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Delta Reports Q2 2012 Results  
User currently offlinepanamair From United States of America, joined Oct 2001, 4875 posts, RR: 25
Posted (2 years 3 days 18 hours ago) and read 9653 times:
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http://news.delta.com/index.php?s=43&item=1673

Net Income (excluding specials): $586 million (+6% margin)
Net Income (GAAP): -$168 million (Net Loss)* (-1.8% margin)

*due to mark-to-market adjustment on fuel hedge contracts settling in the future of $561m, and special restructuring items of $193m

Operating Income (excluding specials) - difficult to fully calculate due to MTM fuel hedge losses being baked in - but operating margin (excluding specials) comes out to be about +9%.
Operating Income (including specials); $134 million (+1.4% margin)

Total revenue: $9.7 billion (up 6%)
PRASM up 8.5%


Profit Sharing: $135 million

Expect operating margin (excluding special items) of 10 to 12% for Q3

22 replies: All unread, jump to last
 
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 1, posted (2 years 3 days 17 hours ago) and read 9455 times:

Quote:
•$171 million in severance and related costs associated with voluntary early out programs



Also played a role in the one-time loss. A solid chunk of the employees that took the buy-out (about 2,000) will be retiring in about 20 days. The rest will occur through the rest of 2012 and early 2013 depending on their position within the company.

-Very solid numbers and very impressed with the continued rise in PRASM despite flying being down almost 2% compared to last year.

-Non fuel CASM however continues to creep up. Hopefully it will stabilize with the help of MTC cost reductions when the 739s and 717s enter the fleet with the exit of the older 757s/763s/320s.

-Still no word on Comair/DCI. Word was that something was to be announced by the end of the month. Maybe they'll talk about the plan for Pinnacle and others in the conference call at 10.

[Edited 2012-07-25 06:27:44]


What gets measured gets done.
User currently offlineNWAESC From United States of America, joined Aug 2007, 3381 posts, RR: 9
Reply 2, posted (2 years 3 days 16 hours ago) and read 9230 times:

Quoting FlyASAGuy2005 (Reply 1):
Also played a role in the one-time loss. A solid chunk of the employees that took the buy-out (about 2,000) will be retiring in about 20 days. The rest will occur through the rest of 2012 and early 2013 depending on their position within the company.

I was surprised (or had forgotten?) that they took an $80m hit for the same in the June '11 quarter...

Quoting FlyASAGuy2005 (Reply 1):
Still no word on Comair/DCI.

I was kinda waiting on that myself...



"Nothing ever happens here, " I said. "I just wait."
User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9289 posts, RR: 14
Reply 3, posted (2 years 3 days 16 hours ago) and read 9083 times:

Quoting FlyASAGuy2005 (Reply 1):

-Non fuel CASM however continues to creep up. Hopefully it will stabilize with the help of MTC cost reductions when the 739s and 717s enter the fleet with the exit of the older 757s/763s/320s.

and I have a feeling they will end up doing another early out, along with a few large hiring periods once 717s start rolling in.

One other thing, I have to wonder if Delta is going to shift its focus on the domestic fleet(after of course the bulk of the international fleet), as it looks like both AA and DL will end up with better domestic hard products in the coming year. If they do this will keep CASM a big high due to aircraft mods.

they just said MTC cost *should be* ~ flat YOY for the july quarter.

[Edited 2012-07-25 07:24:53]


yep.
User currently offlinestlgph From United States of America, joined Oct 2004, 9303 posts, RR: 25
Reply 4, posted (2 years 3 days 16 hours ago) and read 8972 times:

Listening to the conference call now, a few notes --

Refinery will have third quarter loss, will be profitable in fourth quarter - will start making fuel in September or October.

Delta says corporate revenue rose 14% year over year in 2nd quarter

Sees July unit revenue up 4 to 5%

Corporate customers see same or increased spending.

Will cut 50 seat planes to less than 125 over next 2+ years.

Will cut capacity as required.

Sees 10-12% operating margin in September.



Eternal darkness we all should dread. It's hard to party when you're dead.
User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9289 posts, RR: 14
Reply 5, posted (2 years 3 days 16 hours ago) and read 8917 times:

Quoting stlgph (Reply 4):
Will cut capacity as required.

They have also said, not on this call, but that they may/can flex up if needed with the 739s. Some 320s/757s that are on the list to go can get one more HMV and come back for a few more years. The first batch of 757s are gone for sure though. Sadly they have gotten the last PSV and will hit VCV very close to cycling out.

Quoting stlgph (Reply 4):
Sees July unit revenue up 4 to 5%

also said they took a hit with the 4th being on a weds.



and there it is for the first time today. "we don't comment on that but we will continue to control our destiny and consolidation is good". Why do they even ask anymore?



yep.
User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9289 posts, RR: 14
Reply 6, posted (2 years 3 days 16 hours ago) and read 8853 times:

Wow that was the most monotone lady i have ever heard in my life.

Richard did say they have a "confident path" to getting to 125 50 seaters..... regardless of what others/operators are saying.

and he said(when someone asked the same thing....which is so friggin annoying)......someone just did it AGAIN. Anyways, he said the "WILL" get to 125 50 seaters....like it or not.

