DAL - Earnings call transcript Q1 2018

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Operator

Good morning, everyone, and welcome to the Delta Air Lines March Quarter 2018 Financial Results Conference. My name is Eboni 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 would now like to turn the call over to Jill Greer, Vice President of Investor Relations. ma'am. ahead, go Please

Jill Greer

morning, quarter thanks earnings Good for joining our March call. everyone, Eboni. for and us Thanks,

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

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

factors the otherwise such non-GAAP financial may the Delta new recast prior-year discuss results special exclude periods standards. Some cause All accounting On those reflect also have described unless January new items differences in SEC to adopted X, We'll measures. adoption of All that of noted. Delta's filings. several standards. been are

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

Ed Bastian

earnings joining share penny. everyone. for margin reported Thank us. morning, consensus pretax $XXX Thanks, you beating by of quarter per today Good and Earlier million Jill. a $X.XX, profit a Delta

end to we that revenue severe $X.XX share came and XX the for the profit performance Atlanta offset winter the event days this an year, record just quarter of guidance in despite operations. response improve from as to a quarter our cancellations. strong were year's revenues we in had initial and Northeast of billion impact We at the high impactful weather anniversary the that in our leveraged zero irregular $X.X passed we a mainline weather. per of last Our recovery Though one-year storm, more in March

revenue without because truly of in our than February. dedication the are in year of XX high We We the numbers we're Promoter people Scores I these earnings XXXX $XXX strong entire determination changing performance our and most of our recent our of only are are growth, are earnings track to year. thank Revenue delivered we the quarter the base in the XXXX Fares. for the double-digit reached also as product out seeing all-time Not geographic we're And single culture our result premium revenue All X% have of of a the better Delta the year that a strong growth on month we starting And service this the like confident million each Every to to gains With cost the XX% loyalty day, difference June a a to credit they and and Net in results are cancellation greatest with More they towards asset. in trajectory the at solid Not first first improvement customer sharing we laid of domestically which other region and choosing profit December. improvements foundation, system, great the customers sources that remain from Growing start we them scores. in and record a international we is deliver rating our want sustaining next a outlined recorded competitive line for earnings good already a customers similar provide satisfaction a payment. and we we our people Delta key reliability the make quarter. and people. grow made year's our in quarter, congratulations than the the Day and top is and deliver. a cargo, and our path only had partnerships. elements the across our also In ago. Branded of we also our Investor that driving line passengers, leveraging seeing Delta diversifying at and to ever days top quarter we’re revenue priority momentum. industry, expect to driven say

by in Now led changing at a also see transatlantic. cost grow growth XX% our I equal was very pleased line Of trajectory. is our the international strong revenues top pace to priority

to cost X% nonfuel need growth unacceptably high We year. to to back get rate. an X% has Our been this that at trending

This to future. of upgauging this quarter year, to of down look lot step of the points year December quarter delivered we the to into not growth With this efficiency our we improving consecutive our quarter sequentially will saw drive a June third well still from nearly only XX and aircraft be cost mark a couple but performance.

project for for deliver best-in-class collaborate place that top product the to tier across business. better way the leading we and year’s our learnings With better customers for how and our this work is for a is one uses we’ll be a continue last another savings investment there shareholders. people, can Our One Delta cost efficiency from initiative our to Atlanta will storm

still right foundation setting So to in the while on do, direction targets. cost our moving a have we we’re solid to and deliver consistently work

international our leveraging partnerships. Finally,

the one today before, ever and the strength is the Delta more marketplace our via connects No realize partners. international core than we world aircraft offer options or our on our business, than we of While the whether today better is domestic long-term our world.

Air expected approval received class we travel offer final the across in quarter will This customers X comprehensive our one May and most launch market. newest with benefits route Korean venture networks for to Trans-Pacific joint which is of the world

week to taking Atlantic transatlantic and a It multilateral XX was a years joint from level largest create unprecedented. By the first the finalize to of ago been venture, can which new France announced our industry’s We’re and KLM more creating partnerships. profitable, relationships also Virgin Delta and working this JV. closely has that will most the and even be we with merger company Northwest established our most transformation Air single we these our value

are We to financially and for invest in stronger, enabling us sharing customers experience still people. consistently high-quality with a while our deliver our success

and investment We continue our our owners we and our and with deployment we long-term the have grade on culture, and unrivaled to employees, remain strength for we of to momentum year growth started our our reliability, loyalty network, sheet customer customers cash of prudent Delta’s and serve. industry-leading flows. create communities earnings revenue-driven our will And focused domestic the the the value balance leverage and brand, our that solid

to a with the off balance happy We’re that, start I’m over in year. to the to that to XXXX we and of look good Glen. And forward call over the momentum turn maintaining

Glen Hauenstein

Good you, Thank morning, Ed. everyone.

