Delta Air Lines announces December quarter and full year 2018 profit
- December quarter 2018 GAAP pre-tax income of $1.3 billion, net income of $1.0 billion and earnings per diluted share of $1.49
- December quarter 2018 adjusted pre-tax income of $1.2 billion, adjusted net income of $890 million and adjusted earnings per diluted share of $1.30
- Full year 2018 GAAP pre-tax income of $5.2 billion and earnings per diluted share of $5.67, resulting in $1.3 billion profit sharing for Delta people
- Full year 2018 GAAP operating cash flow of $7.0 billion used to invest in Delta's business, strengthen its investment grade balance sheet, and fund $2.5 billion of dividends and share repurchases
Delta Air Lines (NYSE:DAL) today reported financial results for the December quarter and full year 2018. Highlights of those results, including both GAAP and adjusted metrics, are below and incorporated here.
Adjusted pre-tax income for the December quarter 2018 was $1.2 billion driven by over $700 million of revenue growth, allowing the company to fully recapture the $508 million increase in adjusted fuel expense and produce an 11 percent adjusted pre-tax margin. Adjusted earnings per share increased by 42 percent year over year to $1.30.
For the full year, adjusted pre-tax income was $5.1 billion, a $137 million decrease relative to 2017 as the company overcame approximately 90 percent of the $2 billion increase in fuel expense. Full year adjusted earnings per share were $5.65, up 19 percent compared to the prior year as the company recognized benefits from tax reform and a four percent lower share count.
"2018 was a successful year for Delta with record operational reliability, increasing customer satisfaction, and solid financial results in the face of higher fuel costs. Delta people are the foundation of our success and I am honored to recognize their efforts with $1.3 billion in profit sharing for 2018," said Ed Bastian, Delta's chief executive officer. "As we move into 2019, we expect to drive double-digit earnings growth through higher revenues, maintaining a cost trajectory below inflation, and the modest benefit from lower fuel costs. Margin expansion is a business imperative and we remain confident in our full-year earnings guidance of $6 to $7 per share."
Revenue Environment
Delta's adjusted operating revenue of $10.7 billion for the December quarter improved 7.5 percent, or $747 million versus the prior year. Total unit revenues excluding refinery sales (TRASM, adjusted) increased 3.2 percent during the period driven by healthy leisure and corporate demand offsetting an approximately 0.5 point headwind from unfavorable foreign exchange rates.
For the full year, adjusted operating revenue grew to nearly $44 billion, up eight percent versus prior year on an increasingly diverse revenue base, with 52 percent of revenues from premium products and non-ticket sources. Premium product ticket revenues increased 14 percent along with double-digit percentage increases from cargo, loyalty, and Maintenance, Repair and Overhaul revenue.
"Delta's strong brand momentum was evident across the business with positive unit revenue growth in all geographic entities for the full year, a record revenue premium to the industry, and double-digit revenue growth from premium products and non-ticket sources," said Glen Hauenstein, Delta's president. "Our March quarter adjusted unit revenue growth is expected to be flat to up two percent including impacts from the timing of Easter, increasing currency headwinds, and the ongoing government shutdown."
|
Increase (Decrease) |
||||||||||||
|
4Q18 versus 4Q17 |
||||||||||||
|
Revenue |
4Q18 ($M) |
Change YoY |
Unit |
Yield |
Capacity |
|||||||
|
Domestic |
$ |
7,066 |
7.7% |
2.6% |
2.7% |
5.0% |
||||||
|
Atlantic |
1,328 |
7.2% |
4.1% |
1.9% |
3.0% |
|||||||
|
659 |
3.6% |
1.0% |
2.1% |
2.6% |
||||||||
|
Pacific |
594 |
1.0% |
(0.2)% |
2.5% |
1.2% |
|||||||
|
Total Passenger |
$ |
9,647 |
6.9% |
2.7% |
2.8% |
4.1% |
||||||
|
Cargo Revenue |
214 |
5.4% |
||||||||||
|
Other Revenue |
881 |
(12.3)% |
||||||||||
|
Total Revenue |
$ |
10,742 |
5.0% |
0.9% |
||||||||
|
Third Party Refinery Sales |
(11) |
|||||||||||
|
Total Revenue, adjusted |
$ |
10,731 |
7.5% |
3.2% |
||||||||
March Quarter 2019 Guidance
For the March quarter, Delta expects to deliver four to six percent total adjusted revenue growth and non-fuel unit cost growth below inflation.
|
1Q19 Forecast |
|
|
Earnings per share |
$0.70 - $0.90 |
|
Pre-tax margin |
6.5% - 8.5% |
|
Fuel price, including taxes, settled hedges and refinery impact |
$1.95 - $2.05 |
|
TRASM, adjusted (year-over-year) |
Flat - up 2% |
|
CASM - Excluding fuel and profit sharing (year-over-year) |
Up 1% - 2% |
|
System Capacity (year-over-year) |
Up ~4% |
|
See Note A for information about reconciliation of projected non-GAAP financial measures |
|
|
Total adjusted revenue and TRASM, adjusted above exclude refinery sales and DAL Global Services |
|
Cost Performance
Total adjusted operating expenses for the December quarter increased $803 million versus the prior year quarter, with more than half of the increase driven by higher fuel prices and profit sharing.
