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DL747400
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Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 4:07 am

DL's Q1 2019 earnings will be announced hours from now. The following are various DL earnings previews. The official earnings press release will be added once it is live.

Will DL make any unexpected fleet or destination announcements tomorrow?

Will there be any new developments in the search for a partner in the refinery operation?


Delta Air Lines Earnings Preview: Can the World's Most Valuable Airline Keep Climbing?
https://www.fool.com/investing/2019/04/ ... ds-mo.aspx

Delta Air Lines Reports Earnings Tomorrow. Here’s What to Expect
https://www.barrons.com/articles/delta- ... 1554751225

Delta Stock is Gaining Altitude Heading Into Earnings
https://www.nasdaq.com/article/delta-st ... -cm1126235

Earnings preview: Softening fuel cost, high demand to lift Delta Air Lines in Q1
https://news.alphastreet.com/delta-air- ... -earnings/
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strangeplanes
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 4:08 am

Why would they announce new routes or aircraft tomorrow?
 
jumbojet
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 5:00 am

strangeplanes wrote:
Why would they announce new routes or aircraft tomorrow?


Do you have any idea what one particular airline is supposed to announce tomorrow?
 
Ishrion
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 5:16 am

They're gonna announce ATL-BOM :rotfl:
 
jumbojet
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 5:32 am

Ishrion wrote:
They're gonna announce ATL-BOM :rotfl:


You clearly don't understand the politics of the whole BOM situation, makes you a clear, undebatable amateur.
 
questions
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 6:12 am

strangeplanes wrote:
Why would they announce new routes or aircraft tomorrow?


They’re not. That’s crazy talk. However, they are going to announce a refresh to the livery.
 
jumbojet
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 11:21 am

here it is

https://news.delta.com/delta-air-lines- ... ter-profit



March Quarter Financial Highlights
• Adjusted earnings per share were $0.96, reflecting a 28 percent increase year over year on solid core performance and benefit from the early renewal of the American Express agreement.
• Total adjusted revenue, which excludes refinery sales, grew 7.5 percent to $10.4 billion with 55 percent from premium products and non-ticket sources.
• Total unit revenue, adjusted, increased 2.4 percent driven by double-digit growth in domestic corporate revenue and an approximate one point benefit from the American Express agreement.
• Non-fuel unit cost (CASM-Ex) decreased 0.2 percent compared to the prior year period, marking the third consecutive quarter of strong cost performance.
• Generated $2.0 billion of operating cash flow and $760 million of free cash flow after investing $1.3 billion into the business, primarily for aircraft purchases and modifications.
• Returned $1.6 billion to shareholders, comprised of $1.3 billion of share repurchases and $233 million in dividends.


Also mentioned further down in the news bulletin,

The March quarter already brought in 220 Million dollars towards next years profit sharing.


Operational Reliability (most likely will be #1 for the quarter-again-in operational reliability)

• Achieved the highest network system completion factor for the first quarter since 2012, continuing to raise the bar on operational excellence and delivering consistency and reliability to our customers.
• Delivered 69 days of zero mainline cancellations, 28 days of zero system cancellations and achieved mainline on-time performance (A0) of 72.0% for the March quarter.

Investment Grade Balance Sheet
• Completed $1.3 billion in share repurchases, opportunistically repurchasing 26 million shares and reaffirming Delta's commitment to consistent shareholder returns.
• Lowered Delta’s borrowing costs while keeping debt balanced by securing a blended 3.2% fixed rate on a $500 million Enhanced Equipment Trust Certificate (EETC) secured by 14 aircraft.
Last edited by jumbojet on Wed Apr 10, 2019 11:32 am, edited 1 time in total.
 
MIflyer12
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 11:30 am

DL borrowed $1 billion short term to fund a $1.3 Billion stock buy-back, but, unlike last year, did not make a supplemental payment into the pension fund. 1Q2018 it was a pension investment of $500 million.
 
micstatic
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 12:42 pm

Are they really getting a new livery?
S340,DH8,AT7,CR2/7,E135/45/170/190,319,320,717,732,733,734,735,737,738,744,752,762,763,764,772,M80,M90
 
tphuang
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 1:08 pm

Definitely a good quarter.

