DAL - Earnings call transcript Q4 2018

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Operator

Good morning everyone, and welcome to the Delta Airlines December Quarter and Full-Year 2018 Financial Results Conference Call. My name is Augusta, 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 like to now turn the conference over to Jill Greer, Vice President of Investor Relations. ma'am. ahead, go Please

Jill Greer

morning Atlanta thanks Ed today Hauenstein; Paul President, Good With Bastian; joining us Glen Jacobson. CFO, our in are and everyone, Augusta. for and us. our Thanks, our CEO,

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

here's You our a reconciliation that, on measures Investor page find at And with non-GAAP Relations ir.delta.com. can the of Ed.

Ed Bastian

that us morning which were pretax including at the today. Good for gave of quarter. end full-year of at both we billion expectations share you of $X.XX, of the today, everyone. Jill. and our Thanks $X.X a we reported Thanks, profit the Earlier quarter joining results, December earnings start of per top

year expanding The strong XXXX our our path step a if successful Delta for margin marked pretax $XXX our year's increase our top transaction. gain delivered one-time year successful performance customers results over improve owners. even to as was of from our non-fuel This for cost combined a solid grew DGS and on with last with performance, million the we the excluding the best in expense. unit a December quarter. fuel Our our result in quarter line X% offset margin

Our only despite fuel our Delta back This pretax up XX%. year, on a over we nearly share XX.X% $X.X the expense. the increase was annual X% $X.X returned last approximately XX.X%. invested billion sums was our income earnings return to We that and our a a how of fell XX% fuel improved below different resiliency XXXX, in year in capital ended the business and prior our saw per The increase Notably, a margin, with of XXXX, billion and XX% XX% owners. pretax and earnings really we year is. time

in days Delta's For is XXXX a Connection, the XXXX's the system, our including year ended another customers, year. without with best XX of record full-year operation was days. and the across XXX entire exceeding Delta cancellation the record-setting both mainline single industry, Delta and We

the XXXX We employees is most the satisfaction. some a great the customers the region a service we great customer the during being our we've the for Airline XX.X%. foundation loyal For investments scores combined every of by row. days for in XXX rate operation in in Delta record-breaking XXXX's creating of product, world. our arrival net Global delivering in in provide without our product Running high airline alone, the This a by we're with performance improvement year team our mainline resulted a on-time operations On-time When second made FlightGlobal cancellation, industry. had Most named in promoter of an and exceptional drove

the and over promoter net all-time domestic in of score decade last reached tripled September high an over XX%. has Our

outstanding to performance the sharing people, in of consecutive with recognize and fifth profit employees' All I'm for of work these of results our billion over Delta were a incredible year year. the this pleased $X reflection the

non-fuel few been sit would be. months, has volatility were they way fuel while almost thought where The line XXXX, a we cost reduction year last This, the assuming exactly strong should environment into unit with the and stability After global cost Year. revenue for last in move New prices control are where top growth growth ago, X% solid. major now year, remains we position for by in coupled we a XXXX. rates in the As us modest a they economic story well

Investor growth year we rate We quarter, for as to month full we at expect a top this communicated the also anticipating our line be Day. are last X%

accounts importantly market Our Most that's and quarter, XX% the revenue this the to revenues show growth a trend and do in grew our this continues level driving X% we Corporate of revenues well. XX% for some total XXXX, a travel of approximately fourth bookings concerns, similar continuing. recent Delta, trade to and environment, for which China, quarter. domestic grew expect passenger revenue, in

to shutdown, pressure our respect with the Now, are seeing government some we business. on

with put experiencing $XX our ability is front, delays travel. on On security. are XXX operation; we're aircraft back lower million per The Airbus in hampering biggest impact, the at seeing to non-essential pushed seven customers is process. longer This about who our shutdown, the at start due to the deliveries service, lines the work into is revenue FAA with new to other our also airport certification our but month be it's bigger impact date likely in government

nonessential earnings significant great row, mindful employees. and a our these our and a $X to our record setting, We year delays, for while any minimize in reliability our year including built it well demand environment officials these and are returns customers, business, trends, has shutdown, was great and in resolve summary, revenue more been is for to possible. The be cost closely to the the improved Delta Despite to product, steps healthy. team elected headwind, and the will and solid, is of in differences margins, topping fuel of should generated for base for we XXXX. their stakeholders. over we're as headwinds, TSA and currency a encourage cash billion We year for Delta our macro of a success challenges and the fourth has expect now, growth can owners, never flows we and Glen turn our positioned our in In our do fully our build strongly brand exist, and government as working stable, perform our that their foundation very we XXXX operational strong employees was on extended on deliver environment. demand a XXXX discuss $X our best certainly profits security take for aspects resulting to I'll billion get quickly double-digit We And experienced to strengths top line government open for mobilizing with owners, process.