CASM-Ex was down 0.5 percent for the December quarter 2018 compared to the prior year period, the strongest cost performance for the year. For the full year, CASM-Ex increased 1.4 percent, marking an important inflection in the company's cost trajectory with increasing benefits from efficiency initiatives, Delta's fleet transformation and strong performance from operating units.
Adjusted fuel expense increased $508 million, or 27 percent, relative to December quarter 2017. Delta's adjusted fuel price per gallon for the December quarter was $2.42 which includes a 16 cent headwind from the Monroe refinery and inventory pre-purchases. For the full year, adjusted fuel expense increased $2.1 billion, or 29 percent versus prior year.
Adjusted non-operating expense for the quarter improved by $258 million versus the prior year, driven primarily by pension expense favorability and the DAL Global Services transaction (see below for more detail). For the full year, adjusted non-operating expense improved by $360 million versus the prior year.
"In 2018, we successfully returned to our long-term target of keeping non-fuel unit cost growth below two percent, with December quarter non-fuel unit costs declining 0.5 percent," said Paul Jacobson, Delta's chief financial officer. "With solid momentum from our fleet transformation and One Delta efforts, we have confidence in our path to one percent non-fuel unit cost growth in 2019."
Cash Flow and Shareholder Returns
Delta generated $1.3 billion of adjusted operating cash flow and $45 million of free cash flow during the quarter. For the full year, Delta generated $6.9 billion of adjusted operating cash flow and $2.3 billion of free cash flow.
The company invested $4.7 billion into the business in 2018 including $1.3 billion in the December quarter. This enabled delivery of 68 new aircraft in 2018, including five Airbus A350s and four Airbus A220s. The company's ongoing fleet transformation is driving higher customer satisfaction, premium seat growth, and improved cost efficiency.
During the December quarter, Delta returned $563 million to shareholders, comprised of $325 million of share repurchases and $238 million in dividends. For the full year, Delta returned $2.5 billion to shareholders, comprised of $1.6 billion of share repurchases and $909 million in dividends.
Strategic Highlights
In 2018, Delta achieved a number of milestones across its five key strategic pillars.
Culture and People
- Received the Glassdoor Employee's Choice Award for the fourth consecutive year, based entirely on input provided by employees, reiterating the importance of the Delta culture.
- Announced sustainability improvements including removal of a variety of single-use plastic items from Delta's aircraft and clubs, eliminating more than 300,000 pounds in plastic waste annually.
- Contributed over $50 million to the communities we serve as part of Delta's commitment to give back at least 1% of net profits to charitable organizations.
Operational Reliability
- Delivered 143 days of zero system cancellations across the combined mainline and Delta Connection operations on a full year basis, up from 90 days in 2017.
- Achieved industry-leading operational performance with mainline on-time performance (A14) of 85.7 percent for the year; and top legacy carrier baggage performance as measured in the latest Department of Transportation report.
- Recognized by FlightGlobal as the 'Most On-time North American Mainline Airline,' 'Most On-time North American Network Airline,' and 'Most On-time International Mainline Airline.'
Network and Partnerships
- Continued Delta's global and domestic expansion with the announcement of new routes in the December quarter including Boston-Edinburgh, Boston-Lisbon, Minneapolis/St. Paul-Mexico City, and Minneapolis/St. Paul-Shanghai, pending governmental approvals.
Customer Experience and Loyalty
- Debuted the first U.S. biometric airport terminal at the Maynard H. Jackson International Terminal in Atlanta, allowing customers flying direct to an international destination on Delta, Aeromexico, Air France-KLM, or Virgin Atlantic Airways to use facial recognition technology from curb to gate.
- Ranked as the No. 1 U.S. airline by the corporate travel community in the Business Travel News Airline Survey for a historic eighth consecutive year, sweeping all 10 categories.
- Experienced double-digit growth in co-brand spend, helping drive $3.4 billion of incremental value from Delta's American Express relationship for the full year. New card acquisitions reached 1 million for the second year in a row and Delta expanded new SkyMiles Members by a record number in one year.
Investment Grade Balance Sheet
- Established a long-term leverage ratio target of 1.5x to 2.5x adjusted debt to EBITDAR, which should allow Delta to maintain investment grade ratings through a business cycle. At year end 2018, Delta achieved a 1.9x adjusted debt to EBITDAR ratio.
DAL Global Services Transaction
On December 21, 2018, Delta completed a transaction combining DAL Global Services (DGS) with a subsidiary of Argenbright Holdings. Delta retained a 49 percent equity stake in the combined company. As a result of the transaction, Delta recognized an approximately $90 million gain in non-operating expense in the December quarter.
For the full year 2018, DGS operations contributed four cents to Delta's earnings per share, after adjusting for profit sharing. In 2019, Delta will recognize 49 percent of the combined entity's income in operating expense. The year over year impact on earnings, margins, and non-fuel unit costs are expected to be immaterial. For guidance purposes, DGS revenues will be excluded in year-over-year calculations for unit and total revenue to reflect core revenue trends in the business. In 2018, DGS contributed approximately $60 million in revenue per quarter.
