertainties

that differences items, unless Some discuss All special exclude the filings. are results non-GAAP noted. financial cause also SEC Delta’s factors otherwise We’ll of in measures. described may such

incurred to We’re the from XXXX. comparisons cost and we normalized quarter a as fourth better the contract appropriate providing matches quarters retroactive our expense on pilot this XXXX the also basis margin in of

I’ll can a call non-GAAP that, You turn Ed. at with reconciliation measures our the on of page over find And the Investor ir.delta.com. Relations to

Ed Bastian

the profit go. per $X.X This a joining and quarter got that on we've together a more call $X.XX everyone for Thank to morning, pretax we've this earnings consensus appreciate XXth share versus call. reminded continues you, our that me $X.XX. it Jill. of morning. the Good reported other Delta earnings be is of September us and Jill to the yet day and I billion story done good a lot

to our this to strong While are of the the customers are quality City, us Demand customers value and service multiple through. choosing Delta showed our deliver determination earthquake people of and we communities than fly ever of a hurricanes service. including And number people to in great faced Delta showing quarter, they more challenges an Mexico that and before. is

we fact, passengers in days this summer. carried history our top the for XX XX In of had

margin from pressure resume $XXX first million Tampa, facing depression We resilient an that of fabric X% and our good in rising the from key our air Irma operating in of travel and This the city's tropical topline and show billion most continue in to cash part hub fuel shut important times. times operating we of Lauderdale. XX% of part We And is our down Irma. Fort to speaks recorded prices Florida society $X.X and in is history. never the headwind generates today's quickly despite challenging growth, rebounded Atlanta service and investment Orlando, of brand. were daily and first airports flow operations Delta the while and in health Hurricane to the thesis from including in We a airline the encountering

challenges and and our sincere people other professionalism the through by quarter. faced my the April want I aided take each our process following customers of earlier year better Delta for we great express put to this storms to improvements grace in the the of the demonstrated team. thanks and was recovery care this communications you we Our to proud very crew scheduling, including place all

in $XXX towards profit Your million payout. year's efforts sharing resulted another next

our the decision a once to uniting is recently powerful and apart sharing Delta tool a we in of plans mind, employees sets program our profit all goal. again. With sharing around align common profit Our this made

of holding together Delta asset. of stakeholders strategy. keep of all our foundation our This generate come. to for our the the greatest investment our will will And the are and is considerable employees returns people benefit Our years culture for

and revenue Since half focus our we Our fuel counter than prices build have last our look spoke, we costs to by expansions. more is increased as on ever important unified rising cost $XXX to second growth margin return million. fuel earnings momentum and and

We we've unit quarter. two are by in encouraged last another track quarters for revenues are the our and the as fourth progress on result deliver to grown positive

mid-teens be revenues an We're %. We to a this operating rating, to XX% with margin grade and expect X ROIC. QX year. X% after close transition successful third investment And having pretty year XXXX to shaping up secured close a unit to be after looking tax to our up is

pretax $X Our third with row a in or approaching profits at year billion.

premium in winning business. service As and unit path margins. our our the positive momentum revenue keep in we and we've to international have large aspect we pipeline visibility A a unit and to improvement and look commercial good positive To the we to revenues ahead revenue in award revenue to unit initiatives return industry. first, earnings maintain the business has must product the a there, we solid XXX% our get trajectory. expect initiatives to growing our seen and been the key on Through with of growth deliver

have and investment We the to XX% over GOL, France-KLM stake group brands AeroMexico, now the Air our the shareholder. which Atlantic, one airline are we the where we last Eastern in world, newest invested China a their five $X build of franchise week largest last and best a of with Virgin closed billion roughly years around some

basis. we're a these of ventures With margins able immunized driving cross many joint benefits and to achieve the of partners on consolidation border international our sustainable improved

at the international will Day growth we growth a domestic in we returning We'll capacity Investor to maintain expect the momentum. at to while several to entities keep similar details December, right past but as have modest revenue that more maintain now right recover. rate years, Second, levels these to our

allow with a our this think due longer in Keeping full range length. in structure international topline X% This both deal capacity Delta unit will check point with domestic. the competitive structure increase finally the provides to put And and stage us fact growth we'll cost of X% effectively XXXX outpaced to system disciplined this In QX, growth. stay We RASM our with revenue drive to flexibility and challenges. would in to growth our cost solely plan capital. our

year costs, been While transition unit X% sub-X% a on cost nonfuel growth unsustainable again XXXX the labor must XXXX. return has growth we starting is in and

us and and this roughly customers, of early greatest also our incredible our to solid were the in results the a owners We've while quarter will grade are execute we operating our that investment at opinion, our capital and able allows continue on for cash the the while returns our for Delta strengthening flow. the importantly drive substantial step our keeping of this up We communities. airline half innings built gains fleet as our Delta, sheet, transformation can of balance efficiency in generating history global spending among in initiative, and some to an shareholders. our business industry people showed, to our at any deliver best challenge This

I'm the going Paul turn over details to the to more Now, call go on to and through quarter. Glen