Glen Hauenstein

a to for Delta record Ed, for the Delta. strong and Demand support. thank their I'd operational affinity product and the loyalty team brand Delta higher. for and everyone. good our delivering was continued revenue for the year, Thanks, been morning like has for this customers results year XXXX and and never our

both full in with first grew XXXX the X% unit up streams with throughout demand a to to year, segments our and producing billion strength and levels. strong both revenue fares improved XX%, on double-digit returned XXX%. Non-ticket for grew time as X% Corporate XX%, Cargo were premium unit Corporate diversified entities revenue MRO For year. revenue improved revenue nearly record revenues since was and margins. the growth Passenger of all revenue Leisure XXXX, $XX the revenue in we average base. of X.X%,

of total American Our Express contribution incremental million $XXX source with for close a XXXX, relationship is value competitive In advantage. of $X.X of a drove we billion.

fare upsell with Revenues in growth from the up During XXXX, both new across with a volume million digits. quarter portfolio December quarter, as point spend products move will the XXXX. quarter in out deliver capacity. has Miles customers Currency and XX% a a on the strong, a to redeem double Xth, increase as X% post-purchase revenue December in on Delta.com. upgrades upgrades. grew driving improvements revenue X.X this premium purchased improvement. sectors. almost later we revenues unit across on December grew X.X% X within X% miles Corporate we over a to XX,XXX acquisitions, we for month, set first premium In plan customer On over Initial through allowing much launched, the with response functionality in card flight and were additional record been X% month, on the and Miles December on all grew roll increase co-brand Mobile more our

unit performance grew X%, length is specific revenues. growth Turning and higher continue noteworthy quarter, entity X.X% we both to we in revenue for on higher in increase set of and to revenue given This points domestic unit revenues X.X% and on saw records an revenues Internationally, Both increased industry-leading stage revenues. X.X X.X% gauge. premium. leisure the the business domestic

posting main high Japan performance. revenues revenue the taking to some quarter. returned Our signs the we revenue Latin to the pleased started Transatlantic guidance growth the The unit are was X% headwinds. and to the recovery demand. performance addition revenues our on increased points, currency was in strength X% by and quarter, overshadowed region improvement, with and hold best currency more sub growth. to unit in performing entity to offset miss growth, two in X% Korea strongest year-over-year, strong Pacific, X.X posted positive This see Caribbean of with relatively we really factors. midpoint. unit Mexico, of to mid our but absolute attributable The revenue where unfortunately a December unit rise pronounced cautionary in to were single-digit was stage we the significant Korea in point with headwinds In saw unit increase X see flat by

First, recapture of we peak not initiatives gave prices, materialize. guidance expected did near and the fuel fuel

while created Good and potentially holidays, Second, as during on and January reported here the demand to seeing that this trends. returned levels, the the have similar is traffic early consumer Retailers strong, and due Thanksgiving fatigue robust revenue between calendar to was plan. XXXX expected during possible not extended these is yields longest pre-holiday back period period. weeks, have in news as

December Easter trends and increase is Looking and two-point the forward, capacity. due JV unit in to late Europe revenue X% of X% shutdown. shifting a total is currency point from timing half-point half-point of quarter change full growth to settlements, government impact X%, from a in adjusted sequential a the of to unit to from the revenue April, revenue The to flat on up a with quarter March higher expected to

the corporate most travel about and upcoming for and optimistic a are as did we well XX% MLK as two-point year the recent into spend Day or managers March strong with the of for expected President's corporate improvement holidays, domestic period, is travel and We outlook healthy, Leisure travel last demand This is ago. XXXX. survey, to survey their In a maintain for increase the positive. our over quarter. remain break bookings overall spring the performance

For bookings outlook to corporate we January, year-over-year for are and to improve. and volumes improved seeing and Delta competitive for passenger both XXXX, up in X% capacity are fares in continuing industry on-hand Domestic hubs. is already Delta growth with compared the moderate

For be down the is entity Mexico. committed to driven the will expect XXXX, the Brazil March year approximately and persist With by XX% remains our the best-performing progresses. In first-half become challenging currency the and as as capacity. improving capacity Delta in marginal we profitability contributor rising XXXX. quarter, to Caribbean into international trimming length Latin plans by Brazil headwinds stage of will Pacific,

Korean In quarter will new some aircraft, challenged. quarter. expected our but on services, and revenues signs is efficiencies upgraded the flattish, products entity profitability as This to March from to the further March products. we we are cost joint see and be the in cautionary unit most Transatlantic, the remain integrate the expected capitalize venture For improve

expect unit and and of when France impacts this historically which seen Easter, in entity March a revenues the pronounced leisure for domestic quarter. with headwind Brexit, you corporate more unrest, negative impacts most, due the the we to timing have currency this uncertainty We combine and of the the modest

While that bookings. are current in robust as trends based we early not what are the strong XXXX, we on saw summer confident as be will

closing, turn and while us along my a for discuss watching a also to more in products of target continued plan the approach next with would this like is this base are Delta-specific diversified adjust to shoulder XX% capacity revenue margins revenue financials. friend, priority our of growth that, season. the as and geographies uncertainty to region In a across top I closely XXXX, pipeline the Paul, confidence initiatives We give are given prepared in And expanding with Delta. to good delivering on we

Paul Jacobson

unit to and am morning Good quarter pleased costs our Glen. team everyone, you were the say joining for was and I for thank the priority us. in cost down XXXX, Thanks, December Changing that non-fuel trajectory finance top X.X%.

I X.X% our target full-year and entire back unit to our trajectory, keeping below cost X%. within an work Delta us cost their like thinking. in putting our marked growth growth unit for team of long-term Importantly, hard of the inflection cost thank would innovative

operating investments. Hats on non-fuel lower a year-over-year, Our operations well executing facility helping done. fleet units and for achieving to chasm and job the well cost, pressure team overhead offset which off are is from Gill