We which strong results team they are seeing double-digit is our and service I’d in driven drives what loyalty and increases strongest for each improvements geographic revenue provide our the revenue. strong XXXX momentum carpet by the like day, in these all regions, Delta entire every customers results. great to truly thank since to

leisure line driven with Our up X% year-over-year, an March yields. strong entities revenues quarter our of up average have top fares a demand recovered was acceleration regions, domestic the in by X% showed all the the in quarter. history decline the With Corporate growth X.X% revenue we corporate now fares versus in XXXX. business in across quarter domestic peak all and across highest also and improving

confident are trends these We will continue.

expected Our most which on survey, noted maintained spend XQ travel increased be and recent managers beyond. XX, March XX% travel or their of concluded in to that

Our XX%, and best ex-refinery, quarter other parts Delta. driven revenues grew since a XX% XXXX, in of performance revenue sales our momentum all were across is up by strong first evident loyalty. improvement our Cargo XX%

entities X% again bookings revenues. Close momentum. TRASM PRASM March positive February to posting growth. up for Turning in was strong year-over-year unit showed all and with

hubs consecutive we year-over-year a a quarter. As PRASM unit of capacity passenger result, performance up X.X%. with each delivered quarter positive during flat a capacity its fourth RASM by revenue improvements, Domestic domestic was quarter, quarter revenue X% accelerating domestic The strong throughout improvement, Business month improved growth. the on entity yields All X% where of XX% saw was Seattle, up weakest year. a in in increase the exception mid-February. inflecting to unit the revenue points with demonstrated of X the the on

up are premium we a domestic entity the maintaining increased to to consecutive the expected increase the gauge. on a performance, unit class the trends We the unit currency outlook third drive currency and a X-point robust quarter. demand entity are outpacing summer and and highest industry’s domestic Strong X.X%, cabin continue with bookings revenue record the quarter. next to length tailwind. despite Transatlantic in revenues saw trends improving absorbing industry, for XX% Internationally, positive business for tailwinds revenues business strong into stage

see strength quarter XXXX. expect continued for the we which than Comfort+ In first addition, our of we increase in saw an versus XX% more to product,

positive Caribbean the quarter from as the region region, trends are portfolio payload and year’s recovers Comfort+ demand markets X%, performance consecutive strong continued our encouraging this hurricanes. bookings. the are Latin alliance our revenues In several much of of unit Our we we strengths close now launching the is grew in driven across forward integration. unit partners, by seventh and that coordination for seeing exceeds JV of revenues the new our entity, with summer XX%. In connect encouraging networks, last

up are we increase second beach revenues growth length, entity. and the in were pressured on in seeing the However, in an increased challenges Pacific, demand for business capacity markets X% travel quarter of destinations. revenue Skies unit the In as advisories Open drove quarter to unit for X% Mexico stage the

We the improvement encouraged of in are this by region. rate especially

positive moderated. seeing currently as improved all unit Pacific growth industry with The momentum. has are capacity year-over-year has We environment revenue markets pricing

Premium are our Based the and each service performance us unit as revenues suite and AXXX and We across through produce region. allow year we the strong current comps. positive quarter to trends, demand momentum believe build our will to we the tougher increasingly Delta Select expand seeing on revenue One to on for continue continued

growth be We and April expect June to to you and point earnings focused capacity, purposes, points initiatives. up approximately length X on increases. revenues revenues point segmentation X% I’d X higher unit XXXX and driving for storms to and reduced our and by each. X% term, stage X% of Longer comparison customer our quarter that last we’re brand which X experience TRASM includes network, on of also X% capacity to year’s remind gauge

domestic to allowing This can further year, upgauging. Delta’s add margin upgauging, improve over our our constrained and of efficiently is network. U.S. we much coming Through premium growth leveraging time capacity channels, market capacity, XX% strength performance. domestic seat First, us of domestic airports today. drives The earnings in our notably and our from

We experience. revenue customer that the improving strong premium. and satisfaction brand believe our strengthening to tied directly sustained customer our is Second is

of major is approach One of major our a improve through further a employees our to can By our personalized deliver service. more initiatives investment, technology data to customer-centric need this the they customer give digital transformation. to we taking level experience the

our strong through which value million Co-brand in our segmentation helped finally, from Delta-American total record quarter. choices. to expand offering year, spend And and we co-brand our to was gains to track this brand $XX drive another contribution and year. of American had quarter, the deliver our customers more for Express loyalty we solid leveraging billion program. acquisitions, also we’re XX% record continued agreement Last initiatives, incremental full $X.X had We’re drive portfolio the just Express up on

implemented have we worked make easier partnerships. fare the branded with to our customers across and fare for bundles of align JV to products partners We our and offerings various purchase technologies

of models, our The throughout every introducing to with to revenues to combined aligned both to functionality With a similar such Delta, fleet friend, increase by upgauging Branded goal with we contributing pace put in products, flying geographic employees’ an over Aeromexico as economy service, with of total building incremental addition in an a on momentum $XXX revenue Virgin feel place strong with XX% range giving million and XX% are our France-KLM pay class keep segmented topline that, momentum quarter, offer all us turn in revenue over transatlantic. launched commercial Virgin product growth and good they basic deliver akin in and to like we our completed in the poised outstanding billion seats, with Comfort+ we entities, long-established customers product upsell With it of and revenue to March a Fare in Paul. of well we initiatives as the full post-purchase Delta’s introduced Economy. This reason premium and to Atlantic grew And our quarter. to solid XXXX. Comfort+ future We’ve my Air XXXX. effort now first in $X.X XXXX a achieve targeted I’d Basic

Paul Jacobson

good Thank morning, you, and for you Thank everyone. Glen, joining us.

mentioned As one year our top priorities repeatedly, we is our this addressing cost have of trajectory.

quarter, March operating total from of higher higher expenses half costs. increased revenue and resulting capacity related the that fuel $XXX For million, prices with and

X saw from a but to of is it at weather the in our Our inflation of by foreign quarter, we during initial a nonfuel quarter investments we employees costs came guidance March the were increase to due expense aircraft Over due for higher depreciation this and exchange our down high cost step from capacity. December points up X.X% the what point higher driven and were pressure about quarter. made retirements. on the X.X% in of This accelerated in end

the continue and increasing investments benefits from move to see gain we year, on annualize we Delta initiatives. year relief our upgauging through we’ll prior as and As cost One