Glen Hauenstein

teamwork be drove revenue storms, touches Florida revenue our are and revenues remains team our for quarter. their Leisure and improving join across Ed in and those roughly Passenger from the positive and touches in the to the Great and like in demand for Ed. thanking momentum XX% I'd to our entire to which impact States. XX% limited the United results, delivering efforts Southeastern all opportunity initiatives yields demand groups X% show continues in commercial operations a our from you, domestic recovering as that our strong increase commercial we've along the the revenue continue environment. seen Delta business Thank the of storms. year

same September into with throughout That domestic X% yield October. increase and and yields While continuous alone slightly ancillary now new Comfort+ trend strong business streams we were saw revenues. diversify drove growth and resources than the our demand the July XX% a initiatives in $XXX in class revenue the time, have million revenue we expected, combined to At softer fare contributing Branded quarter. option continue business growth in base exceed favorable up purchase quarter, improvement in post to the the first seen million, an XX incremental added August, fares. delivered from

in team, Express an our is global airlines airline programs. pace of value of record and Our proud partner We're placed combining News quarter. SkyMall quality loyalty partnership SkyMall Rankings another year a the credit of on loyalty high produced with among of very This & the the US card highlights World enrolment additional in for growth value US first million $XX the program. and American a premier

highlight contributed business, Finally, cargo of I'd quarter our digit like double consecutive second a to growth. which

were sales XX%. This up quarter,

of in from month business, system we to at with X% point domestic on X.X% to came in impact range point given saw passenger of improve unit each our results quarter, million one quarter. equated the Turning revenues improvement our with of guidance the revenues, X.X% this storms. PRASM growth Adjusting from our of for unit in PRASM positive $XXX a line including July. over impact the original the In storms, early

ten with our end to September, initiatives. fare at in point Of continued business top quarter. domestic XXX the business territory a markets, within were We gain traction of yield positive the improvement the XX%

is for believe continue seeing which growth healthy moving and numbers improve our direction. the leisure and in fourth in right will are revenue in Coupled quarter. We both of expect two-thirds environment, to base, we we demand, the accounts with those the the business domestic

increasing On in improving with first drove with on the in demand PRASM Trans-Atlantic with side, result. international the the revenues yields Strong three strengthening this had domestic combined outperforming business there the entity quarter positive result momentum quarter. good and leisure throughout unit its years yields demands is X.X%.

business unit head stage historically revenue the Latin, And fourth in PRASM and currency into comp, with X% expect one despite unit hurricanes, further accelerate declined the season an X% the we in Brazil. Pacific, City point will improved in from to high in headwind X% Olympics in continue a earthquakes In Mexico as quarter. the including length. strong tougher and increase a revenues We the

gaining network Our traction. is restructuring

Korean move Narita, which Tokyo. traffic revenues contributed instead our unit in We to with are leveraging Seoul partnerships efficiently, connecting to more of positive through

In mature unit quarter. positive of a entities revenues, Haneda positive four addition, generated margin delivering service representing for we XX% the continues our to our our of summary, roughly have capacity. now and total three In

system quarter to on X% fourth we toughest unit year. maintaining PRASM despite revenues and Our focus is expect facing X%, up the comps of be our to momentum forward

in transatlantic. numbers consistent Latin, of and with last last the demand there our year's in showed year's time in revenue three quarter we seen fares. in be we the is fourth improvements Internationally, our region demand challenges to our holiday has Indeed in the last in increased improvements we've growth XXXX. benefit recover. a capacity of strength contracted It from managers or and for since are modest leisure than concurrently headwinds, into in have Based are of and and be these unit trend underlying importantly and momentum continues In realize where maintained will quarter. revenues election, our volumes first fares survey turn on point after which positive quarter best have fourth we infrastructure is benefit business Jewish a more debuted While years will travel continue territory Latin as will the will should their recently leisure time in survey the expect the lapping affected reduced to This also been the fourth the our years. to spend result yield, into currency corporate the more improvement we the Despite bookings, corporate three until XXXX. in revenue help environment. shift X maintain XX% seeing project further advance and from also

improving this meaningfully main all ahead the to to look Pacific, grow with allow the revenue regions include kick-off should the sit leverage have in Finally, the continue profitability enhance the RASM will later momentum had retirements. have flying network will then in three choice. exit month This points a and driving customer years. years. to as transition in earnings and we will efficiency, begin in fleet delivering our platforms several and Though Then the here XXXX as XXX we region last over past that we AXXX will more we revenues, we facilitating innovation, margins. customer several territory These positive next we us today,

overhead large customers best margin narrow look we across up-gauging route we’ll for like our functions our our scale to our efficiency across further drive while more ventures way. provide global efficient. build our First, a accretive In combined continue networks, more Internationally, out joint customers domestic, making finding distribution we’ll scheduling ways new leveraging to network. options the in and hub structure to with greater bodies, and

experience. the a Clear industry and to chat like innovative offering Second, processes. agents we'll solutions on We customer continue video journey redesigning with customer gate expanding more reservations deliver and our partnerships boarding our lead with

raise We on key are the we are net And the we customers. revenue all-time our bar is premiums customers give to have in a constantly to segmentation striving Delta finally our our to choices. promoter Driving scores expanding the to are sustaining which industry. NPS seeing for experience hit higher And results more highs.