Lease Accounting
In the December quarter, Delta early adopted the new lease accounting standard. The new standard requires leases to be recorded on the balance sheet as lease liabilities with corresponding right-of-use assets. The effects of the new standard will be reflected as of January 1, 2018 by recasting prior quarters in the company's 2018 Form 10-K. This adoption resulted in the recognition of approximately $6 billion in incremental lease liabilities and right-of-use assets on the balance sheet.
In addition, the adoption increased full year 2018 pre-tax income by approximately $50 million after adjusting for profit sharing, a six cent impact to full year earnings per share. The impact on the December quarter was immaterial and there is no year over year impact on 2019.
December Quarter and Full Year Results
Adjusted results were primarily impacted by unrealized gains/losses on investments.
|
GAAP |
Adjusted |
GAAP |
Adjusted |
|||||||||||||
|
($ in millions except per share and unit costs) |
4Q18 |
4Q17 |
4Q18 |
4Q17 |
FY18 |
FY17 |
FY18 |
FY17 |
||||||||
|
Pre-tax income |
1,344 |
1,044 |
1,182 |
980 |
5,151 |
5,500 |
5,113 |
5,250 |
||||||||
|
Net income |
1,019 |
299 |
890 |
652 |
3,935 |
3,205 |
3,917 |
3,442 |
||||||||
|
Diluted earnings per share |
1.49 |
0.42 |
1.30 |
0.92 |
5.67 |
4.43 |
5.65 |
4.76 |
||||||||
|
Operating revenue |
10,742 |
10,229 |
10,731 |
9,984 |
44,438 |
41,138 |
43,890 |
40,636 |
||||||||
|
Fuel expense |
2,327 |
1,802 |
2,360 |
1,852 |
9,020 |
6,756 |
9,073 |
7,015 |
||||||||
|
Pre-tax margin |
12.5% |
10.2% |
11.0% |
9.8% |
11.6% |
13.4% |
11.6% |
12.9% |
||||||||
|
Total unit revenues (TRASM/TRASM, adjusted) |
17.18 |
17.03 |
17.16 |
16.62 |
16.87 |
16.18 |
16.66 |
15.98 |
||||||||
|
Operating expense |
9,652 |
9,067 |
9,673 |
8,870 |
39,174 |
35,172 |
38,679 |
34,929 |
||||||||
|
Consolidated unit cost (CASM/CASM-Ex) |
15.44 |
15.10 |
10.74 |
10.79 |
14.87 |
13.83 |
10.31 |
10.17 |
||||||||
|
Average fuel price per gallon |
2.39 |
1.88 |
2.42 |
1.93 |
2.20 |
1.68 |
2.21 |
1.74 |
||||||||
|
Non-operating income/(expense) |
254 |
(118) |
124 |
(134) |
(113) |
(466) |
(98) |
(457) |
||||||||
|
Operating cash flow |
1,245 |
1,891 |
1,252 |
1,736 |
7,014 |
5,023 |
6,899 |
6,793 |
||||||||
|
DELTA AIR LINES, INC. |
|||||||||||||||||||||||
|
Consolidated Statements of Operations |
|||||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||||||||
|
December 31, |
December 31, |
||||||||||||||||||||||
|
(in millions, except per share data) |
2018 |
2017 |
$ Change |
% Change |
2018 |
2017 |
$ Change |
% Change |
|||||||||||||||
|
Operating Revenue: |
|||||||||||||||||||||||
|
Passenger |
$ |
9,647 |
$ |
9,022 |
$ |
625 |
7% |
$ |
39,755 |
$ |
36,947 |
$ |
2,808 |
8% |
|||||||||
|
Cargo |
214 |
203 |
11 |
5% |
865 |
744 |
121 |
16% |
|||||||||||||||
|
Other |
881 |
1,004 |
(123) |
(12)% |
3,818 |
3,447 |
371 |
11% |
|||||||||||||||
|
Total operating revenue |
10,742 |
10,229 |
513 |
5% |
44,438 |
41,138 |
3,300 |
8% |
|||||||||||||||
|
Operating Expense: |
|||||||||||||||||||||||
|
Salaries and related costs |
2,739 |
2,532 |
207 |
8% |
10,743 |
10,058 |
685 |
7% |
|||||||||||||||
|
Aircraft fuel and related taxes |
2,327 |
1,802 |
525 |
29% |
9,020 |
6,756 |
2,264 |
34% |
|||||||||||||||
|
Regional carriers expense, excluding fuel |
851 |
877 |
(26) |
(3)% |
3,438 |
3,466 |
(28) |
(1)% |
|||||||||||||||
|
Depreciation and amortization |
570 |
583 |
(13) |
(2)% |
2,329 |
2,222 |
107 |
5% |
|||||||||||||||
|
Contracted services |
529 |
535 |
(6) |
(1)% |
2,175 |
2,108 |
67 |
3% |
|||||||||||||||
|
Passenger commissions and other selling expenses |
468 |
457 |
11 |
2% |
1,941 |
1,827 |
114 |
6% |
|||||||||||||||
|
Ancillary businesses and refinery |