The unit revenue looks to have done pretty well given the tough environment in Q1, although it seemed to have benefited 1% from new AMEX agreement. Q2 RASM numbers (1.5 to 3.5%) don't seem to be as good given easter is in Q2 this year. Pretty good cost control.

interesting data on unit revenue breakdown
domestic up 0.9%
TATL -2.6%
Latam 2.4%
TPAC -2.8%

Who would've guessed Latam would be the star performer.

Looks like domestic fare environment is pretty weak overall.
 
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DL747400
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 1:09 pm

Some items which caught my attention in this morning's Squawk Box interview with Ed Bastian:

- Strong brand preference among corporate travelers and is only growing stronger
- Customer satisfaction and NPS scores hitting new highs
- Corporate travel demand up ~10% in Q1
- While Delta does not operate the 737 MAX, that is "not something that we want to compete around."
- Unit costs down slightly YoY
- Best winter operations performance in the company's history
- Still hoping to be a launch customer for the NMA / 797
- DL is "thrilled with the new extended relationship with American Express"
- AMEX is DL's "most important commercial partner"
- DL / AMEX relationship currently brings DL ~$3.5 Billion in annual revenue, an amount that will double to $7 Billion annually by 2023
From First to Worst: The history of Airliners.net.

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DL747400
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 1:16 pm

tphuang wrote:
Looks like domestic fare environment is pretty weak overall.


Any yet it remains positive. The weakness is not unexpected when you consider that Q1 has traditionally always been the weakest quarter of the year from an earnings perspective. In addition, USA Domestic is a mature market, but remains hyper-competitive on price at the lower price point in many markets.
From First to Worst: The history of Airliners.net.

All posts reflect my opinions, not those of my employer or any other company.
 
flyboy80
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 1:52 pm

They need to separate themselves further from united and American. While DL is “favored” by many, they are attracting revenue premiums based on customer focus. The CS/A220 shows this focus, as does 777 reconfigurations and keeping 9 across in coach. It’s time for DL to ‘slightly’ de-densify their 739, 752, A321. Maybe remove 6 seats from each in coach. Add an additional comfort plus row and additional ‘inches’ to F and C+ and let the media market it with everything else.
 
jbs2886
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 1:57 pm

flyboy80 wrote:
It’s time for DL to ‘slightly’ de-densify their 739, 752, A321. Maybe remove 6 seats from each in coach. Add an additional comfort plus row and additional ‘inches’ to F and C+ and let the media market it with everything else.


...you do realize removing 1 row in coach, but adding a comfort + row and "inches" in F and C+ would be densifying coach dramatically?
 
SteelChair
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 2:23 pm

tphuang wrote:
Definitely a good quarter.

The unit revenue looks to have done pretty well given the tough environment in Q1, although it seemed to have benefited 1% from new AMEX agreement. Q2 RASM numbers (1.5 to 3.5%) don't seem to be as good given easter is in Q2 this year. Pretty good cost control.

interesting data on unit revenue breakdown
domestic up 0.9%
TATL -2.6%
Latam 2.4%
TPAC -2.8%

Who would've guessed Latam would be the star performer.

Looks like domestic fare environment is pretty weak overall.


WRT to Latam, true to a point. What percentage of the overall business does Latam make up. My guess is less than 5% of total revenue. So really, the 2.4% pf less than 5% is almost a roundeing error isn't it?
 
cledaybuck
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 2:46 pm

tphuang wrote:
Looks like domestic fare environment is pretty weak overall.

Doesn't look weak to me when considering the capacity growth. Not to mention, DL is the most heavily domestic airline of the US three and has had the best financial results. I think domestic has been a strong point for several years now (hence the 5.9% capacity growth) and is part of the reason DL outperforms its peers.
As we celebrate mediocrity, all the boys upstairs want to see, how much you'll pay for what you used to get for free.
 
tphuang
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 3:02 pm

cledaybuck wrote:
tphuang wrote:
Looks like domestic fare environment is pretty weak overall.