than quarter markets at offering half end fare in domestic has the was buy. branded and now about customers to more Our first making of them to initiatives out Basic and products easier the more portfolio. Latin expanded is economy entity been fully more our and of include rolled the

of the available be products expect next to end year. to continue worldwide the by We

product on the this spring. this Initial encouraging year. the and been be product Select out having transatlantic it fifth forward have in flying Our begin will we're rolled the October more will looking Pacific next to sales broadly very AXXX introduced Premium in next on and

conscious best have all with of you they luxury Investors sharing commercial call service a goal class Regardless of offering have you you're with to over more Delta. a discerning basic they price to we about economy the people details to traveler looking product or which product Day. choosing in the One. great we come I'm opportunities day the forward give amazing and at customer Our excited the by And to for is happy Delta to We're customers the a the Paul. more provided every choose look now of our experiences turn value whether ahead

Paul Jacobson

of and service of let outstanding family all their Glenn challenges the Thanks quarter. to hard our my this for add all we Delta provided customers work me faced the and for thanks they the through

the about and a as prices of measured fuel our million quarter, increase, fuel. investments For our increased was higher Of September $XXX people, our total driven service. in our operating maintained moved and expenses product, the third by we that

advantage ownership doing fuel. continue we on refinery sustainable continued jet the like this buy increase through We impacts focused commercially the to as critical through way we and more prices to competitive in In the to saw is complex drive This in can of refinery everything start the rise. be the times significantly of quarter our even prices hurricanes. fuel the market late as July, which US dealt with we

refinery million As Ed We've three and that mentioned, for year the expertise fuel fuel refinery. a of year half which a profitability leveraging benefit some well, the of fuel of a from in million our quarter we will did the our team purchases now in gallon estimate Trainer the that expect directly half us we ago. and by or $X.XX of just quarter all-in we that our able and We the fourth drive over fuel offset expense saved the of a the timing to months benefit than million. as $XXX to roughly to $XX full the pressure contribution price about be higher $X.XX. $XXX of Roughly the of with came per back been expect

X.X%. by increase legacy expense side million the December expect fuel say will per on gallon. For includes hedge last $X.XX the in resulted all-in of non-fuel increase to happy a impacted a fuel to $XX we of and $XXX The non-fuel remaining this our to million cost This be quarter, came with quarter approximately by price $X.XX unit an expense the increase operating our loss and book. hedge

first and one-time costs were investments year's in half XQ of and continued with performance consistent our our our fleet. outage, our people, our the our reflect product last Excluding impact

modest also capacity related headwind We saw reductions. a from hurricane cancellations and

the CASM For three X% non-fuel growth put the up are factors a are year. for pushing that on X% CASM expect year. cost earlier to basis. quarter, for roughly guidance we on this XXXX cost This above X% trajectory similar non-fuel will X% to There given a fourth with normalized X% a us our trajectory main for

sharing harmonize Ed earlier. that to profit plan decision the discussed the First,

Second, and pressure pressure and incremental Combined, moving subsequent the up XXXX. depreciation the and these the associated finally, including over CASM parking point a items of write-off created hurricanes. And for with fleet retirements of XXXs. decisions, two from storms accelerated narrowbody incremental

reasons our While year, there do in are for cost this inflation transition better. we must we know

part. the XXXX beyond. our domestic taken example, gauge year. narrow our cost this Glen’s X% revenue an As platform goals higher To has and year key made is Ed first at on our X% ramp also to network Capacity domestic growth That this X% CASM more a targeted stated as of will return older put we're improve X.X% part growth growth commercial bodies, of normalized must decision play earlier, a X% and performance, on increasing to needed year our pressure fleet more on cap drive XXXX, we've details Investor to will replacing to new a have sustainable is fewer not average fleet types in up-gauging, give we about XX a part but we We on this This date. but up. next see aircraft rate. domestic them to benefits efficient investments by solid We'll benefit productivity Day, further X% with are to gauge to nearly and departures at the efficiency. and pipeline deliver our to more productivity CASM. rate produced initiatives transformation, maintenance Returning costs. technology benefits more our year we'll In pace which continue will at from double capacity ASMs

efficiency it deliver consistently us the will solid is cost the newer and gauge, benefits. technology the what allow productivity foundation fuel network addition to and that produces In the into strong also higher aircraft margins drive maintenance earnings growth This cost future. to and from in efficiency will

margin, higher hurricane third prices outlook the of a Irma. and delivered XX.X% our lower For quarter, fuel was we initial which operating because than

As margins up prices to be mentioned, to to as we're Ed some quarter our year's XX% time December expecting in result, compared result. a catch revenue fuel and to last XX.X% this normalized latest needs move XX% to our

to an industry. also cash from Delta differentiated this area flow, sheet where the is the itself balance Turning and has

on This billion capital we the stake $XXX $XXX million free billion and of the $XXX of to after of nearly facility $XXX For includes generated million on million and operating $X.X expenditures. and X.X XX% aircraft cash cash upgrades flow modifications, dollars quarter, million investing flow our purchase in new in Aeroméxico. complete

quarter, expect capital our approximately For to continues approximately combination with cash $XXX of quarter. that billion, this XX% shareholders balanced stake benefit closed the this We December of $X.X includes we hand. cash funded capital our France-KLM in expenditures million the XXX Delta’s Air last owners week. which we for and free spending we returned our to generated a flow to and on million approach