For we will storm of half similar significantly X%. that of quarter not the we wage also have annualized the a the Atlanta provide performance. depreciation X% the increases pace, the X.X point trails CASM half combined tailwind after better alone, CASM With we nonfuel which the get for June now a into whole to expect be to year back the that’s our we Then, our result the path we quarter, increase – From expect than point most this and half first third quarter. year’s at cost incremental continues the our move providing employee as a depreciation story. to pressure relief. half CASM last lapped back while year, in of But of off another depreciation

In will this alone. Through Delta over of of curve about in million of on in $X really this the year $XXX efficiency XXXX, C project addition effort, Delta upgauging of cost And efficiency with our a more expected and XX greatest the year to taking the billion to expected divisional including help bend over is cross generate aircraft year. then delivery initiatives gains focus $XXX the a and history savings the holistic term. some the we One can Series the move throughout nonfuel view this with million its One we’re long company. this, our The Delta’s year deliveries as in first fleet drive

This million level, and million rate. of It our to us outcome a run process, build One focused more of looks next our and facilities. a and our we’ve divisions, functions. the $XXX the initiative and the operational this undertaken ultimately at our for of all better performance first generate network efficient savings better to scheduling driving give $XXX way to full platform project coordinate also expected we at while a customers. projects year also our This enabling between is utilization allowing on is simplifying take the aircraft communication will

of the to within million alone. hotel year to We’ve the type group $XX Delta this logistics for cargo and cargo Delta’s are single of These example of the all about is serve a drive of best-in-class needs. creation hotel deliver efficiencies. targeting scheduling as to transportation spend and set Another year initiatives this identified also efficiency opportunities source crew we’re

to X% year to of within as ahead our end, costs. So the progress on to And we to definitely work X% our we’ve line get sight there’s but said. the for lower we’re have making range get

volatile $XX and anywhere Looking have barrel. hitting between $XX per the at and Brent $XX prices fuel, most quarter with in market been recently trading

market That December is also was higher wasn’t pressure that X% for from refinery. than $XXX higher a Delta than contribution and partially by million Our and important our $XX is impacted million to the year. quarter total quarter were increased note in prior legacy offset by prices that Monroe our XX% It as this first will hedges year. this the fuel that continue fuel expense

nonoperating were expect to the now our we Nonoperating roughly the earnings. to expenses for June XX% be prior fuel Pension by the to in year. offset which price flat expense the of partner were our For section, seasonality quarter, appear quarter all-in benefits, $X.XX. $X.XX

expect full primarily and be additional due last million we that our year, than to performance the benefits contributions expense lower we to from nonoperating year. to XXXX, $XXX pension expense For million achieved investment savings $XXX

we per quarter, range June earnings to expect pretax per equates the For of to in to share XX% $X the be $X.XX XX%. to share, of which a margin

operating aircraft that through of generated billion $X sheet in flow the in billion to We balance the related CapEx to of for Turning modifications. quarter flow. the and $X.X billion business with and which cash for $X.X allowed cash aircraft reinvestment

to billion flow and share cash In of million our CapEx through XXXX for $XXX spending XXXX January, $XXX free capital target $XXX voluntary continue $XXX in continue funding $XXX returned we shareholders million million generated contribution. to in and operating at a We to million will cash In flow. we repurchases pension roughly the expect and completed with $X million of in our quarter, XX% dividends.

current Assuming since investment-grade example debt balance just is showing improved unlocked from costs. to the is interest reducing refinancing unencumbered opportunity to $X pool continue discount our pension accelerated assets which have our increase with our opportunities end we billion sheet. our liability of to more sheet And our going by also of transforming balance unsecured XXXX expect we rates, will This from roughly have by while of forward, further the secured further one last unfunded contribution. year’s benefit

improving the and revenues are that, In benefits cost-management and in I for across work want closing, to these and in to using efforts. redevelopment long-term I’ll reform. The from trajectory the bonds maintain us quarter also to New call Q&A. We Jill with for we as a remains earnings harness solid perspective, begin delivered first team the outlook benefits in project of significant growth York. for earnings and strong on my hard turn expected our yield track construction our with positive, we and which cost to rating And their will tax also XXXX. the will continued finance thanks back along drive a investment-grade we portion to control LaGuardia of entire value very tax-exempt Delta of our from businesses pass project the over the

Jill Greer

could from you the ready and, Eboni, questions give we for everyone, Thanks, if are instructions. analysts now

Operator

Thank our ahead. with from go question you. Please [Operator first We Joseph Instructions] Denardi Stifel. take will

Joseph Denardi

very Marriott times put spend. their with business at better Ed, business a at collect property cut your much. in they take the thanks of XX Yeah, of has the because where logo arguably an even trades credit you Delta operating on and no a they a a where earnings front have a and logo risk. cut card revenue put

parties. in Your carriers forming stock seven is you what that can trades partnerships times a think to airlines earnings. incentivizes both Can value better apply with faced the these the at company from appropriately marketing you separate you airline challenge the the in business two? that you trying way more learned can question market My do apply foreign have in solve so to the

Ed Bastian

Hi, Joe.

now We two. a or year have this had discussion for

and and the that that, to open time, premature are think’s is drives. our that think important come that that’s it disclosure hopefully to some the the to And – transparency point. itself. to marketplace more get better of aimed it’s that options the the sustainable provide profitability base and durable revenue we Over at say comments, I’d in this the to of One we’ve looking it’s but into and your valuation we’ve stream we loyalty basis it got But real is to a things I where foundation arrangement and of conclusion we’re seeing the and of to upon I dependent not be, a wouldn’t unable airlines needs say fully bit if ideas. around disconnected,

Joseph Denardi

one. at it leave I’ll helpful. Very you. Thank

Ed Bastian

Great.