Doesn't look weak to me when considering the capacity growth. Not to mention, DL is the most heavily domestic airline of the US three and has had the best financial results. I think domestic has been a strong point for several years now (hence the 5.9% capacity growth) and is part of the reason DL outperforms its peers.

my point is that given DL's strength across geographic areas domestically, it's a pretty good indication of the domestic yield growth across the entire industry for this quarter compared to last year. sub 1% growth is indication of weak domestic fare environment, which we have seen with WN's recent investor updates also.
 
x1234
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 3:32 pm

How is the DL/KE joint venture working out? Is it a revenue sharing JL a la AFKL/ UA+NH in *A or AA/JL in OW!?
 
klm617
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 3:38 pm

It's interesting that that TATL is down as well as domestic being flat so that build up of BOS is not helping to add to the bottom line or so it would seem. Perhaps more focus should be put on their fortress hubs where they have pricing power and add capacity there.
the truth does matter, guys. too bad it's often quite subjective. the truth is beyond the mere facts and figures. it's beyond good and bad, right and wrong...
 
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Midwestindy
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 3:42 pm

klm617 wrote:
Perhaps more focus should be put on their fortress hubs where they have pricing power and add capacity there.


Any particular hub you have in mind? :spin:
Status for 2019/2020: AAdvantage Platinum, Delta Gold, Southwest A-List
 
Elementalism
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 4:03 pm

micstatic wrote:
Are they really getting a new livery?


Sounds like they should paint their planes green.
 
winginit
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 4:19 pm

x1234 wrote:
How is the DL/KE joint venture working out? Is it a revenue sharing JL a la AFKL/ UA+NH in *A or AA/JL in OW!?


Impossible to deduce the size or flow of the back-end transfer payment between the two carriers and who is really getting the bottom line benefit, but it is indeed a profit sharing joint venture not dissimilar from DL's JVs with AF, KL, VS, AM. It's worth pointing out that's different from, for example, AA's joint ventures with BA, IB, JL, which only share revenue as opposed to full profits.
 
dc10lover
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 5:18 pm

flyboy80 wrote:
They need to separate themselves further from united and American. While DL is “favored” by many, they are attracting revenue premiums based on customer focus. The CS/A220 shows this focus, as does 777 reconfigurations and keepin 9 across in coach. It’s time for DL to ‘slightly’ de-densify their 739, 752, A321. Maybe remove 6 seats from each in coach. Add an additional comfort plus row and additional ‘inches’ to F and C+ and let the media market it with everything else.

I was watching a YouTube "AA - vs - DL - vs - UA" video and in the comments DL was favored.
Why endure the nightmare and congestion of LAX when BUR, LGB, ONT & SNA is so much easier to fly in and out of. Same with OAK & SJC when it comes to SFO.
 
baje427
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 5:33 pm

It also shows that an airline can make great profits whilst not skimping on amenities for it's clients.
 
panamair
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 6:13 pm

Some points from the earnings conference call today:

- best March quarter operationally with 99.06% completion
- strong quarter for ancillary revenues (loyalty program and MRO); MRO revenues up 40% in Q1 but expected to moderate in subsequent quarters
- Corporate revenues up 8% in Q1; bullish trend for Q2
- Mileage redemptions grew 12%; 4,000 customers upgrading with miles daily
- Domestic: strong business/corporate volumes and fares, choppy leisure trends but improved by end of quarter; will be at 110% premium to the industry
- Atlantic unit revenues down due to Easter period shift and currency headwinds; point-of-sale Europe leisure demand lower, corporate and premium revenues up year-over-year
- Pacific unit revenues down due to 9% increase in stage length and 1% currency headwinds; Korea performed best with 2% unit rev increase; China revenues up 25% on 30% capacity increase
- Latin unit revenues up due to improved demand and yield trends in Caribbean and Mexico
- Q2 outlook: Atlantic should shift to positive unit rev growth as US point of sale grows stronger heading into summer; corporate trends strong; Pacific will still be pressured by stage length and currency; Latin will be best performing (Brazil should finally return to positive unit revenue growth in Q2)
- 40 MD88s to exit fleet this year; will have 28 A220s on property by end of 2019
- A339s will join by summer and improve margins by 5-10% compared to the 763s they will replace
 
777Mech
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 6:20 pm

Midwestindy wrote:
klm617 wrote:
Perhaps more focus should be put on their fortress hubs where they have pricing power and add capacity there.