299 |
520 |
(221) |
(43)% |
1,695 |
1,495 |
200 |
13% |
|||||||||||||||
|
Landing fees and other rents |
408 |
375 |
33 |
9% |
1,662 |
1,501 |
161 |
11% |
|||||||||||||||
|
Aircraft maintenance materials and outside repairs |
341 |
377 |
(36) |
(10)% |
1,575 |
1,591 |
(16) |
(1)% |
|||||||||||||||
|
Profit sharing |
311 |
262 |
49 |
19% |
1,301 |
1,065 |
236 |
22% |
|||||||||||||||
|
Passenger service |
286 |
274 |
12 |
4% |
1,178 |
1,123 |
55 |
5% |
|||||||||||||||
|
Aircraft rent |
103 |
92 |
11 |
12% |
394 |
351 |
43 |
12% |
|||||||||||||||
|
Other |
420 |
381 |
39 |
10% |
1,723 |
1,609 |
114 |
7% |
|||||||||||||||
|
Total operating expense |
9,652 |
9,067 |
585 |
6% |
39,174 |
35,172 |
4,002 |
11% |
|||||||||||||||
|
Operating Income |
1,090 |
1,162 |
(72) |
(6)% |
5,264 |
5,966 |
(702) |
(12)% |
|||||||||||||||
|
Non-Operating Income/(Expense): |
|||||||||||||||||||||||
|
Interest expense, net |
(67) |
(99) |
32 |
(32)% |
(311) |
(396) |
85 |
(21)% |
|||||||||||||||
|
Unrealized gain/(loss) on investments, net |
184 |
- |
184 |
NM |
14 |
- |
14 |
NM |
|||||||||||||||
|
Miscellaneous, net |
137 |
(19) |
156 |
NM |
184 |
(70) |
254 |
NM |
|||||||||||||||
|
Total non-operating income/(expense), net |
254 |
(118) |
372 |
NM |
(113) |
(466) |
353 |
(76)% |
|||||||||||||||
|
Income Before Income Taxes |
1,344 |
1,044 |
300 |
29% |
5,151 |
5,500 |
(349) |
(6)% |
|||||||||||||||
|
Income Tax Provision |
(325) |
(745) |
420 |
(56)% |
(1,216) |
(2,295) |
1,079 |
(47)% |
|||||||||||||||
|
Net Income |
$ |
1,019 |
$ |
299 |
$ |
720 |
NM |
$ |
3,935 |
$ |
3,205 |
$ |
730 |
23% |
|||||||||
|
Basic Earnings Per Share |
$ |
1.50 |
$ |
0.42 |
$ |
5.69 |
$ |
4.45 |
|||||||||||||||
|
Diluted Earnings Per Share |
$ |
1.49 |
$ |
0.42 |
$ |
5.67 |
$ |
4.43 |
|||||||||||||||
|
Basic Weighted Average Shares Outstanding |
680 |
691 |
720 |
||||||||||||||||||||
|
Diluted Weighted Average Shares Outstanding |
683 |
711 |
694 |
723 |
|||||||||||||||||||
|
DELTA AIR LINES, INC. |
|||||||||||||||||||||||
|
Passenger Revenue |
|||||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||||||||
|
December 31, |
December 31, |
||||||||||||||||||||||
|
(in millions) |
2018 |
2017 |
$ Change |
% Change |
2018 |
2017 |
$ Change |
% Change |
|||||||||||||||
|
Ticket- Main cabin |
$ |
5,056 |
$ |
4,885 |
$ |
171 |
4% |
$ |
21,196 |
$ |
20,380 |
$ |
816 |
4% |
|||||||||
|
Ticket- Business cabin and premium products |
3,380 |
3,059 |
321 |
10% |
13,754 |
12,087 |
1,667 |
14% |
|||||||||||||||
|
Loyalty travel awards |
675 |
577 |
98 |
17% |
2,651 |
2,403 |
248 |
10% |
|||||||||||||||
|
Travel-related services |
536 |
501 |
35 |
7% |
2,154 |
2,077 |
77 |
4% |
|||||||||||||||
|
Total passenger revenue |
$ |
9,647 |
$ |
9,022 |
$ |
625 |
7% |
$ |
39,755 |
$ |
36,947 |
$ |
2,808 |
8% |
|||||||||
|
DELTA AIR LINES, INC. |
|||||||||||||||||||||||
|
Other Revenue |
|||||||||||||||||||||||
|
(Unaudited) |
|||||||||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||||||||
|
December 31, |
December 31, |
||||||||||||||||||||||
|
(in millions) |
2018 |
2017 |
$ Change |
% Change |
2018 |
2017 |
$ Change |
% Change |
|||||||||||||||
|
Ancillary businesses and refinery |
$ |
327 |
$ |
541 |
$ |
(214) |
(40)% |
$ |
1,801 |
$ |
1,591 |
$ |
210 |
13% |
|||||||||
|
Loyalty program |
384 |
330 |
54 |
16% |
1,459 |
1,269 |
190 |
15% |
|||||||||||||||
|
Miscellaneous |
170 |
133 |
37 |
28% |
558 |
587 |
(29) |
(5)% |
|||||||||||||||
|
Total other revenue |
$ |
881 |
$ |
1,004 |
$ |
(123) |
(12)% |
$ |
3,818 |
$ |
3,447 |
$ |
371 |
11% |
|||||||||
|
Note: The prior periods presented here have been recast to reflect adoption of certain new accounting standards. |
|||||||||||||||||||||||
|
DELTA AIR LINES, INC.
