Delta Air Lines CEO Richard Anderson, at the Delta Investor Day 2012, stated (12-Dec-2012) the carrier is anticipating a fourth consecutive year of profitability in 2013. He also forecast "solid returns on invested capital" as the carrier focuses on solid free cash flow generation and achievement of its USD10 billion debt target. The carrier has reduced its adjusted net debt from USD17 billion in 2009 to USD11.8 billion at present. He added, "the next step on the path forward incorporates returning cash to shareholders". The carrier also expects to announce its capital deployment strategy before its AGM in Jun-2013 with a programme commencing in Jan-2014. [more - original PR]
Delta Air Lines plans to return cash to shareholders
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Aeromexico and Delta JV: major uncertainty reigns after the DoT hits hard with slot divestitures
A transborder joint venture between SkyTeam partners Aeromexico and Delta is hanging in the balance now that the US DoT has required slot divestitures and other stipulations in order for the airlines to move forward with their proposed business agreement. Not surprisingly, Aeromexico and Delta believe limitations proposed by US regulators would diminish the economic benefits of the joint venture, and are warning they are reconsidering deepening their business ties.
Numerous airlines expressed concerns about Aeromexico and Delta’s concentration of slots at Mexico City Juarez, and the DoT responded by requiring slot divestitures at the airport along with the relinquishment of slots at New York JFK. The airlines have countered that the DoT’s analysis is flawed, and that a smaller number of slot divestitures at Juarez required by Mexico’s government should allay any concerns expressed by competitors. Aeromexico and Delta also argue another stipulation imposed by US regulators – limiting the joint venture to a five-year term – would create too much uncertainty for the viability of the business venture.
Delta’s plans to take its stake in Aeromexico up to 49% was contingent on the JV proposal succeeding. But with the stipulations imposed by DoT in order for the partners to establish their joint venture a dark cloud of uncertainty is hovering over Aeromexico’s future ownership structure.
United Airlines Part 2: Sustaining balance sheet strength while declaring ambitious margin targets
One area where United Airlines has made important strides during the last few years is in overhauling its balance sheet. Its efforts have gained some recognition from credit agencies for its progress in paring down debt and improving leverage ratios; but similarly to its rival American Airlines – attaining an investment-grade credit rating is not a huge priority for United. The airline believes it can achieve some benefits that investment-grade companies enjoy with the current state of its balance sheet.
In order to sustain the progress it has made in balance sheet repair United plans to amend its aircraft order book to slash capex commitments during the next couple of years, including the deferral of 61 Boeing narrowbodies. United is hinting that other fleet changes could be under consideration, including deals similar to the agreement it forged during 2015 to lease used Airbus A319s.
This is Part 2 in a two-part series reviewing United’s financial and revenue-generating opportunities.