Operator

ahead. J.P. Please Baker question from next will come Our Jamie with go Morgan.

Jamie Baker

trade most lowest-performing the asking without there Glen, low-cost carrier and it underperformance a gauge? more the a that remarks. routes morning, up but is of in terms RASM in is Or Any is Is weakest? You specificity, Obviously, curious Seattle where Is your more whole mentioned have question the domestic everybody. Good a common domestic what color? always on your capacity is are acute. for prepared where Hey. your simply overlap? as functioning common? market it system in well,

Glen Hauenstein

P&L? Underperformance in terms of revenue or

Jamie Baker

P&L. Preferably

Glen Hauenstein

can we a talked against when before, think our I So right generally is the get and can not ULCC, important gauge is to about it’s whether this gauge, legacy operating sector, in not this compete or whether gauge why so we every carriers. to almost us, get to against that is we – or we’ve it’s up story can when

the get we’re is why right where to we that’s airline. the into Generally, scale. on tend really money to getting So gauge focused aircraft we can’t lose where

smaller class equipment in profitable. the the So type least is every almost

and think think in I excited of model. higher that and all plan we’re gauge the so why more about almost because it’s bring higher sustainable a So that’s gauge, drive much Delta through to to growth we our robust

Jamie Baker

a narrative you backed question its late. believe wasn’t valued peers. more Perfect. Okay. And be de-emphasized no as industrial you with because Is working? Because don’t from I And longer it of Ed, had reason? one know, or, you other line for in have messaging point that transport Delta some that that seem it? away should at to high-quality a Or

Ed Bastian

We still that. believe No.

it. that. any obviously need we need I and I than over think something continue that rather our do clear prove owners. point durability comparisons business to There’s seeking within framework – prove of we’ve think to we’re to the think that our we the time made to of the I And and to are

to beat So the same drum. no and was to I think point made there’s that reason continue

Jamie Baker

everybody. care, Take Okay. That’s fair. Appreciate it.

Operator

Keay come go will ahead. Research. Wolfe Please next Our from with question Hunter

Hunter Keay

Good Hey. morning. you. Thank

your the the like two-thirds, looks of go. you a with which earnings that Would is get little revenue So the that revenues, you in agree because like to passenger term? I think How mix, can can that? higher multiple down you is presume you that your can year-on-year. lower low bit get XX% ticket you number total it down your get long would would Do

Ed Bastian

said interesting necessarily question, are my in it non-ticket-based been our that That’s looking, our as an Hunter. light. don’t And We I it’s streams. But revenues. in to faster revenues. as some segmentation though. than ticket we We’ve And be, and those time the that much you’ll it’s target a bring more to marketing now, comment clip diversifying look been as at Joe, about continue. growing to no customized set question, bear, trends there’s never earlier for We certainly a where revenue should at see

Hunter Keay

Okay. still just are EPS to And with the Ed, then, clarify, range? you guidance on XXXX track

Ed Bastian

number we Yes, are. asking few weeks. the Yes, a people talking are. the we been know last that and I of about of have course over

and to still range, expect to conclude otherwise. I it’s We the be to premature think continue in

Our QX on plan. was

We we’re are same plan. running Revenues expect and largely strong of as in the well. ahead QX

but continue the been whether I’d a in to going couple year-to-date. say But weeks, on $X time ahead little Our or expect year a currently target to is fuel. $X this bouncing probably of plan bit, we course been level it all to obviously nonfuel full-year It’s premature the of that’s to here barrel range this lag on but the ability the price required. really up It place. costs card for over wild and be to a are it’s point, of full as a our still it’s at it’s the $XX basis and around in so at depends conclude only

Hunter Keay

All you. right. Thank

Ed Bastian

Welcome.

Operator

Michael our ahead. from go take question Bank. will Please Linenberg Deutsche next with We

Mike Linenberg

at the that at you year had questions the were X% June thinking just mentioned topline well release, than was for it growth you is back in higher-than-planned this higher the on running think X% you planned Ed, running when forecast – your oil to did reiterate to sentence, also back two that if were you same in revenue actually, guiding X% Or as than here. I in you time, was and we go growth as what December in were December? March to the that quarters? topline Yeah,

Ed Bastian

forget plan but a in the plan. plan exact running is than ahead healthy I number clip Yeah, running QX, higher for topline December. good of we’re

Mike Linenberg

just pension Paul. that In well? area Okay. that lower way some expense, my $XXX does into find getting to where of as to line reduction interest non-op million Great. then to And question million the second $XXX you’re due its expense the piece

Paul Jacobson

Mike. income morning, Good line sits the No, Hey. and non-op. all it in other

Mike Linenberg

Okay. Great.

Thank Okay. you.

Operator

We’ll Cowen. next move ahead. go Please Becker with to Helane

Helane Becker

for this so Net everybody. time. who think possible seen get answer the level but the your of should when question, merger a I’m is to over Thanks, sure of Promoter not operator. much bunch since and Hi, about to and Score the so it Thank you on, years you’ve you improvement the XXX?

Paul Jacobson

not that. to of take possible Helane, I’ll No, get it’s to a level XXX.

You would get take it cost would see want to the profile to that to XXX.

Helane Becker

Okay.

for you happy necessarily a like mind are that’s a Or So not is in goal have goal. that? Do you where it right now?

