Delta Air Lines (NYSE: DAL) today reported financial results for the September quarter and provided its outlook for the December quarter.  Highlights of the September quarter, including both GAAP and adjusted metrics, are on page five and incorporated here.

"Thanks to the exceptional work of the entire Delta team, we continue to lead the industry operationally and financially, with a double-digit operating margin and nearly $3 billion of free cash flow generation year-to-date.  In recognition of the outstanding efforts of our employees this year, we have accrued almost $1 billion of profit sharing towards the upcoming February payout," said Ed Bastian, Delta's chief executive officer.

"With an improving industry backdrop and strong demand for travel on Delta, we are positioned to finish the year strong.  We expect our December quarter pre-tax profit to grow 30 percent over last year to $1.4 billion, which would mark one of the most profitable fourth quarters in our history."

September Quarter 2024 GAAP Financial Results

• Operating revenue of $15.7 billion

• Operating income of $1.4 billion with an operating margin of 8.9 percent

• Pre-tax income of $1.6 billion with a pre-tax margin of 10.0 percent

• Earnings per share of $1.97

• Operating cash flow of $1.3 billion

• Payments on debt and finance lease obligations of $263 million

• Total debt and finance lease obligations of $17.7 billion at quarter end

September Quarter 2024 Non-GAAP Financial Results (including the impact of the CrowdStrike-caused outage)

• Operating revenue of $14.6 billion

• Operating income of $1.4 billion with an operating margin of 9.4 percent

• Pre-tax income of $1.3 billion with a pre-tax margin of 8.6 percent

• Earnings per share of $1.50

• Operating cash flow of $1.3 billion

• Free cash flow of $95 million, $2.7 billion year-to-date

• Adjusted debt to EBITDAR of 2.9x

Financial Impact Of The CrowdStrike-Caused Outage

On August 8, Delta disclosed the financial impact of the CrowdStrike-caused outage for the September quarter.  The direct revenue impact of the incident was approximately $380 million, primarily driven by refunding customers for cancelled flights and providing customer compensation in the form of cash and SkyMiles.  The non-fuel expense impact was $170 million, primarily due to customer expense reimbursements and crew-related costs.  Fuel expense was $50 million lower than it would have been as a result of the 7,000 flight cancellations over the five-day period.

Financial Guidance¹

Additional metrics for financial modeling can be found in the Supplemental Information section under Quarterly Results on ir.delta.com.

Revenue Environment and Outlook

"Through the September quarter, unit revenue growth improved sequentially in all geographic entities, reflecting an improved equilibrium between demand and supply as industry growth moderated," said Glen Hauenstein, Delta's president. 

"For the December quarter, we expect the improved trends to continue and bookings for the holiday period are strong.  We anticipate a 1 point impact to total unit revenue from reduced travel demand around the election.  With this, total revenue growth is expected to be up 2 percent to 4 percent compared to prior year on capacity growth of 3 percent to 4 percent.  Industry supply growth continues to rationalize, positioning Delta well in the final quarter of the year and as we move into 2025."

• Unit revenue growth improved sequentially through the September quarter: Delta delivered September quarter revenue of $14.6 billion, including the $380 million impact from the CrowdStrike-caused outage. Adjusted total unit revenue (TRASM) was down 3.6 percent versus 2023, including a 1.1 point impact from the outage. In the month of September, Domestic and Transatlantic unit revenue growth inflected positive.

• Diversified revenue streams driving Delta's differentiation: Delta's diversified revenue base, led primarily by premium and loyalty, made up 57 percent of total revenue in the September quarter. Premium revenue growth continued to outpace main cabin in Domestic and International. Total loyalty revenue grew 6 percent year-over-year driven by award redemptions and growth in co-brand card spend. American Express remuneration was $1.8 billion, 6 percent higher than the September quarter of 2023. Cargo revenue grew 27 percent over prior year on international volume strength.

• International trends positive, led by Transatlantic: International demand remains strong with trends improving through the quarter in Transatlantic and Latin. Transatlantic unit revenues inflected positive in the month of September as Paris demand rebounded following the Olympics. Latin America revenue benefited from the continued maturation of Delta's joint venture with LATAM in South America. Network restoration continues in the Pacific, with double-digit revenue growth driven by travel to South Korea and Japan.

• Corporate sales growth continues: Managed corporate travel sales* were up 7 percent over the September quarter of 2023, with double-digit growth in the tech, media and banking sectors. Recent corporate survey results indicate that 85 percent of companies expect their travel spend to increase in 2025.