$X our now share We authorization. have completed XXXX repurchase billion

its The third authorization we've completed date. expiration before

For $XX. we shares price that approximately average repurchased an program of XXX at million

this our dividend the rely debt to end. over we shareholders, finally, the repurchase of fully beginning XXX% our the X.X% total share received a of XX% balance cash repurchases to a billion long pension a sheet. XX%. year stock, Since we reduction systematic committed prior can net term. quarter dividend period a through new under remain has million down represents on diluted consistently level $XXX our to and announcing And our stream And our another authorization, to approach XXXX. and $X.XXX shareholder and at strategy per adjusted increase together billion the The our payment to $X from by a which yield. our end flow the count from tangible investors cash we September that our [indiscernible] billion, share dividend are over reduced unfunded our was With creating maintaining return which will Our is is that $X.X first be $X.X liability of was was a of strong At our quarter, also return.

to Our strong earlier pension contribution that the $X.X we billion year. year asset has in performance from throughout addition a this benefited made

Delta agencies. upgraded have the We are rating other proud are Two pleased join all S&P three an grade month as at last to Southwest and Airlines airline to investment investment only that grade

strides We opportunities for We're that our in build even great efforts and ahead balance have continued to we sheet have foundation our that and more strong made glad recognized. leverage business is the a success. to are excited being durable about

in back is At which a more early setting As of at accelerating We innings XXXX. combination up the turn sustain Glen over our that future should are will the Investor time Day details with us and you highlighted trajectory. that we're driving for the commercial that allow with in to cost our begin look I'll giving technology to forward seeing scale, initiatives at plans the our us Jill re-fleeting be well the through efficiencies we same revenue and to Q&A. on And to many call December. pace

Jill Greer

this Thanks. your Aaron before and calendars as we please Q&A the will taking a XX go on we XXth year. figuratively road take because Atlanta in our Day for tradition here are this the moment. guess XX of be literally a home And everybody Mark Annual change we're Day Investor I to staying December which year. Investor

but mark will your calendars. send have we do details out being So more soon,

into to everybody could give you So queue. Aaron the get instructions how on the if

Operator

[Operator Capital. Instructions] Macquarie with Donofrio to We'll go first Susan

Susan Donofrio

Hello?

Jill Greer

Susan. Hi,

Susan Donofrio

about also to have well this that to wondering now. speak you're purchase your bit rolled out seeing changes competitors should Just how the I'm on you last kind on on a did you're a your of we transactions. ability, economy, expanded I'm how any international roll just about as think you’re it question just as little it out well. proposed call basic working And now if you approaching as wondering

Glen Hauenstein

it’s today? you Glen, are hi how Susan,

Susan Donofrio

are how you doing? good, I'm

Glen Hauenstein

best just to think offensive a we've space in and is a because believe and we leading the it's spoken want of more And it's have hospitality, that were - an basic to a as class, an for have in you. this really get even economy people that best We you we we space. very Delta thank product combine we product. when conscious need do product product it to happy the good, price before we in just with have product defensive class you that place in Doing the are who than industry innovate

really part with come continues that really people sell-up essentially what you the our buy of to high that. to Internationally, many mind, they think product people assignments and that the don't doesn't different like Our in of who that sell-ups seat that's is buy I the to of and want initiatives those to carriers that don’t of but And and it can products to it we'd are doing how seat want buyback exactly how check-in we key remain and product consolidate do and the decontented initiative have domestically, and it your a is that's success seats. have kinds choose not where till fare to many another continue so but when see internationally. to lot don't we're different people branded only wait people And pick we into have a lot isn’t focused. it really

Operator

next Morgan. Baker go J.P. with Jamie we’ll to And

Jamie Baker

along destined Susan's just rungs? just wondering Glen, non-starter? I'm future potentially sort to lowest fare fare further or further remain about it not pricing. time three it's make sensible at over the ladder creeps as is or that two whether place it a economy basic to question, economy, up basic is simply of that asking or the a time it the does on I'm goes on potentially follow-up ladder sense to up

Glen Hauenstein

to talks that future pricing like think answering from stay to so do initiatives, I'd it. I away

Jamie Baker

us if and does economics assurance out can redirect to Paul, work Fair in out you afford egregious your pay question, Series What's event forced C Plan contract to the existing kidding. enough. same tariff? I'm you're I’ll what the no, an give don't you early B that the an that

Ed Bastian

know field. the take disappointing, we The lot or this and Jamie, is political at Series doesn't it discussions commerce from just discussions is the triggering in decision We whole think levels, the of that that. just it's C a not sense. make debate not lot a within also early I’ll of Ed. aerospace is

not that it’s I as We take and going work taking us believe be how agreed We it will great we to a will the the do the partner think Delta in is being to We to tariffs believe this. clear. the aircraft. work those it ilk. aircraft of market contractual through come that is the will may a eventually tell the who and aircraft tariffs or anything issues to very not get to pay There intend We're to delay, with come out. price. be needs Bombardier to you at pay we can’t We forced any market. going