Our XXXX, each our non-fuel pressure. timing ahead the about quarter to with midpoint and occurring summer pressure half is X.X% water lower, the which to to XXXX. In narrow underway, $XXX we year first full-year this is of is of path in benefits high growth be XXXX evidenced as points million in aging Day. there the approximately X% cost guide, quarter expect from with quarter, us incremental replace throughout expect $XXX we unit realized cost increase quarter Despite to bodies an the be of of for Investor at expected mark in as beyond year. consistent flying pressure maintenance the performance and benefit of and March continue additional Relative X.X our we re-fleeting from creating initiates this of the by the in guidance we'll confidence see cost to X%. our X% to XXXX, the expect or increase One and million In the and to in we give quarter, non-fuel chasm December Delta maintenance

the $XXX December to total million in pressure fuel Turning expense drove quarter. fuel, of our

fuel of price gallon prior $X.XX all-in was higher than year. XX% per Our

quarter. beginning While maintenance of pre-purchases the the quarter, the market from refinery moderated scheduled the prices and at drove a the significantly headwind inventory turnaround $X.XX during

all-in quarter, be we our price roughly the fuel to to For March last flat expect year.

is improvement of of over $XX to in a March X.X% Some million earnings last at $X.XX This prior range year's this share, currently loss year an due the at X.X% to $X.XX forecast refinery quarter a margin by of equates to to gasoline the crack. X.X%. XX% to We of driven pretax March compared lower midpoint. approximately per quarter the approximately

adjusted business, with new sale results expense. two items, items Global increased earnings XXXX full-year unique XXXX profit per accounting by impacted were standard. Services and our benefit coming XX% These by Delta the majority for adoption in together of of of Our two lease early sharing, the the non-operating of $X.XX, share that in

investment As to non-operating This million expense day, $XXX in expect lapping benefit And strong primarily higher cash $XXX than and and our capital to million the execute and at lower $XXX be we the we to XXXX, investor on sheet finally, said Delta the balance to to in due pension is return million. allowed healthy generation a shareholders. gain from $XXX million opportunities to to consistently of DGS XXXX sale.

expect which into of XXXX, billion in billion produce we to operating business, and back In $X XX% represents stock flow operating XXXX, cash o yield generated more flow our the last $X and $X.X $X.X free During and current flow free in to we an billion billion higher $X cash resulting than cash free is year, cash invested approximate price. than cash billion. billion, flow, XX% $X roughly of flow, at

technology. the XX% at product invest replace spend planning of outlined replacement day, as related, of less and we in capital $X.X fleet is As and efficiency billion narrow investor in to fleet our are continue our spending XXXX this bodies. including we of

gains. to transforming higher cost and investments satisfaction, premium drive customer Our significant margin benefits are our through increased seats, fleet efficiency

take $X.X to first the owners our quarter. billion return for of returned $XXX aircraft roughly in the to as $XXX In for in delivery a to dividends, million we shareholders quarter, repurchases XX remain December quarter, the capital the year. consistent we of spending share we of of in committed well. capital $X.X We For expect billion returned million as and total

to free shareholders We expect with line cash a our in flow similar XX% level of returning of XXXX, target annually. in

Over X%. than of by $XX buybacks, count dividend more have fully more current and the reduced years, XX%, we nearly than returning billion past dividends a yield with share through our diluted five share

that balance health reducing debt Importantly, done improving sheet. pension also we've and liability, the our of our while our

day, of ratio of with highlighted to ratio was X.X level are leverage in the long-term We times X.X moved to X.X debt, target investor comfortable This end current we we as a EBITDAR. have the at XXXX. adjusted and to debt of

lease Our liability allow liabilities an At lease was us grade XX%, with business should with targeted includes of the also the cycle, pension maintain our range adoption ratings and unfunded of funded pension incremental to investment through year-end, $X.X a accounting. billion. recognized status

by underperformed asset benefit expense. our shortfall return X% XXXX, year-over-year pension XX the our about planned XXXX non-operating in returns reduce contributing pressure This of to target will Our points. in

Looking challenges I another and cash extremely and solid back our drive am in of We the for XXXX. on at more company double-digit successfully XXXX, navigated growth, have margin of earnings flow accomplished have Delta. positioned growth free expansion, in should and we which proud what line year importantly top

As with is Ed the our outset long-term Delta Jill to the over at call, coupled with this the begin the difference, I'll and said our And drive of performance continue back to industry-leading deliver that, call brand turn results, the combination owners. to powerful our by this of for competitive value unmatched Q&A. enabled advantages

Jill Greer

if we queue. the are ready you on how could get Augusta, for give analysts, from questions the to into instructions

Operator

conducted We'll electronically. The question-and-answer Instructions] go session Certainly. Barclays. Brandon with to first be [Operator will Oglenski

Brandon Oglenski

for everyone, morning question. good and taking Hey, thanks my

and Pacific challenges little here look in bit U.S., or year, shutdown mean maybe the this a Ed guys challenges some that I you Glen, the Latin. lingering slower the I in government from So mentioned maybe guess European economies

if continue worsen capacity these right to the in some I down growth, trends of X.X. now think or even take ability is from XQ about look What's scheduled So, at guess here? I capacity we when

Glen Hauenstein

all, the Well, kind there. actually first trajectory. very you by of We're quite all this of put to qualifiers some slowdown same, as the and we're -- on characterized encouraged Latin about like I'd global excited

you see then negative very a Latin to last accelerating the quarters And great one If being this recall, years returned as see we've year domestic. move two that after the best the returns it's the really in solid We Transatlantic, into of it we is quarter ever remember, throughout year. was had. positive, the for and and year we first of XQ

here, -- the in we're get in we'll of head the Brexit we lower year a adjustments summer more but know really really to flattish summer the with keep report events, a the finally you. we we're I close to when close keep characterize the that additional in see what's we'll of, very being to still over and to read great we going the uncertainty past towards back a that, eye and going make we so all it current is papers something looking prices, we eye off-peak peak, the be back-half fearful but season on these read is and to the So we're in Europe as as need coming fuel France, do wouldn't going on we and

Brandon Oglenski

off, guys premium look, than to day at now spread tried you in And said, ideas products, but I and passenger really now, be maybe of Okay, thinking concerned premium the economy And so the in revenue not said folks isn't with you up don't as economy folks maybe as past? too actually why a maybe business not we more necessarily is give it's But was FedEx the the slow, that, should if cyclical be investors ticket I that Delta and I thinking here so, is can market your incrementally from Glen. that additional that is on between XX% heard that the cyclical the slowing guess because from answer you the that's we've maybe think analyst more will tied right think slow may here, broadly, some why Europe far this think? ticket it that so appreciate it I asked.