|
|||||||||||||||||
|
Three Months Ended |
Year Ended |
||||||||||||||||
|
December 31, |
December 31, |
||||||||||||||||
|
2018 |
2017 |
Change |
2018 |
2017 |
Change |
||||||||||||
|
Revenue passenger miles (millions) |
53,241 |
51,180 |
4.0 |
% |
225,243 |
217,712 |
3.5 |
% |
|||||||||
|
Available seat miles (millions) |
62,523 |
60,060 |
4.1 |
% |
263,365 |
254,325 |
3.6 |
% |
|||||||||
|
Passenger mile yield (cents) |
18.12 |
17.63 |
2.8 |
% |
17.65 |
16.97 |
4.0 |
% |
|||||||||
|
Passenger revenue per available seat mile (cents) |
15.43 |
15.02 |
2.7 |
% |
15.09 |
14.53 |
3.9 |
% |
|||||||||
|
Total revenue per available seat mile (cents) |
17.18 |
17.03 |
0.9 |
% |
16.87 |
16.18 |
4.3 |
% |
|||||||||
|
TRASM, adjusted - see Note A (cents) |
17.16 |
16.62 |
3.2 |
% |
16.66 |
15.98 |
4.3 |
% |
|||||||||
|
Operating cost per available seat mile (cents) |
15.44 |
15.10 |
2.3 |
% |
14.87 |
13.83 |
7.5 |
% |
|||||||||
|
CASM-Ex - see Note A (cents) |
10.74 |
10.79 |
(0.5) |
% |
10.31 |
10.17 |
1.4 |
% |
|||||||||
|
Passenger load factor |
85.2 |
% |
85.2 |
% |
- pts |
85.5 |
% |
85.6 |
% |
(0.1) pts |
|||||||
|
Fuel gallons consumed (millions) |
975 |
959 |
1.7 |
% |
4,113 |
4,032 |
2.0 |
% |
|||||||||
|
Average price per fuel gallon |
$ |
2.39 |
$ |
1.88 |
27.1 |
% |
$ |
2.20 |
$ |
1.68 |
31.0 |
% |
|||||
|
Average price per fuel gallon, adjusted - see Note A |
$ |
2.42 |
$ |
1.93 |
25.3 |
% |
$ |
2.21 |
$ |
1.74 |
26.8 |
% |
|||||
|
Number of aircraft in fleet, end of period |
1,025 |
999 |
26 |
||||||||||||||
|
Note: The prior periods presented here have been recast to reflect adoption of certain new accounting standards. Except for number of aircraft in fleet, consolidated data presented includes operations under Delta's contract carrier arrangements. |
|||||||||||||||||
|
DELTA AIR LINES, INC. |
|||||||
|
Three Months Ended |
|||||||
|
December 31, |
|||||||
|
(in millions) |
2018 |
2017 |
|||||
|
Cash Flows From Operating Activities: |
|||||||
|
Net income |
$ |
1,019 |
$ |
299 |
|||
|
Depreciation and amortization |
570 |
583 |
|||||
|
Deferred income taxes |
504 |
725 |
|||||
|
Pension, postretirement and postemployment payments greater than expense |
(113) |
(28) |
|||||
|
Changes in air traffic liability |
(873) |
(658) |
|||||
|
Changes in profit sharing |
311 |
262 |
|||||
|
Other working capital changes, net |
(173) |
708 |
|||||
|
Net cash provided by operating activities |
1,245 |
1,891 |
|||||
|
Cash Flows From Investing Activities: |
|||||||
|
Property and equipment additions: |
|||||||
|
Flight equipment, including advance payments |
(871) |
(798) |
|||||
|
Ground property and equipment, including technology |
(492) |
(362) |
|||||
|
Purchase of equity investments |
- |
(450) |
|||||
|
Net redemptions of short-term investments |
276 |
132 |
|||||
|
Other, net |
67 |
173 |
|||||
|
Net cash used in investing activities |
(1,020) |
(1,305) |
|||||
|
Cash Flows From Financing Activities: |
|||||||
|
Payments on long-term debt and capital lease obligations |
(312) |
(439) |
|||||
|
Repurchases of common stock |
(325) |
(325) |
|||||
|
Cash dividends |
(238) |
(216) |
|||||
|
Proceeds from long-term obligations |
621 |
450 |
|||||
|
Other, net |
129 |
280 |
|||||
|
Net cash used in financing activities |
(125) |
(250) |
|||||
|
Net Increase in Cash, Cash Equivalents and Restricted Cash |
100 |
336 |
|||||
|
Cash, cash equivalents and restricted cash at beginning of period |
2,648 |
1,517 |
|||||
|
Cash, cash equivalents and restricted cash at end of period |
$ |
2,748 |
$ |
1,853 |
|||
|
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to |
|||||||
|
Current assets: |
|||||||
|
Cash and cash equivalents |
$ |
1,565 |
$ |
1,814 |
|||
|
Restricted cash included in prepaid expenses and other |
47 |
39 |
|||||
|
Other assets: |
|||||||
|
Cash restricted for airport construction |
1,136 |
- |
|||||
|
Total cash, cash equivalents and restricted cash |
$ |
2,748 |
$ |
1,853 |
|||
|