So there should our regard. on not be investors' minds that in any concerns

Jamie Baker

negative competitor Can operating nonstarter. to posted about I'm Norwegian that the industry about behavior? you Glen redirect in thinking When quarter. I changes the transatlantic was capacity second question just think that first winter, since margin in internal over the a does your Obviously, model assume any

quo that you made transatlantic particularly that the do that how competitor that that question the sustainability in with calls like model, think you that capacity call? I or you just -- of commentary status are influence basis of the into the the modeling things earlier do assume

Glen Hauenstein

and the our strength to strong on been think really given winter. has suit, the continue in different traffic business and and will more of transatlantic I lower been that incremental a fall story. in demand the plays our that through I has and about Europe. yields been the business think Leisure concentration It's centers

travel. in -- do acceleration And continued business see we so but

business of recession. plays to strong embracing economy for business, people is opposed As the coming a that’s out carrier as multi-year model leisure is you which to traveling are and US know, of Europe model. the the strength

talk always side, capacity, we competitor coming So on on the flip about who's in.

October well of about we talk will to transatlantic amount a need Germany who's that in carrier had XXth of cease on now an insignificant in coming operations also the that exiting has the and know, as not it capacity announced was you We and that’s out.

So, run. the I and that some all models see up think of been winds more point challenged as where long have the in out, we'll you

Operator

Capital. We’ll go next Oglenski Barclays to with Brandon

Brandon Oglenski

influence a the I I us process bit in little and improving employees. how culture, all give this, but to even of that think share is positive paying what in plan get you profit costs can the we of forward. benefits sustainable an here some drive going of scenes obviously understand behind of you could talking your that X% increase for payout in the thought Ed, of unit equal the about mean hope the the are everyone of especially some out context tangible on intangibles

Glen Hauenstein

We always have to two expected time single be intended never a plan. sharing plans. profit We would it over that

that our had story up original not caused rates. you agreement that that of MEC, with the revert followed of by wound those the pilots sharing planned the back years the approved being to couple in For pilots NATA profit ago, the a we fact to

for profit better It's bottom to it rewards and for grow. more we very our profit the best around they that going hubs paid, the get the is best our and answer making is the make our the by grow are deliver it tool I'm anything provided sharing deliver how can us doing payout in we And than and interesting, certain recognition performance, aligns and sharing doing. which employees So what I traveling is a very they're line. we be and is as growing the what's our system the customers make always question

But variable to gives it's going in done are business in our And terms profits fixed sharing. high it's we've that of rate factor profit when that try It been into this a to with grow a growth also always or of So challenge much of costs us your benefits turn that as only cost cost through profit grows base tangible and a just forward. seeing really growing. structure variablizes that perfect alignment. more when a not

competitors. we've the by profit of our So of is And any network margins got main think far one reasons. of best the sharing I

Brandon Oglenski

I your appreciate CapEx the how spending higher. given heading think share do priorities - of threshold like looks that. And to about to it aircraft And XX% cash you're from and Does mean about of buybacks capital you're Paul dividends purchase, appears your we can that a you fact cross up heading XXXX, given is that into ops? CapEx talk that bit. obviously going it quite going your ramp the

Paul Jacobson

and being make to is XX% of We the cash to strategies and being operations reinvested changes which the capital cash we flow returned manage to of our shareholders. don't used to half in anticipate that about from business allocation core the free the criteria about business having any

Next we higher contributions had cash year expect to from strategy cetera, this well we our operations articulated et that as from see which was lower of part year, pension earlier

Operator

Pfennigwerth We’ll Evercore take from with next our Duane ISI. question

Duane Pfennigwerth

what sequential Glen, guide, rank you speak improvement regions expect weakest. see maybe XQ can you to to strongest to on the

Glen Hauenstein

on transatlantic we're say by followed some so. pressure Sequential Caribbean infrastructure third from of a last put on too, strongest the quarter the of Mexico because expecting on relatively Pacific, and in bit particularly that's domestic the to improvement shorter earthquakes right followed the a markets yielding then relatively tail by Latin high and I'd in going and Caribbean stage and lengths

that's how them. rank think I would I

Duane Pfennigwerth

and push that would chatter reduce And to then change, just burdensome been a there's experienced have regulations could from requirements view happen. a you backdrop likely there's do pilot guys the on to be regulatory how that perspective a that some

Ed Bastian

that's Ed, is think I this unlikely. Duane,

Duane Pfennigwerth

one should with how annual just the about just Brazil. And about investors this you. capital how about There some and Can think forward to international Brazil thinking you're longer respect conflicting about on talk term investments. in, sneak your you JVs. maybe these to allocated Thank equity going then quarter maybe a reports press were JV basis

Ed Bastian

speaking and long not was plans the Well have was further a at. nor question misinterpretation equity investment we - and We've at Brazil any investment announced a to a a you're make certainly Glen misstatement function very referring to we important the do it’s at in Latin a Would this future consider possible, investments, but America. Brazil we the point in important market it’s term most is time, have Listen, in market, plans. GOL. into no

Operator

And we’ll go to next with Keay Wolfe Research. Hunter

Hunter Keay

is the re-rated, network stock despite your to down not to the Ed, the margin debt pay start and flow. airlines cash other premium, relative

do own a when the to rate a So do of we just is of it's or re-rating entire drive Delta specific guys having you matter think can there start your talk a multiple? you for the your anything see about you before industry turn valuation board, multiple to the think with you