Ed Bastian

the the Well, disparity question, I lower between those, talk all-time about premium ending we ending in leisure. should at corporate is the spread an between think first the two other travel higher The absent and is low. things products, and there's that

If leisure back. the past you happened peaks we to return many, continued of years, many yields. and stubborn have occurred increase, off while we're think that fares about to XXXX corporate levels, we've the years still very couple And had over far what's

So the versus big about realized the or big and cycle in had if cycle how play been you were next thinking at closer last macro corporate a you those does the of cycles, have differentials think really some never the out. we from level if fare leisure,

and that's very more should in was in that talk we more that and So, bringing able make product we're lot demand less the there that products demand, whole buy that, I their by because confident the and broadness And new think cyclical. if way in marketplace. products, to a the the feature a the services issue Pay the things all distributing big to like need offset we're a industry, the new and think we're we offer, to it, Miles would than with premium about be weakness tick ways of including into able I down to then

as concerns really contractionary that about we're and feel so are you we'll for are face We many while so will confident or we hear in more seen and on move we should of your year. talk in cycle, So domestic, any lot through haven't we and more recessionary why much the those, next really and years about the that we mindful will the a weakness confident environment, cycle we into it, we we about are both a this expansion, better. probably that we planning weather and where eventually tell we

Brandon Oglenski

Thank you.

Operator

to next Michael Linenberg Deutsche Bank. with go We'll

Michael Linenberg

was there shift XX ones shutdown you headwinds the a and Two March you in that again? what Easter in government Glen, another the is heard quarter, I was another currency Yes, had mentioned, -- hey. was basis What here; points, highlighted point, RASM quick on a is thing like half-a-point.

Glen Hauenstein

JV exchange There was and foreign settlements.

Michael Linenberg

settlement JV piece. the Okay,

Okay.

Glen Hauenstein

That of balance just come a in go and when should year. the they issue out. that's they throughout And when out timing really

Michael Linenberg

there was And question, to some about commentary how Australia, Okay, just China, a and and great. Is Pacific just like strong second my stage then you're down the noticed that was a about commentary Korea, you're there Pacific, was Japan and What then smidge. the positive sales were of of more where that? weakness? RASM driving -- Is another was length? seeing there lot that I part

Ed Bastian

No, based all unit it to the know, that is most negative -- we but Chinese RASM, as China, while length. to that's it all because Atlanta of of potentials in the it's higher, lengt,h Narita a discontinued so the you stage replaced and profit Shanghai route, are with lower, and revenue, on what slightly significantly stage Shanghai, driving so

Michael Linenberg

that makes you. sense. Great, Thank

Operator

next James. question from Syth Raymond comes Savi with Our

Savi Syth

morning. good Hey,

the from solid commentary Glen, on a domestic mentioned Just you clarification trends.

and So outside should magnitude the we level? of maybe core government at is Easter of least at shutdown assume kind the just the similar that

Glen Hauenstein

came from we that confident. little the in I very December, in track. we the XQ. But very as back corporate look and right around what to leisure everybody we're holiday. had the earlier similar part And of trends on We work blip the and saw January Yes, demand think back are

Savi Syth

on Trainer -- was the that And helpful. the helpful. Paul, just color That's you that a follow-up provided,

about XQ it we Just driving trying the the to should how progresses? understand in and think as year loss what's

Paul Jacobson

the is pressure gasoline on Sure, they're some pretty lows Good right on is that the which for morning, putting now, trading question. There one thanks difference big cracks, are year-over-year Trainer, in with production historic a basis. Savi. impacts at Trainer at and two year-over-year

we a last The from second liability that RINs from benefited a we slight XXXX. revaluation of were was year holding

our smaller impact, lower gasoline date, those should a to which prices and as obligation year, been it's but the to driven XXXX especially those with RINs get have reverse satisfied over season. We've by flat. we relatively summer -- RINs lower in we that's traded So so 'XX primarily expect cracks,

Savi Syth

you. Thank

Operator

Credit go Caiado We'll next with Suisse. Joe to

Joe Caiado

much. morning Good very everyone. Thanks

target in the First on I spend your for cadence and level, timing high just the expected appreciate or question you about X% year. costs. opportunities either But and risks where maintenance QX cost you to CASM-Ex a can talk in see your is of here outperform on materially year? the the Paul for the at structure the underperform unit the color biggest for

Paul Jacobson

of momentum continue at XXXX lot into One to Delta morning, we We've on come progress enterprise of and that in I'm so Sure. optimistic Good particular with better we of XXXX, that initiatives to Joe. I'm fleet efficiencies in and out get a continue as first-half airplanes level expect as our the going of some phases take get. year, over the but optimistic about forward. of to we'll thinking, we also realize that XX the efficiencies in those We'll start time approximately that

reiterate So fully maintenance our again, I gave we conveyed and that very goal of the on confident about when quarterly feel that the expected X% optimism in at day, investor guidance timing in was a basis.