Any particular hub you have in mind? :spin:


ATL?
 
Prost
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 6:21 pm

So are the A339 5-10% margins, is that per seat or per flight? I get confused with some of the terminology that gets used.
 
MIflyer12
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 6:54 pm

Curious that they think margins will improve in the 339s even with a lot more seats v. 763s. Maybe they think people will be drawn to the improved product. Without before and after PRASM we're not going to know.
 
MIflyer12
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 6:56 pm

klm617 wrote:
It's interesting that that TATL is down as well as domestic being flat so that build up of BOS is not helping to add to the bottom line or so it would seem.


There's far more to TATL than BOS. Count the annual TATL seats (or better, ASMs) out of BOS vs. all other North American TATL gateways. The tail does not wag the dog.
 
Sancho99504
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 7:59 pm

MIflyer12 wrote:
Curious that they think margins will improve in the 339s even with a lot more seats v. 763s. Maybe they think people will be drawn to the improved product. Without before and after PRASM we're not going to know.


Probably from a combination of significant fuel savings, more freight volume, significantly lower maintenance costs and a better premium product to justify charging higher premium fares. I have heard that each A339 will be pretty much paid off at time of delivery. That changes the economics against the 763 they're replacing drastically.
kill 'em all and let God sort 'em out-USMC
 
1989worstyear
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 8:58 pm

Sancho99504 wrote:
MIflyer12 wrote:
Curious that they think margins will improve in the 339s even with a lot more seats v. 763s. Maybe they think people will be drawn to the improved product. Without before and after PRASM we're not going to know.


Probably from a combination of significant fuel savings, more freight volume, significantly lower maintenance costs and a better premium product to justify charging higher premium fares. I have heard that each A339 will be pretty much paid off at time of delivery. That changes the economics against the 763 they're replacing drastically.


Even the A330 CEO was significantly more fuel efficient due to the 1988 Factor.
Stuck at age 15 thanks to the certification date of the A320-200 and my parents' decision to postpone having a kid by 3 years. At least there's Dignitas...
 
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compensateme
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 9:08 pm

Sancho99504 wrote:
MIflyer12 wrote:
Curious that they think margins will improve in the 339s even with a lot more seats v. 763s. Maybe they think people will be drawn to the improved product. Without before and after PRASM we're not going to know.


Probably from a combination of significant fuel savings, more freight volume, significantly lower maintenance costs and a better premium product to justify charging higher premium fares. I have heard that each A339 will be pretty much paid off at time of delivery. That changes the economics against the 763 they're replacing drastically.


Repeated fairly often on a.net but not true. DL isn’t going to pay cash for new aircraft deliveries, especially not with current interest rates. They may retort to some creative financing arrangements, but all new aircraft will undoubtedly be financed.
We don’t care what your next flight is.
 
panamair
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 9:43 pm

MIflyer12 wrote:
Curious that they think margins will improve in the 339s even with a lot more seats v. 763s..


When you actually look at it, it's not as significant a capacity increase as it may first seem, if we look at it by market/cabin segment. For example, most of DL's 763s today are in the 25J+200Y/Y+ configuration. The 339s will be in 29J+28W+224Y/Y+. So comparing Y/Y+ directly, it's an increase of 24 seats (or 12%), which should not be extraordinarily hard to fill. The other increase is coming from the new W cabin with 28 seats: the W (or Premium Select) market segment is technically an entirely new market for DL on these former-763 routes so presumably some portion of that cabin could be filled with a market that does not fly Delta today due to the lack of a true W cabin.
 
winginit
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 9:58 pm

compensateme wrote:
Sancho99504 wrote:
MIflyer12 wrote:
Curious that they think margins will improve in the 339s even with a lot more seats v. 763s. Maybe they think people will be drawn to the improved product. Without before and after PRASM we're not going to know.