Note: The prior periods presented here have been recast to reflect adoption of certain new accounting standards. |
|||||||
|
DELTA AIR LINES, INC. |
||||||||
|
December 31, |
December 31, |
|||||||
|
(in millions) |
2018 |
2017 |
||||||
|
ASSETS |
||||||||
|
Current Assets: |
||||||||
|
Cash and cash equivalents |
$ |
1,565 |
$ |
1,814 |
||||
|
Short-term investments |
203 |
825 |
||||||
|
Accounts receivable, net |
2,310 |
2,377 |
||||||
|
Fuel inventory |
704 |
916 |
||||||
|
Expendable parts and supplies inventories, net |
463 |
413 |
||||||
|
Prepaid expenses and other |
1,250 |
1,499 |
||||||
|
Total current assets |
6,495 |
7,844 |
||||||
|
Property and Equipment, Net: |
||||||||
|
Property and equipment, net |
28,354 |
26,563 |
||||||
|
Other Assets: |
||||||||
|
Operating lease right-of-use assets |
5,979 |
- |
||||||
|
Goodwill |
9,781 |
9,794 |
||||||
|
Identifiable intangibles, net |
4,829 |
4,847 |
||||||
|
Cash restricted for airport construction |
1,136 |
- |
||||||
|
Deferred income taxes, net |
83 |
1,354 |
||||||
|
Other noncurrent assets |
3,613 |
3,309 |
||||||
|
Total other assets |
25,421 |
19,304 |
||||||
|
Total assets |
$ |
60,270 |
$ |
53,711 |
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
||||||||
|
Current Liabilities: |
||||||||
|
Current maturities of long-term debt and finance leases |
$ |
1,523 |
$ |
2,242 |
||||
|
Current maturities of operating leases |
960 |
- |
||||||
|
Air traffic liability |
4,661 |
4,364 |
||||||
|
Accounts payable |
3,130 |
3,674 |
||||||
|
Accrued salaries and related benefits |
3,287 |
3,022 |
||||||
|
Frequent flyer deferred revenue |
2,989 |
2,762 |
||||||
|
Fuel card obligation |
1,075 |
1,067 |
||||||
|
Other accrued liabilities |
1,129 |
1,868 |
||||||
|
Total current liabilities |
18,754 |
18,999 |
||||||
|
Noncurrent Liabilities: |
||||||||
|
Long-term debt and finance leases |
8,270 |
6,592 |
||||||
|
Pension, postretirement and related benefits |
9,176 |
9,810 |
||||||
|
Frequent flyer deferred revenue |
3,652 |
3,559 |
||||||
|
Noncurrent operating leases |
5,770 |
- |
||||||
|
Other noncurrent liabilities |
971 |
2,221 |
||||||
|
Total noncurrent liabilities |
27,839 |
22,182 |
||||||
|
Commitments and Contingencies |
||||||||
|
Stockholders' Equity: |
13,677 |
12,530 |
||||||
|
Total liabilities and stockholders' equity |
$ |
60,270 |
$ |
53,711 |
||||
|
Note: The prior periods presented here have been recast to reflect adoption of certain new accounting standards. |
||||||||
Note A: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below. Reconciliations may not calculate due to rounding.
Delta sometimes uses information ("non-GAAP financial measures") that is derived from the Consolidated Financial Statements, but that is not presented in accordance with accounting principles generally accepted in the U.S. ("GAAP"). Under the U.S. Securities and Exchange Commission rules, non-GAAP financial measures may be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. The tables below show reconciliations of non-GAAP financial measures used in this release to the most directly comparable GAAP financial measures.
Forward Looking Projections. The Company is not able to reconcile forward looking non-GAAP financial measures because the adjusting items such as those used in the reconciliations below will not be known until the end of the period and could be significant.
Pre-tax Income and Net Income, adjusted. We adjust pre-tax income and net income for mark-to-market ("MTM") adjustments and settlements on fuel hedge contracts, the MTM adjustments recorded by our equity method investees, Virgin Atlantic and Aeroméxico, and unrealized gains/losses on our equity investments accounted for at fair value, to determine pre-tax income and net income, adjusted. We include the income tax effect of adjustments when presenting net income, adjusted.
MTM adjustments and settlements. MTM adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the period.