Joe Caiado

seeing or a see passenger think in yields, might of us demand? more to what across in the color I that sense operation, was there whether indicator could you being of some you're terms seeing Okay, the we and on particularly for give thanks. in and not you're and what volumes And it of potentially on Pacific, makes what curious then as a Glen us cargo, if question for leading cargo

Gil West

Gil this West. Yes, is

the Just a had $XXX or as an you as over mentioned, couple business exceptionally to due of in million yield the cargo strong cargo; comments revenues XXXX, first, probably large part XX% performance. were on Glen year know, up

that's So But we're yield pressures, you pretty primarily to, it's challenging do will continue yield see hold to digits performance. to seeing moderating, that, as allude say performance occurring. some is volume some despite revenue driven I geography by some lapping while still comps strong. growth, We year-over-year, up single

Joe Caiado

on as about see with the view might volumes indicator potentially to or the that side, way we should right what And not it? a we leading is passenger of that demand think

Gil West

see of we sense, think quickly don't people are to economic very what what's I the same more we at and with we appropriate that ahead when tariffs passenger size and with on and air revenue I in how are to into using side, macro I They're very, as the offset decisions. and the and we side, revenue then it. could trends to be try at indicators, got about can, always we don't as sea or think we look get leading you've tariffs try the we is but close going trying look ourselves, going we passenger revenue to think translating and the their think make

Joe Caiado

and all appreciate the color, everyone. Understood, thanks

Operator

to Bank next Andrew America. of We'll go Didora with

Andrew Didora

everyone. for my good Hi, questions. morning, Thanks taking

rate cabin, little for growth question that versus, XX main up here, in to changed I how breaking on think, interested read notice up I getting you in First bit year. in product that what's now across 're like now spend? Glen, Do corporate the has in Glen; your you this your revenue did tracking premium -- read good you're premium decelerate a know, mid-teens a bucket for thoughts on a premium and did you how view versus earlier XQ really revenues a What this?

Glen Hauenstein

you is had any in as I the would increasing No, in second it teens least expect we high One, is number the think and continued the be the quarter. seats we'll base we mid dramatically, two have of over that base premium one that to on. -- things didn't the to going that got thing is so quarter grow,

about eight plus were premium at So the on count. seat tracking we

go about to into up quarter as will back six. number we four, This was that and plus 'XX, go plus

have have quarters. growth XQ lowest the So for and also is to next we'll was premium your that to related the the inventory number the sell ability inventory you few

Andrew Didora

anything side out that travel beginning maybe corporate you that to in the Oh, question the would travel the revolves -- second my got seen conversations more be your not in that airports, shutdown, but indicate managers sense. bookings, government around lack guys and is this look government then the you your it, on fluid corporates called have corporate with appreciate yet, but on situation, crowding have issues I is or know up might a traveling, that that of I contracts pretty a conversation, or delay And at thanks? makes given the that popped

Ed Bastian

at to extended Andrew, looking other hopefully shutdown resolved seeing this any that this that's going we're not before than Ed. as be No, is soon. something anything evidence

Andrew Didora

it. Got

you. thank Okay,

Operator

Research. Wolfe with Keay Hunter to next go Well,

Hunter Keay

Good morning. you. Thank

Ed Bastian

morning. Good

Paul Jacobson

Good morning.

Hunter Keay

morning. Paul. Hey, Good

starting plan guys about drove gross in -X%, I So XX% get what your assets. XX-K that happened plan and about global think some you concerns of some given comments may of if you be said made wondering that Paul, XX%, thinking asset are you having it, to growth? seeking pension return I'm allocation, pension you maybe economic of how there? around you that's about what the

Paul Jacobson

Hunter. Sure,

a around emerging stocks always at we weighted the a particularly but that So return life, year but cetera. long et It heavily in that, long-term do across equities. the has as and markets, to in be expected challenging toward tweak know, plan matching a profile. looking pretty through tend board, of We're was that that, liability you approximate ways we expected pension X% global a lens return, to equity markets a with the

not same careful overreact, to at time be prudently. to So the exposure but we that manage want

Hunter Keay

know industry just you target, at Okay. this, five, how quantifying oil maybe bit you how higher particularly wondering that if more guys, take were geared me? just than maybe a prices geared, or Do And more ago? question towards six you any changed data Glen. Delta, seats, you seven that's or minute, to before little a for little then, XX AP to window I maybe stab last and unsold should is maybe maybe go days years your relative provide around seven-day and is for the a Can well, that think, you industry the how many bit Glen, capacity era today, seats basically growth, in a like know of the you flight this is many do want

Glen Hauenstein

Yes, you where XXXX the going been months ahead we've factor. actually into and XXXX, one we in the months each at in of when load look entered I have into think

So on risk actually as months. as a ourselves little become each reliant bit very we with continue to the table in want and little position 'XX demand, bit on less the really the head we've close a to end where we of into one less that's

Hunter Keay

Okay, thanks.

Operator

ISI. next go Evercore We'll Pfennigwerth Duane to with

Duane Pfennigwerth

thanks. Hey,

about aircraft delays, why just expand some understand shutdown process, mentioned aircraft in think types. I driving commentary this on certification you AXXX your that delays? you induction I but is Can other with I Just think the

Gil West

Gil.