Ed Bastian

it's board about it Thanks, do level. course, talk question lot at a and good we of a Hunter. the Yeah,

have we’re get will very will You network guys and better we and our that it would you're will referring time, be proven be premium we main sustainable we doing think well competitors listen, judges than versus we think probably we of and and that margin over the be re-rating the to.

than I job we We we why you'll is and say the explaining ourselves, the we’ll we're about it. driving look distinguish think need the of and better of answer will our sustainable are in think it Industrials we the, not different those part can't to Investor the that have the network that that to and on that strength power continue that the a the that things at S&P point competitors, of everybody make numbers. them, to we comp really hear about just the of brand premium math deserve side how Day. and the story But the at in do I more just to to talk Delta

to that, need we onion and not the more think peel back need only I little a prove we why. show to

Hunter Keay

of an if you the capped multiple saying, I your couldn’t would is it's mean to kind actually improves? industry your the you argument margin the industry close off that make want gap? So, until altogether maybe competitors

Ed Bastian

getting the on to not. the pressure there no get to how have results, are Delta to I continue we us targeted for focused there I view have on is them it of as our while are means We like our think earnings that point to fact to and or only at all competitors as and and improving because what perform influence I performance, margins -- enjoy no our they

Operator

Denardi with from We'll Joseph take Stifel. question our next

Joseph Denardi

in local Thank of hubs offset the Glen, traffic? structural Hunter’s your routes Just network. bit the one to to about monopoly connecting regional of some back the kind if it talk your seems kind the of on how increasing of provide on you. lower wondering of growth little is advantages ability on by that that much your I'm you question. could is of like a factor percentage yields a peers higher main of you fares from the your relative ULCC the

Glen Hauenstein

and a anybody you'd our long than we're look Joseph, to created probably going hard very last where XX don't to we opportunities, new sit that at to where term saw to else and that the in we about but and where sit invest see or more ourselves that think creating we years, see the continue over X in or we next if in be in modes years creating where wanted we you we're think lot a are that if on network we we Seattle where Raleigh, a get continuing over changed opportunities modest we fly to and and at grow we've over you and think the about network those time our have excited in more those network to we today. in intentional deliberate places we've believe we sit I we've very evolution worked Boston XX opportunities pace things

Joseph Denardi

is essentially cargo. the there revenue will -- lot profit you revenue break be line other stream miles, changes, this actually three Paul, passenger. the about of tell going of cargo After is times to it you’re line of selling to like by Day, be revenue that that guys from takes thought what to renaming is component any year be into far, maybe biggest a next will Investor that out market and rev-rec that you shifting place, other seems but recognized from you the a the and with preview

component? break you. not why marketing Thank out So the

Paul Jacobson

We more of year-over-year about recognition at changes on details it. including Day, will Investor thinking detailed and have kind how revenue we're

level the terms before, details of XX-Q how more of we're about talked out we've As have breaking in increased have in and we'll Day. revenues transparency we the those at Investor

Operator

Morgan Lalwani Rajeev Stanley. from comes question with Next

Rajeev Lalwani

question just capacity getting saw fuel or a up cap the moving relative margin XXXX bit into base tougher. cost just ‘XX. we goal underlying to playing Glen, for a for figures I your Ed from little the the or with in potentially the that How's and labor guess guide

Ed Bastian

and We Ed. get are doing our RASMs that the to is should we've XXXX in clear Rajeev, said we this we that's X% to growth the that. we full and that a moving We out positive in come would for trajectory our that limit year. done exactly numbers were what needed very to

as of will largely As that's get play, because going Paul they going to the the been take for growth. surprise has advantage partners. we fall How a our you I it the on point think the to on terms fewer X% length talking gave margins move look certainly and the international about be and international can't of year. we're be we're solely but the of need gauging has in, going departures. the forward, working opportunities has But for to well why on And I of given benefit that as little continue held returns with a we're on flying and this bit at we everyone we generate topline to capacity was leverage rebounded story improve the same nice be for marginal reference X% on of just up the in where not as better we need cost to growth to cost, where to capacity think but Domestic will efficiencies.

is are But costs year, reduce, our same that component unit of scale just take we're compared check. context the it's why in to think this next trying market the we're the based something as generate best advantage use and So certainly where itself going decisions to time our is a referred revenues keep help cost the utilization. to I that better costs going that at capacity in to to our you pressure year of up to

Rajeev Lalwani

quick then for Glen one a you. And

about places a for Mexico quarter, from saw bit from the you As talked seeing far some as into are you example. impacts Caribbean outlook fourth like in Las and lingering any other little the and we events but the Florida demand Vegas

Glen Hauenstein

I story, the So surprising each throughout this from you an and there. most that is happened is the think because Vegas impact out different Vegas one a see week events horrible past probably can

Vegas. places and a that's not bit is demand is a a decline the US or taken from a here. of year is of And be surprise. an not believe flat of out. why of a areas Latin in of affected infrastructure actually there origin terms material That's the And and so that in take non-affected terms tends damaged the traffic relatively will used that point human sad I in was to was it's Vegas Mexico capacity that business time. a hope demand with growing little indications and indicate would in quickly that getting be state destroyed Caribbean The a story. City it going The the bit what capacity see in different. commentary then of we dramatically. this. to in that initial There shrinking on we're we we a of different marginally next And very from to to But longer drop We've was areas lot seems rebounding some lot

So between trends event put time we seats. the airline the hope those more purchase and of distance and continue as

Rajeev Lalwani

And Florida really quick.