Paul Jacobson

to increase cost it. mid-XXs XX continuing Our domestic range. like the evaluate benefits and to would get that in then Net we to the Score is Promoter Internally, of

Helane Becker

Actually, have team. leave have answered. my it Okay. questions at I’ll That’s been of Thanks, other my all just been asked questions great. and one. most – the

Paul Jacobson

Great. Thanks, Helane.

Operator

go from Oglenski Our next question Please with will Brandon Barclays. come ahead.

Brandon Oglenski

a horse here, dead were want of guiding, where everyone. to we X cost if I beat to the on and guidance or fuel you do X%. hold come to to the question you’re topline talking back X incremental points to constant here, would Ed, $XX Good relative of to Hey. Hunter’s not about but X% represent because about $XX, morning, that still

change an this slightly in ago that can but roughly can to can very in these question still or So What over the cyclically you couple and maybe long-term on I basis. is you be fuel operating tell headwinds a bigger environment, up strong going years that earnings are here down flat year we’re shareholders time? the guess offset formula from a

Ed Bastian

Well, view range big I the $XX headwind. as fuel in a don’t

proven very some we’ve business, returns solid In and fuel in lot price fact, this at to past. make certainly more the about the it creates discipline ability a the

to you additional point of If or the about were were cover that it. year, for $XX to price minus, would to think the we’ll hold range RASM, of require I X see. And assume the balance plus

think is normal. than the there’s price as a you good to The for I a so it’s I is lower and to still curve, revenue this. think unique were amount This challenge. the as price if market is the as whole is today. that said Delta we’re a needing we’ve seeing, a actually had market, I new $XX backward that’s to take know, dated, that say think industry premature do I This is of you why is not momentum success. tremendous and And industry,

Brandon Oglenski

what upside? here. that’s asking And will drive that should going But What we appear? I it’s to just are investors assume guess pricing

Ed Bastian

Pricing? to of us things. cost Well, would pricing? what saying it’s be several going to cover You’re that enable

First it’s the going to strength all, of economy. of be the

to reason years. our number is a investing the this, our going be fuel more You been strategies. driving we partnerships of believe branding, can into underlying little look color, international add really up. Glen strength but for have product Fares, to It’s on our our off. through of the why a We’ve bit Branded what’s more are paying

challenged business know, and the As been clip. most part over a years, strong the of at rebounding it’s the that’s two you last very

up Our XX% in the transatlantic was RASM quarter.

see strength underlying of it Glen? continue we’ll a over top the there’s So to line, time. and on lot

Glen Hauenstein

but into marketplace. could I of and price, add, time Yeah, airline before the up take bit a fuel it correlation a down, just revenues it’s between and directions, huge does there’s if both absorbed little

speculating be much to Under and has up. stay XX- we in think premature forward in a range, around, that the revenues. rapid a but And to it’s we’ve so for as see start fares how probably of it’s as weeks, normal would us fluctuating run there, fairly roll I into to circumstances the with economy, to growing captured that few would past XXX-day over seen it

Brandon Oglenski

the response. I appreciate Okay.

Glen Hauenstein

Sure.

Operator

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

Duane Pfennigwerth

Paul, have new if out-of-the-money studying Thanks. I the just thinking Hey. longer wondered you options. any at point you know regarding were use of one hedging term? call

if Just anymore? you’re backwardation wondered, given studying into that this XXXX,

Paul Jacobson

managing look in taking trying make Good Hey, morning, risk to the look, at Duane. we’re always we’re a business. sure

now. right continue happy look We we’ll again, we at where have and add to to we’re pretty at time, any I hedges it. with this plans sit think But no

lot the advantage good nice which where sit business a feel fuel efficiencies and in competitively, about in and that’s line. the of buy a sustainable we we creating driving we in We’re fuel

Duane Pfennigwerth

Maybe this broadly the existing then second, my where are this could and flow, And thinking buyback about you’re free you very growing buyback? you us about how generous cash Thanks. authorization, thinking the you. Thank just just how remind with year. on with you’re the for

Paul Jacobson

Duane. Sure,

of the So completed was XXXX, throughout expect new billion We’ve the $X last complete plans on we we’re year. in quarter, to year. the and about about we, line $X middle as billion with launched talked of track which talked we’ve authorization last that that the part by that about with

Duane Pfennigwerth

you. Thank

Operator

We our will take Atkins ahead. Stephens. go Jack next with question from Please

Jack Atkins

for morning. Good couple questions Hey. A me. revenue

at business fares cycle what a company-specific macro line? on needs back of really from confidence remaining really happen from or perspective First, a perspective corporate with fares, to revenue the domestically, highs, that XX% business to either into the get loss,

Glen Hauenstein

years. of real over We’re to working But able last on that the don’t back there time. be impediment competitively we changed a have lot any day, domestically couple get every over to dynamics see the and

get it’s anyway, first momentum level, that it’s we’ve up, every in what of at market continuing a that. be and a in I would results working quarter. at think And our industry-leading And see And day better customers so shown we we’re those to second the the into quarter, consider ability to some understanding capture level. to our terms I

Jack Atkins

air driven freight Okay. be comments global e-commerce freight, the the cargo Great. of market you. and just then, demand. clearly global earlier the Glen, quite trade continues following on by side Thank air up strong and global strong your to And on is business,

there to jumped nicely it cargo point. capacity quarter, load XX%. side? out me on just globally like Because at space be essentially opportunity factors could you revenues much the freighter for cargo is seeing seems in main belly more globally, the up that just sold How given deck Your this is increasing

Glen Hauenstein

continued below momentum still so can, we levels. years couple again, a what ago, historic peak if those cargo just in hundred get was to there is million We’re dollars I back a our think few

Paul Jacobson

of cargo If to of we team and the the customer the Glen, the have that a and think reliability great drive. of driving I type job, I getting to done premiums can just cargo improving the expect service, the is operation that, add They’ve quality job with operation. should and the fantastic airline doing upside we the align can a into that, where reliability is

Glen Hauenstein

Great point.