There become that government rest and into crew it shutdown other the the of Wi-Fi that Of impact about, seats course, think. certify with namely, some that gets for and some certification and fleets, talked we've problematic I AXXXXXXneos systems on AXXX, potential issues us. back is things we the nature,

impact, immediate but a have an us. not there's certainly So could impact, it downstream, on

Duane Pfennigwerth

the can these these to pressure as words, maybe what going are part around? of you parking and then other specifically, aircraft some and aircraft types that's older are driving XXXs, in us delays helpful, be AXXXs, are is with Thanks, what you just run short the remind maintenance replacing? you in those keep So

Gil West

it. an as extended course, class We're of this think RJs primary Duane, the and initial are the replacing not expecting aircraft are range delay MD-XXs well. really some you're two I long XXXs to overthinking be

Duane Pfennigwerth

you. thank Okay,

Operator

next to to JPMorgan. Jamie go Baker with We'll

Jamie Baker

government Hey, everybody, feel have you passengers or first majority spend? us I government terms fly SkyMiles is personal annual do finance, what if tomorrow? of looks is. leisure typical you the for Glen. passengers much know government probably for accounts. the tech dynamic were really fares obviously, fraction how even on spend one Can I'm a non-government good these I the to give know, spend knock-on of of out a don't morning, that figure to spend somebody in guessing for your for just drive their their trying reopen in a in that how mean, effect employee, corporate

Glen Hauenstein

quantify to now. that trying We're Right. right

implications estimate you difficult to of components. our imagine, there, all $XX those that's of but you -- includes all it's dimensions the out because might of As figure multiple of have kind million

So it's not just…

Jamie Baker

does? it Oh,

Glen Hauenstein

Yes.

Jamie Baker

right, words? I in back have somewhere vacation, go other But presumably, any then then come mean, manifested start in from in don't quarter vacation January, in by employees on reduced January and else that's working -- future spend so in your another and the you government wouldn't leisure

Glen Hauenstein

mean, I Exactly. we'll see how long…

Jamie Baker

Okay.

Glen Hauenstein

see how $XX expands, what now if We'll long but and thinking, could revise this and right million. long we it's that's we're occurs, that

Jamie Baker

out you Are is paying know, probably might been Okay. plane point Ed be think these you're wide Not or network haven't -- CASM, pressure I AXXX for spread delays aircraft and figured or attention also Paul, noise, a a I close eventually, the domestic but should from mean, Just construct? all or Boston fit at we plane, question know, And of going impact? something which they or answered that? the about how like and from, of wondering the taking sure, tariff don't have second plant XXX network to a there the Seattle recently. you far as, any the within I impact lingering

Paul Jacobson

the in primarily that gateways right more higher drive assumption opposed to volumes. and you're be think the where I on coastal efficiency focused they'll hubs as can your we interior cost

Jamie Baker

Okay, fair enough. Thank you much. very

Paul Jacobson

Right.

Operator

Becker We'll next go Cowen. with Helane to

Helane Becker

[technical much very difficulty] Thanks

Ed Bastian

could Helane, you we question? hear you, your can't repeat

Helane Becker

can hear [technical you Oh, difficulty]…

Ed Bastian

we hear you. No, can't

Helane Becker

open Well, right the you Operator, can line?

Operator

There you Helane. are,

Helane Becker

better? Is that

Ed Bastian

Yes.

Helane Becker

okay. good, Oh,

me I problem think New office in London, a my with calling there's from and just in from York. calling

offset seeing -- other Just you're talk about revenue talk you the your a question on that's TechOps, half the in didn't I the you would but -- pressures year maybe shaping that, hear just cadence and business, first of how that the that for and growth in that about up maintenance? could and that

Gil West

This is Sure. Gil.

business new up similar to year you million. still in had in XXX see capabilities, a know, million our pushed million, you MRO but TechOps, in little little as probably We moderated made again though, growth, XXX XXXX. over probably term a They XXXX, and So, a our close XXX year-over-year. more a investments trend great Longer a pushing will two that fan Pratt Royce know, those revenue engine titles. new the two engine, gear then a billion as a over engine Trent Whitney as into series shop, type MRO incremental longer our engine new term Rolls a dollars fleets and all the and we that revenue engine turbo that sell, year ramps, to test see work foundation introduce from we've

Helane Becker

business? not other including the From those alone

Gil West

correct. That's

Helane Becker

Great.

being Okay. for everybody. Thanks Well thanks patient.

Gil West

Helane. Thanks,

Ed Bastian

Helane. Thanks,

Operator

next with to will Joseph Stifel. go We DeNardi

Joseph DeNardi

morning. Paul, ROI guidance it about contemplated as be, is and your you just as the would X% high in of you lowering can the about for talk if in whether that, I've it, sustainability 'XX? assumption Yes, what the of seen, effects good is earnings knock-on lowered

Paul Jacobson

corporate return only that plan industry, but the The to to Joe. Sure, all end relief. but plans in is airline at is of expected corporate Good our high unique, because of morning. airline Delta remember assumption the plans, not X%

we've that met XXXX. So an more proactively our aggressive with bit what funded the have because with to time fully an a we having return done relief minimum profile, we obligations with have little approach airline is taken where of do through

thought with portfolio as is the would say in on as been plans XX fully it returns rate has and it and would through contributions years there's that wholly consistent the risk that XXXX. we about closer in that always over the get that what funded no investment I a change we to status trying that So, drive last of been funded, work of our to reducing over in both returns, will have but strategy we've change the in time, long-term plan, better but contemplated

Joseph DeNardi

both you've that challenge the couple first question years two-part I you've of past kind what think with about guide couple that's and the probably parties could you different early, then timing agreement I when changed sort that years is extend can the your And then offer is, they'll so a that you? Okay, typically first Thank whether just quarter whether comes helpful. AmEx just that, a of have of guidance, had way in And talk for revenue it has you hitting up are Glen, you; opportunity though you. over based revenue of on than guidance been? the happy

Glen Hauenstein

on Well, we potential comment don't negotiations. any

lowered five I'll say and and for everybody. we're examining it's range the we targets to is -- we too of our to make they sure in inside that we one, again, want while miss the we on we one, so hit second clearly us investors we that and X.X hit the heard range, in order, defer know painful but three that don't the I'd So first on to have get our we want that

Joseph DeNardi

Thank you.