Glen Hauenstein

very, giant a more not quickly. bit of West on so - Florida, for coast know is the largest station. got impacted we story a significant the damage. impacted. again very we a you with infrastructure lot - with one Key But us, is as reasons a adjusted capacity to we heavily Key demand, of rebounding of anticipated, the West what exception large that But those a were not player it's very the is we of of lot as Florida, west it's markets are different a that station in relatively

Operator

Bank. question We'll Michael take next Linenberg from Deutsche with our

Katie O'Brien

Katie on actually It's O'Brien from Mike.

tailwind the that So in I international outlook. to domestic quarter. two you’re same you expecting then expecting give fourth for in could of feel the quarter kind number be PRASM would earlier PRASM you in one continue know of but strength, And outpace Hunter your for that from just second to on Glen, point. a FX overall us domestic you're December sequentially told terms

Glen Hauenstein

euro. a places flux the what on situation on of tailwinds think that they'd bit think too with that early leading I in shakes We're be little and in be a Europe that, lot and serve demands probably depend a are I will issue the but again we we in call the the will to America Probably out. are similar actual Latin of Latin primarily in face. the how

headwind a continue if As should trends euro. that you but primarily sometime current in is know, shift yen actually the the December, and still

Katie O'Brien

can And do on or? number you have that a put you

Paul Jacobson

I unit point, don't I point exact a it's Yeah. about a positive revenues. think number, of have the but

Katie O'Brien

recent And then Korea if on you've face to just have one headlines impact having been on for impact numerous you any had? headlines more the lately, can speak the to the

Ed Bastian

a onion partners flow peel is it's a now so When taking because you US XX% in to working today. think to flat a of a Korea, great back Korea, you outcome. that little just see that offset do a I lot interesting little our unit an point being we're we but increase revenues by Korean itself, origin are are bit capacity small and with by up bit, or of to the I'll which decline of story incremental in say business Korea closely the just slightly,

as not as big might expect. really you So

Operator

take Becker. Helane form analyst question final We’ll our

Conor Cunningham

guys. It's Helane. in Conor Hey, for actually

Thanks. about your guys might that have bill, mean to you what you quantified longer if could expect maybe talk Delta on structure what maybe term? just what cost you bill and haven't, So know government From a bit traffic what we the carriers vocal actually other reform might about look control the Delta current less that has than air of debate been some continues the about well, and you the term long from like. to little

Ed Bastian

this in the discussions Washington quite the of I’d cost is FAA in No. terms the state Conor, quantify I of structure. know how Ed. don't

have We air traffic out come of modernization. as proponents

reform efforts have session, the systems non-profit in reality. we did of very the the modernization and get privatized that type while Chairman control to engaged over to hope they to think air all current a with discussion, the we're We entity regulatory to are our do discussion not we're that and going make the needed happen going time a improve we continue of in out stakeholders it through Shuster’s of traffic to proponents come the

Jill Greer

am to analyst of call. our the Walker, So to portion over to Officer. Ned the that’s turn happy conclude it going now I Chief Communications

Ned Walker

we’re media Hey, Aaron, ready Jill. now. for thanks Q&A the much, very

the to on yourself almost ask be would media, media If allow to that question review who process you’d and up for that you question everyone ahead. for could please a And queue question. to to to ask one should wants limit appreciated. a a us the accommodate Aaron, go the follow-up, if please how brief

Operator

we'll Doug first And with to Journal. Instructions] Cameron [Operator go Wall Street

Doug Cameron

question. quick Ed,

you were you expect, by pretty hear You way? that adamant don't the can me

Ed Bastian

I can, you. Good Doug. to talk to

Doug Cameron

Excellent.

Okay. Yeah.

the to tariffs you're you don't form because play trying expect C won’t go process, to you I'm words, your Series, don't rather but a just that part it. prepared that you down we’re tariffs some of adamant hence finding appeals in any a the or on believe to pretty is interpret want that to, You're and pay I expand

Ed Bastian

will not my debated. discussed tariffs think pay are I no, are the being that we words very clear, or

of all, manufacturer they arm opinion, US those not purchased as don't very is our are tariffs with I First to In it difficult did preliminary offer they and for that mentioned. or any claim produce. Boeing that we product a

all product, Canada. order, were ironically their they Brazilian over competing a the wasn’t with they XX In XXX, akin selected went RFP Boeing an the would closest very the from the places the fact, which competed was at Series, Embraer product, except EXXXs for ended through be of was C it years production but it product. even When That to we and own hard select new, the not ago. used,

to justify you we're But closely working Bombardier… To partners of to a it's developed, the terrorists being a particularly nonsensical. contemplated. bit with exactly as tried see are at be us So and how looked is this to unrealistic, type case our that through going harm

Doug Cameron

Ed, your case, what out you the I interrupt, what and harm tariffs. if but your hands, make to [indiscernible] happens but can mean it’s they find if Sorry impose do happens do impose they of

Ed Bastian

looking plans be I alternatives brought continue the Boeing into any there's the that will to But get case also which harm and not Delta we're I a you. that made Well, at to there there's order to believe not other contemplating various with to was specific company.