Jack Atkins

the Okay. Great. time. Thank you for

Operator

Our Raymond from Syth ahead. with Savi question next go will come Please James.

Savi Syth

morning, Good everyone. Hey.

maybe Glen, quarter I last and last the best expected be you’d – domestic based time, think, Atlantic Latin to on the current on the the Pacific last. call, and trends at and then time,

strength, at just function maybe came point? that the also kind you quarter, this the the Pacific kind follow-on, And Pacific performing drivers a than So of domestic biggest the that that curious is of of it were better? thought kind Or what of just had improvement? out being weaker way of to given

Glen Hauenstein

great a business moved hat’s team the a demand. been year, very my through a is has robust and we who off really as doing managing our to job Pacific surprise Pacific great

Brexit to Brexit have you less would business the to or us traffic or UK. to stronger. not to reality, think been when and demand has I think traffic Brexit would present that thought most you prognosticated the business the would think cause back whether of for I never In a business UK more challenge UK,

and as we so on but forth going are continued monitoring think that. China, in a about we all the press, to and back what’s in seen very of is travel how lot strength continued business and we’ve apprehensive is closely improvements going And

all showing So China, strength. Japan, incredible Korea, South

Savi Syth

kind so gets kind kind partnership and of is some that of increased kind follow momentum Korean, that, the on to the that fair? of of as we Just should Is expect network? with solidified into

Glen Hauenstein

Yes.

the calls, into from restructuring towards major international we’ve in in a as points away China. multiyear and of capacity had, our Tokyo nonstop earlier in have Pacific our flying We mentioned hub

as Asia, refocus we’ll and we’ll for that main Now and and on distribution building secondary to third-tier with using in the services, start platform be cities next over to continue Korea existing years. our great a our off we’re

Savi Syth

you. Thank Helpful.

Operator

Genovesi move Darryl with UBS next Please ahead. will go Financial. We to

Darryl Genovesi

in Thanks with combined second guys. the is year, above. quarter Should the towards first [indiscernible] for of like your for expect time. for we looks deceleration second the the top end bit It a Hi, trending the half? the even the a little what you range in did

Paul Jacobson

said So three for we the year.

that with point storm X impact. quarter of little at year-over-year this over the We’re attributed that for bit to a

Darryl Genovesi

the the think will get like have Okay. that Do And spoken, into then still range. of that being times you when you half of last – the think slightly couple alluded towards guys of that you CASM you we year? to the be closer Paul, have CASM to I – or that this tone. range the lower your commentary different had it can lower you today end sounded hoped

Paul Jacobson

expectation. and morning, Darryl. Yeah, I Good that that is our our Hey. target, think still our goal,

to do I we’ve we think the those on about market is targets. give trying progress but year, good we that initiatives what still full-year a update the today about talked the call the feel hitting were through on

Darryl Genovesi

just then one bookkeeping And one. Okay. quick

On the $XXX non-op, change million decline, guidance contemplated original first a just that or the fully is was that $XXX time? to the you’re for it million the in a and disclosing

Paul Jacobson

It original was plan. our contemplated in fully

Darryl Genovesi

All it. right. Thanks Appreciate a lot, guys.

Operator

go with Lalwani Rajeev to ahead. Please move Stanley. Morgan will we Next

Rajeev Lalwani

Good morning.

Glen Hauenstein

Good morning.

Rajeev Lalwani

to around I Can is terms opportunity to up of I’m progresses Domestic if just you. two. you for to whether out International your has question just in Domestic in. International and the a coming about Glen, catch guess the to as spread talk going the between trying figure year International be the expectations or

Glen Hauenstein

To think the that’s solid huge little move we’re that up stretch, would XX bit such see a and think working Domestic Transatlantic momentum. what progression but Domestic we like through represents the be on that I year, imagine revenue I is that a pool to is of continue for a and us.

our year-over-year momentum. year positive first last know, you As our revenue first of quarter was year,

achievable. that goal, very keeping ever-increasing over it’s an trajectory we base going So our think is and

Rajeev Lalwani

hitting numbers very earnings [indiscernible] the committed a just quick year. for Obviously, one the to for you.

for track. in get at lever there You good shape? pricing seem maybe environment to a all capacity you the Would be that is assuming on

Glen Hauenstein

You question range? out in help Is guidance there. will capacity zoned keep us full-year your changes our

Rajeev Lalwani

Or that’s obviously? it assuming environment is you Yeah, is right. the that pricing consider holding something would

Glen Hauenstein

capacity We’re for comfortable our with the year.

that start year. course within range respect gave the to over generally the at of guidance. of We’re year we are the There with changing the

Some fundamentally, to But, there. a no. do think international little you could you strength of the certainly cause there’s more

of is it what a period is time. to capacity much those them longer types changes adjust the dime. and of seasoned on Our can’t be need We over

Operator

that answer did your Caller, question?