Comair---- HA! that was such a written statement but pretty much, we are looking at it. Economic changes yada yada. Pretty much nothing. (but it was very clear Anderson had a pre-written statement about it.)

[Edited 2012-07-25 07:58:02]


yep.
User currently offlineFI642 From Monaco, joined Mar 2005, 1079 posts, RR: 2
Reply 7, posted (2 years 3 days 15 hours ago) and read 8641 times:

Once they get those 717's online, they'll make money hand over fist!


737MAX, Cool Planes for the Worlds Coolest Airline.
User currently offlinemikey72 From United Kingdom, joined Oct 2009, 1780 posts, RR: 2
Reply 8, posted (2 years 3 days 15 hours ago) and read 8548 times:

"Moving forward, we expect to have strong profitability in the September quarter with a 10 - 12% operating margin as we continue to reap the benefits of investments we've made in our operation and customer experience.

There you are you see....a 10% operating margin is not so beyond the realms of reality is it !!

 

Well Done Delta !!!



Flying is like sex - I've never had all I wanted but occasionally I've had all I can stand.
User currently offlineburnsie28 From United States of America, joined Aug 2004, 7531 posts, RR: 8
Reply 9, posted (2 years 3 days 15 hours ago) and read 8420 times:

Quoting FlyASAGuy2005 (Reply 1):
-Non fuel CASM however continues to creep up. Hopefully it will stabilize with the help of MTC cost reductions when the 739s and 717s enter the fleet with the exit of the older 757s/763s/320s.

Everyone is talking about the 320's yet they are still younger than the M88s



"Some People Just Know How To Fly"- Best slogan ever, RIP NW 1926-2009
User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9289 posts, RR: 14
Reply 10, posted (2 years 3 days 14 hours ago) and read 8270 times:

Quoting burnsie28 (Reply 9):
Everyone is talking about the 320's yet they are still younger than the M88s

And have something like 20K less cycle cap. Its just as simple as the 320s, like some 57s, are about to start hitting cycle limits. The newer 320s aren't going anywhere.

and the 88s, like the DC9 are tanks that can fly for a very, very long time. (but to be clear, its nothing like the 9. I think the 88 is 60-70K cycles and the 9 is 120K cycles.....early A320s are in the 30-40K ball park)


Oh and its not "everybody" Its Delta Air Lines. go and find a 737-900ER order PR. 767-300s, 757-200s and A320s.



yep.
User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 11, posted (2 years 3 days 12 hours ago) and read 7762 times:

Quoting burnsie28 (Reply 9):
Everyone is talking about the 320's yet they are still younger than the M88s



Everyone including DL. In every single press release that has anything to do with the 739s, they mention the 757s, 767s, and 320s...

I'm sorry that you don't like it but i'm not making it up. FWIW, I have nothing against the Airbus fleet...



What gets measured gets done.
User currently offlinebobnwa From United States of America, joined Dec 2000, 6449 posts, RR: 9
Reply 12, posted (2 years 3 days 12 hours ago) and read 7622 times:

Quoting DeltaL1011man (Reply 6):
Comair---- HA! that was such a written statement but pretty much, we are looking at it. Economic changes yada yada. Pretty much nothing. (but it was very clear Anderson had a pre-written statement about it.)

Wouldn't you have a prepared statement for any question you were likely to get? That would appear to be the smart thing to do.


User currently offlineDeltaL1011man From United States of America, joined Sep 2005, 9289 posts, RR: 14
Reply 13, posted (2 years 3 days 12 hours ago) and read 7566 times:

Quoting FlyASAGuy2005 (Reply 11):

Everyone including DL. In every single press release that has anything to do with the 739s, they mention the 757s, 767s, and 320s...

I'll help.

"As a result of maintenance efficiencies and a 15 to 20 percent improvement in fuel consumption per seat, the Boeing 737-900ER will have lower unit costs than the older technology Boeing 757 and 767 and Airbus A320 aircraft that it will replace."

http://news.delta.com/index.php?s=43&item=1428


PS, check your PM ASA.



yep.
User currently offlinexdlx From United States of America, joined Aug 2008, 631 posts, RR: 1
Reply 14, posted (2 years 3 days 11 hours ago) and read 7388 times:

Quoting burnsie28 (Reply 9):

Sure, if you did not learn anything about the Douglas product, the last A320 crew to go to VCV will return in a MD90 back home..... It is French remember?


User currently offlineNWAROOSTER From United States of America, joined Feb 2005, 1066 posts, RR: 3
Reply 15, posted (2 years 3 days 11 hours ago) and read 7332 times:
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Quoting DeltaL1011man (Reply 10):
and the 88s, like the DC9 are tanks that can fly for a very, very long time. (but to be clear, its nothing like the 9. I think the 88 is 60-70K cycles and the 9 is 120K cycles.....early A320s are in the 30-40K ball park)

When Northwest flew the DC-9s, they had a 100,00 cycle limit or the next immediate check after. There was an aft pressure bulkhead mod that was required to continue flying the aircraft. Few, if any, had the the mod done.
Unless Douglas modified the MD-90 and the MD-95 (717) during assembly, these aircraft may have the same restriction.   