Operator

to go Goldman with We'll Sachs. O'Brien Catherine next

Catherine O'Brien

Thanks time. everyone. for morning Good the

days, travel, So, but slightly just I international usually business travel first could imagine business travel booked about within being could be business longer booking on think curves in for average. question I seven

in curve less Thanks. a between my differences or particular build maybe your booking see there forecast? where That's more and in the you in question. cushion to booking you region cushion regions, is maybe or that then talk is that longer window could So, or first you the shorter, about

Paul Jacobson

yes. Sure,

is. the how far related of of kind think can You booking trip the curve to

So, Jacksonville, Atlanta the closing things haul like the is. Very to you York to New world, the Orlando, booking to have around general Atlanta well. as further go Atlanta the window short earlier curve booking

long York to Atlanta New Japan, or have we booking Japan, New window. York China, very to or to

So thumb. -- there general of What of that? that's part the another rule was was

Catherine O'Brien

just part second for than that you the then was into and some of booking cushion, international given you or your these forecast for domestic? keeping might Yes, windows less build in more do in longer mind,

Paul Jacobson

the Oh, forecast of few happened build last what's weeks happened last the the few what's our in in is way last happening in what months really we years. course, versus versus the few

So, longer it's windows, that have a account. clearly into booking very those for take equation, that and we complicated mathematical

Catherine O'Brien

Understood, the and if government ask quick follow-up I on could just a math. shutdown

and guidance, government your -- FX, most the for point that are shutdown month, maybe just that just march how you should is when January, know saying in point that in million So, that? are we month flowing government think said, a or I about a quarter of for thinking you're there's the you $XX or the you of shutdown,

Ed Bastian

I commented on this happen overall Ed. people of risks the is. the what's run with so see what It's coming in we Catherine, should one think the considered with can guidance. current going into We're to unit revenue shutdown. rate We up get but is $XX our of not that precision guide, level don't speculate going government the to million, we the that

Catherine O'Brien

much. very you Thank Understood.

Jill Greer

we're that analysts. the more have one from time guess I question to for going

Operator

from come David will Bernstein. that with And Vernon

David Vernon

taking Thanks question. for Hi. the

before one shutdown about be or difficulty] a government [technical questions, guide First year? you worried I so to the thing the have some associated this to the but some quarter how the of maybe continuation with is of guess would go really again guidance of the into baked for cost question happen long

Glen Hauenstein

your we repeat could lost your question, David, you first part of it?

David Vernon

how either of or question that year? XQ to aircrafts the trying long to for stuff government guidance, and cost about dimension like with in you'd unit we The in worried associated impact any like cost this the see before or not -- to would an sorry. whether the go the Oh, be delay, was guide, there's shutdown need

Glen Hauenstein

the a it We in impact unit quarter year. the don't to the or either on expect guide meaningful have cost

David Vernon

a Paul, as follow-up, how should just quick sense non-op And the full-year? you expense then give for for look us Okay. maybe could a

Paul Jacobson

pretty is from even throughout As gets we talked year, about, be evenly David, to that expense pressure year. going the throughout non-op pension the the spread

should consistent. pretty it be So,

David Vernon

clarifications. Okay, for thank you the very much

Jill Greer

wrap up the over it to of Walker. going That's analyst call. Ned portion the hand to I'll

Ned Walker

day, Jill. very Hey, Okay. much, thanks everyone. Good

ahead we'll should review you ahead asking ask be begin Q&A ask the That follow-up. one and question, they We if if Augusta, could with and able brief process everyone this and the could will go Media question begin. a to at the like time. for to almost way, go we I'd accommodate everyone,

Operator

a portion the go Andrew of to Instructions] question-and-answer it media Street with Thank now first you. Tangel is will Journal. the The Wall session. moment. just We'll We for pause Again, [Operator

Andrew Tangel

customs, and Delta, terms the in at much Hi, of can to delayed, on any that stoppages, in forth? kind financial as way you a cost material that measure of about missing lines, give shorting have in having is what able of are rebooking impact if idea of so and seeing and way us connections been there you're passengers shutdown missing there. how flights, maybe long you getting Wondering and a some

Ed Bastian

to a at typically them lines, are They but destinations having by getting impacted so not the our Andrew, run, mentioned with help running absence that are an the the they to them today forward. time, isolated airports The rate. job we compares this cues I meaningful good not issue re-accommodating to X% a had the TSA yesterday are in and their a operations to doing great it's that unscheduled that earlier and some is schedule, impact. moving We're on published is manner. it's rate on customers system-wide TSA in team delayed we lines, longer are of a seeing X% Ed. of all, working extent

Andrew Tangel

as just And a follow-up on AXXX. the

wanted will your weeks? table on the million you leaving is for a you be in much to shutdown delayed $XX government that? as the weeks is the mentioned that Is workers. there quantify way and from But how just remarks causing You launch know could

Ed Bastian

are short probably We outcome. that anticipating the answer. not That's

any not the leaving table. are We money on

canceling to flights. are be We routes going or not

that We delay introduction specific just will aircraft type. the of

Andrew Tangel

Thanks.