Probably from a combination of significant fuel savings, more freight volume, significantly lower maintenance costs and a better premium product to justify charging higher premium fares. I have heard that each A339 will be pretty much paid off at time of delivery. That changes the economics against the 763 they're replacing drastically.


Repeated fairly often on a.net but not true. DL isn’t going to pay cash for new aircraft deliveries, especially not with current interest rates. They may retort to some creative financing arrangements, but all new aircraft will undoubtedly be financed.


Did Paul Jacobson not say outright on the earnings call that some very large percentage of the $2 billion in operating cash flow generated over the quarter was going to aircraft? Maybe I interpreted that incorrectly but it does appear that cash flows, at least to some degree if not a major degree, are being put towards aircraft deliveries.
 
panamair
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 10:17 pm

Prost wrote:
So are the A339 5-10% margins, is that per seat or per flight? I get confused with some of the terminology that gets used.


While he didn't elaborate on the call, there is an Investor Day 2018 slide that showed the benefits of upgauging - in the graphic from 763ER to A339, they seem to indicate that a combination of a 22% savings on fuel burn per seat as well as a 50% increase in premium seating (both Delta One and Premium Select) would contribute to a +5 to +10 points margin impact.
 
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compensateme
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Re: Delta Air Lines Q1 2019 earning thread

Wed Apr 10, 2019 10:26 pm

winginit wrote:
Did Paul Jacobson not say outright on the earnings call that some very large percentage of the $2 billion in operating cash flow generated over the quarter was going to aircraft? Maybe I interpreted that incorrectly but it does appear that cash flows, at least to some degree if not a major degree, are being put towards aircraft deliveries.


I don’t assert that; I asserted that the planes DL’s taking delivery of aren’t “fully paid for” as perpetually repeated on here. This is fairly easy to determine.

During the quarter, DL spent $1.2B on new aircraft deliveries and modifications.

https://ir.delta.com/news/news-details/ ... fault.aspx

In Q1, DL took delivery of: 6 A220, 10 321, 2 359, 12 739, 4 CR9, 1 E75. That’s nearly $4B at 2018 average list pricing. Sure, DL got a hefty discount but toss in the cost of the engines and interior modifications ... as well as conversion of the 777 to new D1, plus other mods... that $1.2B represents a modest down payment (probably close to 20%, and likely necessary to obtain best financing rates). So no, DL is not “fully paying for” its new aircraft upon delivery.
We don’t care what your next flight is.
 
Lootess
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 12:40 am

baje427 wrote:
It also shows that an airline can make great profits whilst not skimping on amenities for it's clients.


Why would they? They are raking in cash. Investing in the customer experience is why they are so far in the lead.

I remember press going nuts when Southwest was coming to ATL and they kept saying how would they compete with no bag fees.

Richard Anderson simply said just get the Gold Delta AMEX and it's not an issue. There is your free bag. He was so good with the media, and of course Delta people.
 
Sancho99504
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 4:22 am

compensateme wrote:
Sancho99504 wrote:
MIflyer12 wrote:
Curious that they think margins will improve in the 339s even with a lot more seats v. 763s. Maybe they think people will be drawn to the improved product. Without before and after PRASM we're not going to know.


Probably from a combination of significant fuel savings, more freight volume, significantly lower maintenance costs and a better premium product to justify charging higher premium fares. I have heard that each A339 will be pretty much paid off at time of delivery. That changes the economics against the 763 they're replacing drastically.


Repeated fairly often on a.net but not true. DL isn’t going to pay cash for new aircraft deliveries, especially not with current interest rates. They may retort to some creative financing arrangements, but all new aircraft will undoubtedly be financed.

Delta is paying less than 50% of list prices for A220, 739, A321CEO and A339. The A350s and A321NEO are just about 50% off list. At time of delivery, they won't have much to pay for each frame, hence my comment of "pretty much".
kill 'em all and let God sort 'em out-USMC
 
Sancho99504
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 4:26 am

compensateme wrote:
winginit wrote:
Did Paul Jacobson not say outright on the earnings call that some very large percentage of the $2 billion in operating cash flow generated over the quarter was going to aircraft? Maybe I interpreted that incorrectly but it does appear that cash flows, at least to some degree if not a major degree, are being put towards aircraft deliveries.