Glen Hauenstein

think it go the to one. can did. I next We

Rajeev Lalwani

you. It did. Thank

Operator

next Research. ahead. question with Dan Please McKenzie go will Our Buckingham from come

Dan McKenzie

fare peel X% just these an of I’m more for these sort might on the given Premium and for half back for the what’s onion back the than is probably the versus to for into up upgauging the to I year, seats system. The across Hey. to premium premium to guess this Good trying how seats Premium full-year growth seats the seats year. kind Premium you the X%. morning. tie the of overall Glen, RASM Thanks, Oh. And have it average seats of and fare guys. My plan fare X% in the year? how with respect growth are if average – average X%, just what garner of thought the

Glen Hauenstein

That’s to as upgauging number seats continue one the main of marketplace in to strategy have of using increase strategy really we that. the commercial vehicle of backbone, the the if you the Premium is will, our for

that the premiums Premium coach terms in the fare. have the throughout will we increases we X range the to that on from year double-digit marketplace. average depending on So product XX% seats And of times in get the

us, a think really key the what numbers would first were I of able revenue consider be that’s driver post reasons to one we superior to for quarter. So I and the for

Dan McKenzie

about at leave financing adjusted this point, There would this guess of your the we of go. sense leverage buyback, Paul, financing loud $X to are billion just capital as And delivered the what’s may debt returned is how respect and And year-end? year, XX yet on aircraft clear think that a you. on philosophy respect aircraft Thank at you where metrics. where with help with then, to I or get the going either that I to shareholders, pool net you your that and be to obviously, I’m to trying expand with heard

Glen Hauenstein

think lost the I we caller.

Dan McKenzie

Hello?

Glen Hauenstein

are you Dan, there?

Dan McKenzie

not sorry. Paul, can hear I’m sure. Yeah, you me?

Paul Jacobson

now. you hear can We

Dan McKenzie

Oh.

Great. Okay.

delivered what net end be the yet is question and to at just to was this I that of the Paul. aircraft wondering where might debt respect financing adjusted XX the year, leave the was Sorry second about with just philosophy And that. aircraft year. for it’s on My

Paul Jacobson

Dan. Sure,

Sorry about the technical difficulties.

et residual-value during XX% management, we’re peak to that We for leased of very improving with debt the for asset as the paying gotten aircraft fleet. we’re comfortable into long-term base today. some the And lease as getting The X% to or unencumbered provide future portfolio, where our our X% of It flexibility, back as continue to our debt deliveries, is and of our cetera. continuing had range the discussed, cash, of future. cushion We de-levering. aircraft point, flexibility XX% low but sits on we’ve predominantly targeted our and want

grade We metrics that in target to we are we monitor continue investment all comfortably as the and we’ll go that forward.

or no significant to material increase or our plans decrease desire change to materially. So debt

Dan McKenzie

for the time, Thanks guys. you Okay.

Operator

come will Our next go Please Bernstein. David from ahead. with question Vernon

Unidentified Analyst

my David. Thanks taking for Vasquez on behalf This of questions. is Leo [ph]

and comment had the on potential we’ve So talks, codeshare the SkyTeam holding you Alitalia impact could EasyJet plans. for and

Paul Jacobson

cannot. we Unfortunately,

Unidentified Analyst

Thank Okay. you.

Jill Greer

our question to going is last this the Eboni, from And, be analysts.

Operator

Thank you.

Our go from from come ahead. bank. Susan Donofrio final question with Macquarie Please analysts the will

Susan Donofrio

Atlantic. a demand? should Atlantic think defensive from thinking just new the view be more how have Or we that strong going as as the should it of whether it’s far strategy as across top on question against happened growth Good wondering new morning. Fares is to I’m competition? you line further Branded we My it drive anyway your about Yes. would across

Paul Jacobson

a and I airlines, were as of because monolithic provide more classes customers And to about customized evolution of three ticket. what what we’re to tickets really give based to us. people ticket purchasers. the buy the products – a ticket and our They through on GDSs or to do trying historically, services individual service trying or able of was was we they offensive like and you products think way is from that we categorize we’re service weren’t think to if defensive to distribution want two or distributed but a which

So no matter this just travel to needs provide a natural of your us best-in-class services really trying what is are. evolution

premium from baggage? I to why So able suitcase a some an very handling coach a aisle a provide very with have for would more we variety and in we who order fare lower suites. where the bag, is starting services a direct access all the to historic overhead to in to of customer way you a pack ticket services seats our think products us Delta get finest willing up the charge the you’re So to forego of if of flatbed basic and allows and it attributes champagnes One

to ability customers excited and this, the really marketplace accepted by change are to that Delta’s well we about sell we’re that it’s customers, So in this our finding think and value been in it.

Susan Donofrio

your as standardization then expect, different of follow transatlantic I the little are Fares just as Would products? that notice And of their we start bit a fare up, Great. having a that some you’ll partners JV, further Branded calling more your names. you integrate transatlantic

Paul Jacobson

do we think involve what step services, with is the we’ve to launched years are, which bioidentical, Virgin with the partners that with next we convergence our I to five products all you that great have and forward. I like in absolutely. Aeromexico what so what think think products being and Air over Does France-KLM them nuances will? not. with Probably and is launched launched it. get was on the first great a But if They’ll we’ve what those alignment to I see would more thing and on the

big the the really tickets Although the that’s in us. are different, nomenclature identical, the languages forward proposition a value step for and and are sometimes

Susan Donofrio

Okay. you. Great. Thank

Jill Greer

the call. Susan. I Thanks, now turn over Ned. And to to of wrap portion everyone. the it will Thanks, going analyst up That is