Equity investment MTM adjustments. We record our proportionate share of earnings/loss from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense. We adjust for our equity method investees' MTM adjustments to allow investors to better understand and analyze our core operational performance in the periods shown.
Unrealized gain/loss on investments. We record the unrealized gains/losses on our equity investments accounted for at fair value in non-operating expense. Adjusting for these gains/losses allows investors to better understand and analyze our core operational performance in the periods shown.
Tax reform charge. As a result of the Tax Cuts and Jobs Act of 2017, Delta recognized a one-time charge in the December 2017 quarter from the revaluation of its deferred tax assets and liabilities. We adjust for this charge to allow investors to understand and analyze the company's core operational performance in the periods shown.
|
Three Months Ended |
Three Months Ended |
||||||||||||||
|
December 31, 2018 |
December 31, 2018 |
||||||||||||||
|
Pre-Tax |
Income |
Net |
Net Income |
||||||||||||
|
(in millions, except per share data) |
Income |
Tax |
Income |
Per Diluted Share |
|||||||||||
|
GAAP |
$ |
1,344 |
$ |
(325) |
$ |
1,019 |
$ |
1.49 |
|||||||
|
Adjusted for: |
|||||||||||||||
|
MTM adjustments and settlements |
(33) |
7 |
(26) |
||||||||||||
|
Equity investment MTM adjustments |
55 |
(12) |
43 |
||||||||||||
|
Unrealized gain/loss on investments |
(184) |
38 |
(146) |
||||||||||||
|
Total adjustments |
(162) |
33 |
(129) |
(0.19) |
|||||||||||
|
Non-GAAP |
$ |
1,182 |
$ |
(292) |
$ |
890 |
$ |
1.30 |
|||||||
|
Year-over-year change |
42 |
% |
|||||||||||||
|
Three Months Ended |
Three Months Ended |
||||||||||||||
|
December 31, 2017 |
December 31, 2017 |
||||||||||||||
|
Pre-Tax |
Income |
Net |
Net Income |
||||||||||||
|
(in millions, except per share data) |
Income |
Tax |
Income |
Per Diluted Share |
|||||||||||
|
GAAP |
$ |
1,044 |
$ |
(745) |
$ |
299 |
$ |
0.42 |
|||||||
|
Adjusted for: |
|||||||||||||||
|
MTM adjustments and settlements |
(49) |
18 |
(31) |
||||||||||||
|
Equity investment MTM adjustments |
(15) |
5 |
(10) |
||||||||||||
|
Tax reform charge |
- |
394 |
394 |
||||||||||||
|
Total adjustments |
(64) |
417 |
353 |
0.50 |
|||||||||||
|
Non-GAAP |
$ |
980 |
$ |
(328) |
$ |
652 |
$ |
0.92 |
|||||||
|
Year Ended |
Year Ended |
||||||||||||||
|
December 31, 2018 |
December 31, 2018 |
||||||||||||||
|
Pre-Tax |
Income |
Net |
Net Income |
||||||||||||
|
(in millions, except per share data) |
Income |
Tax |
Income |
Per Diluted Share |
|||||||||||
|
GAAP |
$ |
5,151 |
$ |
(1,216) |
$ |
3,935 |
$ |
5.67 |
|||||||
|
Adjusted for: |
|||||||||||||||
|
MTM adjustments and settlements |
(53) |
27 |
(26) |
||||||||||||
|
Equity investment MTM adjustments |
29 |
(15) |
14 |
||||||||||||
|
Unrealized gain/loss on investments |
(14) |
7 |
(7) |
||||||||||||
|
Total adjustments |
(38) |
19 |
(19) |
(0.02) |
|||||||||||
|
Non-GAAP |
$ |
5,113 |
$ |
(1,196) |
$ |
3,917 |
$ |
5.65 |
|||||||
|
Year-over-year change |
$ |
(137) |
19 |
% |
|||||||||||
|
Year Ended |
Year Ended |
||||||||||||||
|
December 31, 2017 |
December 31, 2017 |
||||||||||||||
|
Pre-Tax |
Income |
Net |
Net Income |
||||||||||||
|
(in millions, except per share data) |
Income |
Tax |
Income |
Per Diluted Share |
|||||||||||
|
GAAP |
$ |
5,500 |
$ |
(2,295) |
$ |
3,205 |
$ |
4.43 |
|||||||
|
Adjusted for: |
|||||||||||||||
|
MTM adjustments and settlements |
(259) |
88 |
(171) |
||||||||||||
|
Equity investment MTM adjustments |
8 |
4 |
12 |
||||||||||||
|
Tax reform charge |
- |
394 |
394 |
||||||||||||
|
Total adjustments |
(251) |
486 |
235 |
0.33 |
|||||||||||
|
Non-GAAP |
$ |
5,250 |
$ |
(1,808) |
$ |
3,442 |
$ |
4.76 |
|||||||
Operating Revenue, adjusted and Total Revenue Per Available Seat Mile ("TRASM"), adjusted. We adjust operating revenue and TRASM for refinery sales to third parties to determine operating revenue, adjusted and TRASM, adjusted because refinery sales to third parties are not related to our airline segment. Operating revenue, adjusted and TRASM, adjusted therefore provide a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.