Operator

We Schlangenstein Bloomberg to with will next News. go Mary

Mary Schlangenstein

you. Thank

You one talked then the extend on you've a the on you the bit it and rebounded then? earlier the Can the since in Year in one-week was corporate of did terms the call general about week? little just that the New rebounded. and Or, just that Christmas how more right and bookings into travel start in that before dip talk

Paul Jacobson

lull. between to wasn't It I And think an and the corporate. was it Giving it was really long period specific really board across just Christmas. the Thanks

you holidays. first the creates years once seven know, year on the day occurs very longest every the is this November in possible the between and of where a As Thursday period

industry I you advantage think not in of lot a that long retail. is seeing are airlines people about period where for this, only talk probably not our or

to again year will a expecting the it recur. online next trends after closer. all and right go holidays. it move And that lot did moves are not And the So, yet, we

Ed Bastian

in Mary, Ed, we is record just time we to terms And all of a this Christmas, great volume carry. that had affirm,

us. little but a holiday for pricing anticipated, than Christmas season So, strong just was on it very it It softer very wasn't a a lull. was the and was we impact

Mary Schlangenstein

and planes other or XXXs if all so, how being that And at just other And could Were if fleet then many? I entry, Great. are were in types related into there? others the seven that that. there include question AXXX does the the on is ask AXXXs, some delayed

Paul Jacobson

going earlier, could the not as those Airbus are XXXneo yes, but mentioned the all details. We Gil to primarily impacted be get It's here. in also XXX,

Mary Schlangenstein

Great. Thank you.

Operator

next with CNBC. We go Josephs Leslie to will

Leslie Josephs

month then to January? you clarify. my what lost can just $XX mean the a I and It's I And you or not internet, shutdown, route. do? in question, mentioned just new revenue you XXXneo else can -- on launch million wanted also the

what So can do FAA not furloughed? you with

Paul Jacobson

that's any The be, January. significant operational we're aircraft magnitude not our And for is is what On number, and don't but we those to us challenges. where seeing it that's continue, was seeing if is and new we know the of to. think in concerns are of are in Obviously revenue estimate, we could order the introduction what pipes impacts $XX XXXneo. million of limited XXX Airbus primarily month the

Leslie Josephs

issue Is the of on there on especially the or mechanics business? with some hiring aspects TechOps with any hiring any furloughed, FAA

Paul Jacobson

change. bit Certainly, be seeing it's on-boarding in the a not is We're quickly. space. little any that relatively again, hires new delayed any something But going meaningful we moving that for hopefully are to through

making We producers. any changes are our not in

Leslie Josephs

you. thank Okay,

Operator

with Rucinski Reuters. We'll go next to Tracy

Tracy Rucinski

questions have already but my question. just Hi, shutdown-related more answered, one been

You on impacts this travel has be bookings, passengers that haven't but month the you been attributed can any rise said to plans seen any canceling that in shutdown?

Paul Jacobson

inclusive that. all month $XX seeing The million above is those of for gave estimate not we of all factors. the January the We're --

Tracy Rucinski

just that's Oh, contractors? government not

Paul Jacobson

are It's best that that; government see contractors tell. and we related any we the that can knock-out effects can to that

Tracy Rucinski

Okay, thanks.

Operator

Insider. Business with Benjamin Zhang Next we will from hear

Benjamin Zhang

quick a I revenues non-ticket in had XX% question gentlemen. just the about from -- products morning, Good premium sources. coming

a in You guys do expect space? growth for that mentioned there double-digit that or sorry XXXX? What to XX% foresee you increase that. is at you continue Do

Glen Hauenstein

grow and to than continue grow we'll fare premium that the expect more we Yes, products services we in base products.

side. total our growing would year higher to you that we significantly So, if premium think about of indicate next growth X% on product that the are X%

to have close the past few as to in XX% that XX% we years. probably So,

Benjamin Zhang

Great, thank you.

Ned Walker

guess we time have that Okay, I one more question. for

Operator

Argus Elliott come Media. with you. Thank Blackburn will from That

Elliott Blackburn

for morning. Good me. time for making Thanks

year options a You refinery. partnership guys last at late had process exploring the a

looking other you bringing if more performance? or and maybe logistics on curious and in refinery crude what curious update continues, to to if Just you Macon can making [ph] that, give also if is Delta an that the any just improve from us broadly non-maintenance it at investments determined

Ed Bastian

Good morning.

discussions is the have on articulated. with some update There continued We interest that strategy and have as having we received process broadly with and parties. no

we We those are the refinery on a are the the and right discussions value be focused and for strategic quite the ways every can just six refinery to years. of through looking enhance the refinery now, complicated, well. is running We to running out turnaround investment but we partnership, done And value Delta that as a as is major came of and operating to efficiently five can.

the So, needed performance. enhancing terms nothing of in

Elliott Blackburn

Okay.

anything to on So, access to right like You you don't satisfied feel crude have need you the build are with that? to now? that you

Ed Bastian

Absolutely.

a take of we wide variety So, crude.

to internationally, and to advantage Sometimes logistics domestically we themselves. able and present we opportunities have those as be take that swing some the of

Elliott Blackburn

very All right, much. thanks

Ned Walker

XXXX Ed, does quarter Thanks Gil. earnings And full-year December Okay. Glen, that our call. and conclude Paul, and

We in will March back we here Have our April everyone. XXXX a quarter earnings. report day when again good

Operator

conference. your Thank participation today's for concludes That you today.

Delta Air Lines (DAL) 15 Jan 192018 Q4 Earnings call transcript