Doug Cameron

will you planes? take happens the whatever But

Ed Bastian

not pay say that. said tariffs. didn't I will I any we

Doug Cameron

take you'll in analysts the earlier plane. response to question that the said You

Ed Bastian

the not we do to I take planes. expect we take And may to brought over this debate course - taking any no, delay take to But - be gets them said the as do planes. the of XX a and we will a expect in there next the pay yes, months. tariffs head

Operator

We’ll News. go next Bloomberg Michael to Sasso with

Michael Sasso

all of contract issue of response. things if don't Ed, go I kind is the ability contract following is I out Bombardier you what there the of with a Just - contract recall analysts get again, wrong? contract, about Bombardier out the says hearing say can on just up ability get something the talk, about asked of to what the one the to - about think if

Ed Bastian

very we do it's contract going still very, disclose to to we're pay would in the the our that I Michael, and contract. tariff not and of going take private you elements But tell because aeroplane. not was contract hopefully never a are what's clear a we expect we the to

Operator

Transport Air with Aaron We’ll Karp World. take our from next question

Aaron Karp

being much unsustainable, that so you that do CASM can You to it about is talked labor you year. main grew reason what change this think and the

Ed Bastian

of able fact as pressure And of Yes the due early growth years well. that are cost stopped all say were we as was look on everything I'd cost at take increased of hit as some continuing of this right wages little our I'd Others above Aaron, it special on some year is a snap-ups, of at next was is transformation. that our labor. seeing we not charges down Delta. the fixed limiting them, our out to the due a cost the industry caused to to that the which some half was recapture. and Unlike include utilization also The we our aircraft half, And this other that we some that the at to seen special depreciation levels we're the that some accelerate scale. We as say bit we of we to airline don't about that were grow from our we've Ed. we’re those which that’s structure, will be X% non-fuel some employees overall cost to peers, And pay - cost and would there's the modestly year of ago. count fleet they retiring probably to there growth X% get charges. our

Aaron Karp

do two you or going increases are years labor now - do And think Delta continues is cost are was say a labor that another from continually confident as to so won't you more be there this increase, one get to adjustment well.

Ed Bastian

for is grow going expand, which pretty what labor and will It's think be. But and no I if natural. hard you're But there's to to is to speculative it airline would hard me now. get question margins the continue higher future asking predict be to perfectly right earnings a answer earnings, question, normal

Ed Bastian

Aaron, one we more time Okay have for question.

Operator

right. All

Atlanta take from question Kelly Journal-Constitution. will final Yamanouchi our We with

Kelly Yamanouchi

Hurricane you anyway? in impact any if have Irma caps, that wondering I’m on of impact within is fare revenue the the significant breakdown

Ed Bastian

the fare of impact The cap?

Kelly Yamanouchi

Yes.

Ed Bastian

costs big a of part were really wasn’t the part that canceled. The the got the of major That prices Kelly. cost,

Kelly Yamanouchi

[Technical more about to further as was to on in Difficulty] you a also hurricanes Durbin’s relocate? what of And wake follow-up, adjust wondering, people think comments air allow I fares the

Ed Bastian

up during Can you you your that? couldn’t question. broke I repeat quite Kelly, --

Kelly Yamanouchi

what on relocate I’m have a comments you the to the air to on fares I’m when more in wake of to hurricanes for provide to Durbin’s perspective you Oh, example further wondering mainland. sorry. weekends the think adjust airlines if

Ed Bastian

Okay.

get fares. out XX,XXX it Washington, -- based Juan we islands about all hands in that the input the bring Florida, XX,XXX about customers. imply of ordinarily of days it’s levels in on the the to our out there. to comments at people few at thing maybe seats our that very, added air to and at was didn’t about could Florida equipment get doesn’t XX,XXX, We South very people Senator low whatever again any San to from Durbin's last fare with So do decision for on your Listen, we make right restricting

did efforts; to team. I very, of recovery respect very an think with the our overall we proud job amazing

efforts. all board, and our fund to Red in have We Iowans, $X and communities Florida million effort towards been to Juan, the resoundingly the in the took also of Delta and over positive participate the channels from in the whether have response contributed the San leadership the care recovery Cross the other across

Florida, the fare levels We’re All to the station into very the we every out. the at opportunities people and just airline get back get of last opportunity first about flying to capped giving back South in. giving people were very

it Delta, was. shining moment it was So for really a

Peter Carter

this states for everything Peter the Carter, that, from have would is in thanked I reached Congress say out Kelly, members it hurricane. And impacted and of did Delta Ida

Ned Walker

Okay. earnings again thanks XXXX Ed, Good January. and Hey, call. so announce Paul talk the concludes That September when Peter. quarter year-end thank in results you, Glen, and bye much. We'll we everybody

Operator

gentlemen, does Ladies today's participation. and for this conference. We thank your you conclude

disconnect. now may You

Delta Air Lines (DAL) 11 Oct 172017 Q3 Earnings call transcript