John Walker

we’re to media Thanks very begin call. Jill. Hey. Eboni, the Okay. much, ready

we you review ask question. follow don’t Also, asking questions. up. most quick like one address able should with limit would to That a mind, question a you I’d If to the process please themselves the to Eboni? way, to for media be

Operator

our go first Alana take Reuters. with ahead. Absolutely. [Operator Wise will from Instructions] question Please We

Alana Wise

question. Hi. call much everyone. my for Thanks so taking taking Good and the morning,

current or just whether possibility traffic a to preparing there for So earlier some the that about about Delta’s could effect and open-skies have effect And was a slowdown Transatlantic of negative concerns later. to effects Brexit agreement the begins me little oven changes to UK, the bit business curious made take mention as there the it of business? is U.S./UK not are Delta a

Glen Hauenstein

a UK we changes can right all. at profiles in for at of trail-off and We we see Sure. now far business demand as quickly looking on this as no and as demand almost we’re basis And in daily monitor can. we to react course see as the we

to change indeed fact, a robust matter of As course. react it, will does if very it right now. of it’s But we

think of to UK that As significant Europe change no far or way there we in open-skies changes we to be as operate Brexit. from the will in real the the agreements, the any

Alana Wise

so Thanks much. Fantastic.

Operator

from Our Bloomberg with ahead. Michael question will next Please Sasso come go News.

Michael Sasso

Good morning.

that morning one, the comment, stake taken entire British You in owner I the IAG, may out of thing. and has Norwegian about Airways, bid may have just seen news this for wonder if how share affecting a you a or anyone potentially question And that capacity see anyone or bigger market or Delta is buying do all across potentially else, just of see Atlantic. the the you you’d Norwegian? else, the

Ed Bastian

don’t I Michael, are. Ed. British plans know this is Airways’ what

them. I don’t no, And invest better off we plans have asking Norwegian. to think in any you’re probably

Operator

go ahead. We’ll Journal. [ph] to Please Wall Cameron move next with Street Doug

Unidentified Analyst

That was long get me. everybody, long I’ll never from couple back. hour, Quick a a hour. it

been of UK the oppose lingering Do calls still and their should vocal and You’re DOT? the do licenses by be licenses units your those Ed, in Transatlantic Norwegian, Irish the of there’s some on you still opposition unions. for revoked? think you – the Just granting obviously from

Glen Hauenstein

Doug position wouldn’t a in in topic I at on be so that to this moment. haven’t [ph], respond engaged time, some we that to

Unidentified Analyst

three engage did in it you But for years.

Glen Hauenstein

Yes, we’ve we did, on. moved and I think

Unidentified Analyst

good. moved Very on. You’ve

Okay.

a Just quick one.

et and You the card site cetera. AmEx talked the revenue, about

pick If nonflying in forward to medium growth would the three expect you term? you of revenues, were to nonoperating, would we most see two you or hope where going or say shall the

Glen Hauenstein

which double-digit been a to continue clip, the significantly double-digit which I business. AmEx the airline think grow growing relationship, of clip, at rate is will run outside core has at a the

significant So I think that’s improvement. a

the of our especially those and product fleet certainly base how are and are double-digit easily created. going than there, segment considerable a I and geared into know businesses the those forward, introduction adds of which businesses as model to a revenues, the better mentioned the call. much but of Branded out next and our initiatives durable mentioned strength merchandise growth ticketed clip are don’t think revenues, we’ve doing over terms grow there’s then continue Our all number the on think turbofan more as I to well for sustainability MRO us, business I those I potential cargo and faster very of of years. also of And more the the a which foundation that will I Fares is overall the think with improvement we in

Unidentified Analyst

That’s Thanks very useful. much. seeing Series. to C those really Look forward

Glen Hauenstein

Yeah, me too.

Operator

Forbes. Ted to next ahead. move We’ll Please with Reed go

Ted Reed

Can weak. on there’s great leisure comment is is guess I my [indiscernible] question traffic that reporting Glen. transatlantic growth international Thank There’s you know you. that Europe I for reporting elsewhere some particularly that? is but and from some

Glen Hauenstein

see see peak that. We U.S. travel don’t summer and Europe We XXXX. record directions for between in of the both

and are say from from out out Europe fares they for are the we historically selecting have of Europe. trend higher continues. years, They than been So I’d traffic of traffic last higher the over are the U.S. XX U.S. the because that

Europe extent we So we origin year. favor traffic be will this think in But can to traffic that record-breaking U.S. the peak, total to do. the we

Ted Reed

Thank you. right. All

Glen Hauenstein

one Eboni, more question, Okay. have we please. time for

Operator

you. Thank

Our Please final go ahead. with question Russell will come from FlightGlobal. Edward

Edward Russell

the if any will Series, my taking could aircraft year? wondering for of I more question. was first you C this arrive Thank you number the on provide detail and when

Ed Bastian

at C it Our plan is start the first by induct and probably of the to year Series end take of XXXX. service into the the the

Edward Russell

And know plan you do many take to this how you year?

Ed Bastian

XXXX? calendar In

Edward Russell

Yes.

Ed Bastian

fourth the – a handful in handful in it’s a the fourth just just quarter. It’s

Edward Russell

Thank you.

John Walker

Quarter much. We appreciate Paul, in and Okay. thank everyone’s Thanks, time, Call, XXXX you Earnings we’ll the be conclude back July. very Glen, Ed, This March and everyone. will

Operator

participation. ladies your Again, conference. does gentlemen, this today’s Thank for conclude and you

You may disconnect. now

Delta Air Lines (DAL) 12 Apr 182018 Q1 Earnings call transcript