I don’t assert that; I asserted that the planes DL’s taking delivery of aren’t “fully paid for” as perpetually repeated on here. This is fairly easy to determine.

During the quarter, DL spent $1.2B on new aircraft deliveries and modifications.

https://ir.delta.com/news/news-details/ ... fault.aspx

In Q1, DL took delivery of: 6 A220, 10 321, 2 359, 12 739, 4 CR9, 1 E75. That’s nearly $4B at 2018 average list pricing. Sure, DL got a hefty discount but toss in the cost of the engines and interior modifications ... as well as conversion of the 777 to new D1, plus other mods... that $1.2B represents a modest down payment (probably close to 20%, and likely necessary to obtain best financing rates). So no, DL is not “fully paying for” its new aircraft upon delivery.



At less than 50% of list for everything but A350, that $4b at list comes to about $1.9b. All I said was that the A339s will be "pretty much paid for" at time of delivery.
kill 'em all and let God sort 'em out-USMC
 
Sancho99504
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 4:42 am

What irritates me the most is that we have enough revenue generation to become debt free very quickly. I feel that all the "shareholders" must have shareholdings in finances as well. It's insane, even at 1.9% interest, to take on debt when you don't have to.
kill 'em all and let God sort 'em out-USMC
 
questions
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 4:47 am

Is there additional info on the new American Express agreement? Plans for best-in-class value to customers? How Delta plans to double benefits of the agreement to $7B over five year period?


Source: news.delta.com
Delta Air Lines Announces 2019 March Quarter Profit

Customer Experience and Loyalty

• Signed an 11-year renewal with American Express, ensuring that the two companies continue to work together to deliver best-in-class value to customers, while doubling the expected benefits to Delta to nearly $7 billion annually by 2023 from $3.4 billion in 2018.
 
HPAEAA
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 4:51 am

Sancho99504 wrote:
What irritates me the most is that we have enough revenue generation to become debt free very quickly. I feel that all the "shareholders" must have shareholdings in finances as well. It's insane, even at 1.9% interest, to take on debt when you don't have to.

Why does it irritate you? Given the current financial position DL should have very favorable long term rates & terms on the debt which allows them to find other uses for the cash being generated (investments in IT, share buybacks, strategic alliance development, expansion etc). By locking in the terms now it only sets DL up for the next downturn when traffic & revenue decline and enables them to have cash to continue the investment cycle when terms might not be as favorable.
1.4mm and counting...
 
FSDan
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 5:47 am

This quote from the call transcript (Glen Hauenstein speaking) is interesting given the flack DL has been taking on this site lately regarding their position in the Transpacific market:

In the Pacific, currency capacity growth in stage will continue to pressure unit revenues in the June quarter, but we see profitability continuing to improve as we execute on our long-term vision for Asia. Our fleet is becoming more efficient. Our product is improving. We have the right partners and with these building blocks in place, we have returned to growth for the first time in seven years. Performance is on track or exceeding our expectations.
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KMCOFlyer
Posts: 178
Joined: Sat Aug 05, 2017 5:32 am

Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 6:09 am

panamair wrote:
MIflyer12 wrote:
Curious that they think margins will improve in the 339s even with a lot more seats v. 763s..


When you actually look at it, it's not as significant a capacity increase as it may first seem, if we look at it by market/cabin segment. For example, most of DL's 763s today are in the 25J+200Y/Y+ configuration. The 339s will be in 29J+28W+224Y/Y+. So comparing Y/Y+ directly, it's an increase of 24 seats (or 12%), which should not be extraordinarily hard to fill. The other increase is coming from the new W cabin with 28 seats: the W (or Premium Select) market segment is technically an entirely new market for DL on these former-763 routes so presumably some portion of that cabin could be filled with a market that does not fly Delta today due to the lack of a true W cabin.


Most of the SEA-Asia 767 routes that the 339s are replacing are currently using the 36J 76T with only 208 seats, while the 339s have 285 seats and 7 less J seats. That’s a pretty big capacity jump.
 