User currently offlinecol From Malaysia, joined Nov 2003, 2093 posts, RR: 22
Reply 16, posted (2 years 3 days 9 hours ago) and read 6408 times:

Quoting xdlx (Reply 14):
It is French remember?

European, Chinese and coming to a State near you. 


User currently offlineMHTripple7 From United States of America, joined Feb 2008, 1105 posts, RR: 8
Reply 17, posted (2 years 2 days 17 hours ago) and read 3780 times:

Truthfully I don't think this is a great quarter for DL.... Arch rivals UA and US are reporting net incomes of $339 million and $306 million respectively, including those "special items".

I know A.net in particular likes to say "those special items don't count, DL made a profit!", but in my opinion a cost is a cost even if it's "special". Just because they messed up their fuel hedges and are paying a price for that doesn't mean it should be ignored!

Hoping to see better results next quarter!


User currently offlinepanamair From United States of America, joined Oct 2001, 4875 posts, RR: 25
Reply 18, posted (2 years 2 days 12 hours ago) and read 3429 times:
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Quoting MHTripple7 (Reply 17):
Truthfully I don't think this is a great quarter for DL.... Arch rivals UA and US are reporting net incomes of $339 million and $306 million respectively, including those "special items".

In this case, $561m of Delta's loss is entirely an accounting/paper loss - these are the mark-to-market (MTM) losses for still-open fuel hedge contracts that settle in future periods. In other words, these are UNrealized fuel hedge losses, so if fuel prices go back up, MTM accounting would mean Delta will report either a realized (depending on when these settle) or unrealized profit in the next quarter, etc.

If I'm not mistaken, and an accountant can correct me, Delta has chosen not to designate these fuel hedges as such, which would have allowed it to keep these on the balance sheet instead of on the income statement. In that case, these hedging gains/losses would only be moved from the balance sheet to the income statement once they settle. It is entirely conceivable that UAL, which also engages in hedging (and would have been subjected to the same negative effect on hedges when oil prices went down in Q2), designates its hedges as fuel hedges and holds the unsettled ones on the balance sheet instead.


User currently offlineDelimit From United States of America, joined Jan 2009, 1504 posts, RR: 2
Reply 19, posted (2 years 2 days 9 hours ago) and read 3211 times:

Another fantastic quarter. Kudos to all of DL.

Really impressed with the discipline being shown. I think DL has the best management team in the business.


User currently offlineFlyASAGuy2005 From United States of America, joined Sep 2007, 7004 posts, RR: 11
Reply 20, posted (2 years 2 days 5 hours ago) and read 2987 times:

Quoting DeltaL1011man (Reply 6):
Comair---- HA! that was such a written statement but pretty much, we are looking at it. Economic changes yada yada. Pretty much nothing. (but it was very clear Anderson had a pre-written statement about it.)
Quoting bobnwa (Reply 12):
Wouldn't you have a prepared statement for any question you were likely to get? That would appear to be the smart thing to do.

Press conference/release tomorrow AM...



What gets measured gets done.
User currently offlineairtechy From United States of America, joined Dec 2006, 489 posts, RR: 0
Reply 21, posted (2 years 2 days 3 hours ago) and read 2835 times:

I notice that in a two and a half years Delta has reduced their net debt from 17 to 12.1 billion. That can only be good.

Jim


User currently offlineTeamInTheSky From United States of America, joined Apr 2011, 534 posts, RR: 0
Reply 22, posted (2 years 1 day 23 hours ago) and read 2697 times:

Quoting panamair (Reply 18):
If I'm not mistaken, and an accountant can correct me, Delta has chosen not to designate these fuel hedges as such, which would have allowed it to keep these on the balance sheet instead of on the income statement. In that case, these hedging gains/losses would only be moved from the balance sheet to the income statement once they settle. It is entirely conceivable that UAL, which also engages in hedging (and would have been subjected to the same negative effect on hedges when oil prices went down in Q2), designates its hedges as fuel hedges and holds the unsettled ones on the balance sheet instead.

Given that Delta most likely has their hedging operation in a subsidiary, it truly depends on what elections that subsidiary has made. It's less of a current choice but one made when the sub made its intial election or became a "trader" versus an "investor" in hedgefund accounting terms. As an active "trader," many times MTM gains and losses have to be booked. I am no expert in the rules surrounded fuel swaps specifically but I would suspect they are not too different than other swaps I am more accustom to seeing.

By in large though, given my understanding, you are spot on!
Quoting airtechy (Reply 21):
I notice that in a two and a half years Delta has reduced their net debt from 17 to 12.1 billion. That can only be good.

Jim

With airport, fleet, and customer experience upgrades all still ongoing, that five billion cut is truly impressive. If DL can get as low as 5 to 8 billion in the next couple of years, their flexibility will be hard to match.



Since 2010: DL, KL, AF, WX, IG, FR , FL, U2, AK, BA, OK, UX, VS, VN, K6
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