Atlwarrior
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 6:16 am

I am probably one of the Delta fans on here, but my co-workers told me here flight to Germany two to three weeks ago was on an old airplane that was full. She mention that a lot of things didn’t work, and since the flight was full, she could not switch seats. I hope whichever plane she was on is due to retire or be refreshed. She said the plane back home was very nice. Coach was the class.
 
777Mech
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 8:52 am

Sancho99504 wrote:
What irritates me the most is that we have enough revenue generation to become debt free very quickly. I feel that all the "shareholders" must have shareholdings in finances as well. It's insane, even at 1.9% interest, to take on debt when you don't have to.



The simple fact is, if they had little to zero debt, there would be hostile takeovers. It's one of the main reasons AS hasn't been bought out, they took on the excessive debt in VX.
 
MIflyer12
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 10:42 am

Sancho99504 wrote:
What irritates me the most is that we have enough revenue generation to become debt free very quickly. I feel that all the "shareholders" must have shareholdings in finances as well. It's insane, even at 1.9% interest, to take on debt when you don't have to.


That view is so out of step with U.S. financial engineering of the last 40 years it's hard to know where to begin. (It's like arguing with someone that he ought to give up his iTunes downloads and use 8-track tapes.) To simplify it vastly: anyone should be happy to borrow at 1.9% (and have tax-deductible interest) to make 12-16%.
 
MIflyer12
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 10:52 am

777Mech wrote:
Sancho99504 wrote:
What irritates me the most is that we have enough revenue generation to become debt free very quickly. I feel that all the "shareholders" must have shareholdings in finances as well. It's insane, even at 1.9% interest, to take on debt when you don't have to.



The simple fact is, if they had little to zero debt, there would be hostile takeovers. It's one of the main reasons AS hasn't been bought out, they took on the excessive debt in VX.


I don't think that's a simple fact. The Enterprise Value (debt + market capitalization) of U.S. carriers isn't particularly high. AT&T last year bought Time Warner for $85 Billion. Disney just bought Fox for $71 Billion. Twenty years ago Vodafone bought Mannesmann for $202 Billion. Of the U.S. Three, Delta has the highest market cap but the lowest debt. Enterprise value is about $55 Billion. If you think AA/DL/UA are too big to be acquired you are emphatically wrong.
 
heavymetal
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 12:36 pm

Sancho99504 wrote:
What irritates me the most is that we have enough revenue generation to become debt free very quickly. I feel that all the "shareholders" must have shareholdings in finances as well. It's insane, even at 1.9% interest, to take on debt when you don't have to.


This statement shows a serious lack of basic corporate finance knowledge.
 
deltaguy767
Posts: 669
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Re: Delta Air Lines Q1 2019 earning thread

Thu Apr 11, 2019 2:55 pm

heavymetal wrote:
Sancho99504 wrote:
What irritates me the most is that we have enough revenue generation to become debt free very quickly. I feel that all the "shareholders" must have shareholdings in finances as well. It's insane, even at 1.9% interest, to take on debt when you don't have to.


This statement shows a serious lack of basic corporate finance knowledge.

Perhaps we could use this as an opportunity to provide some learning versus putting people down:

For those who don't quite understand the implication here, a company is financed by a combination of equity (common stock in Delta's case) and debt (bank loans, bonds etc.). Equity is more 'expensive' in terms of the rate of return demanded because it is a riskier investment. The company has no contractual obligation to pay its equity holders in the event of a bankruptcy or failure. This is in contrast to debt wherein the creditor has a claim on the company's assets in order to make them whole, in the event of a default or bankruptcy, and the structure of their investment guarantees them specific payments (interest + principal) over a given period.

In sum, this means that equity is relatively 'more expensive' than debt. Therefore when Delta is considering its total cost of financing, it conducts a weighted average analysis weighing the costs of debt and equity from a relative perspective and finding an optimal value.

There are more complicated factors here which would impact this analysis (tax policy, credit ratings) etc., however, they do not impact the overall takeaways.

lhttps://en.wikipedia.org/wiki/Weighted_average_cost_of_capital - for more detail
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