|
Three Months Ended |
|||||||||||
|
(in millions) |
December 31, 2018 |
December 31, 2017 |
Change |
||||||||
|
Operating revenue |
$ |
10,742 |
$ |
10,229 |
|||||||
|
Adjusted for: |
|||||||||||
|
Third-party refinery sales |
(11) |
(245) |
|||||||||
|
Operating revenue, adjusted |
$ |
10,731 |
$ |
9,984 |
7.5 |
% |
|||||
|
Year-over-year change |
$ |
||||||||||
|
Year Ended |
|||||||||||
|
(in millions) |
December 31, 2018 |
December 31, 2017 |
Change |
||||||||
|
Operating revenue |
$ |
44,438 |
$ |
41,138 |
|||||||
|
Adjusted for: |
|||||||||||
|
Third-party refinery sales |
(548) |
(502) |
|||||||||
|
Operating revenue, adjusted |
$ |
43,890 |
$ |
40,636 |
8.0 |
% |
|||||
|
Three Months Ended |
|||||||||||
|
December 31, 2018 |
December 31, 2017 |
Change |
|||||||||
|
TRASM (cents) |
17.18 |
17.03 |
|||||||||
|
Adjusted for: |
|||||||||||
|
Third-party refinery sales |
(0.02) |
(0.41) |
|||||||||
|
TRASM, adjusted |
17.16 |
16.62 |
3.2 |
% |
|||||||
|
Year Ended |
|||||||||||
|
December 31, 2018 |
December 31, 2017 |
Change |
|||||||||
|
TRASM (cents) |
16.87 |
16.18 |
|||||||||
|
Adjusted for: |
|||||||||||
|
Third-party refinery sales |
(0.21) |
(0.20) |
|||||||||
|
TRASM, adjusted |
16.66 |
15.98 |
4.3 |
% |
|||||||
Fuel expense, adjusted and Average fuel price per gallon, adjusted. The tables below show the components of fuel expense, including the impact of the refinery segment and airline segment hedging on fuel expense and average price per gallon. We then adjust for MTM adjustments and settlements for the same reason described under the heading pre-tax income and net income, adjusted:
|
Average Price Per Gallon |
|||||||||||||||
|
Three Months Ended |
Three Months Ended |
||||||||||||||
|
December 31, |
December 31, |
||||||||||||||
|
(in millions, except per gallon data) |
2018 |
2017 |
2018 |
2017 |
|||||||||||
|
Fuel purchase cost |
$ |
2,318 |
$ |
1,805 |
$ |
2.38 |
$ |
1.89 |
|||||||
|
Airline segment fuel hedge impact |
(33) |
22 |
(0.03) |
0.02 |
|||||||||||
|
Refinery segment impact |
42 |
(24) |
0.04 |
(0.03) |
|||||||||||
|
Total fuel expense |
$ |
2,327 |
$ |
1,802 |
$ |
2.39 |
$ |
1.88 |
|||||||
|
MTM adjustments and settlements |
33 |
49 |
0.03 |
0.05 |
|||||||||||
|
Total fuel expense, adjusted |
$ |
2,360 |
$ |
1,852 |
$ |
2.42 |
$ |
1.93 |
|||||||
|
Change year-over-year |
$ |
508 |
|||||||||||||
|
Percent change year-over-year |
27 |
% |
|||||||||||||
|
Average Price Per Gallon |
|||||||||||||||
|
Year Ended |
Year Ended |
||||||||||||||
|
December 31, |
December 31, |
||||||||||||||
|
(in millions, except per gallon data) |
2018 |
2017 |
2018 |
2017 |
|||||||||||
|
Fuel purchase cost |
$ |
9,131 |
$ |
6,833 |
$ |
2.22 |
$ |
1.70 |
|||||||
|
Airline segment fuel hedge impact |
(53) |
33 |
(0.01) |
0.01 |
|||||||||||
|
Refinery segment impact |
(58) |
(110) |
(0.01) |
(0.03) |
|||||||||||
|
Total fuel expense |
$ |
9,020 |
$ |
6,756 |
$ |
2.20 |
$ |
1.68 |
|||||||
|
MTM adjustments and settlements |
53 |
259 |
0.01 |
0.06 |
|||||||||||
|
Total fuel expense, adjusted |
$ |
9,073 |
$ |
7,015 |
$ |
2.21 |
$ |
1.74 |
|||||||
|
Change year-over-year |
$ |
2,057 |
|||||||||||||
|
Percent change year-over-year |
29 |
% |
|||||||||||||
Pre-Tax Margin, adjusted. We adjust pre-tax margin for MTM adjustments and settlements, equity investment MTM adjustments and unrealized gain/loss on investments for the same reasons described above under the heading pre-tax income and net income, adjusted. We adjust for third-party refinery sales for the same reason described above under the heading operating revenue and TRASM, adjusted.
|
Three Months Ended |
||||||||||
|
December 31, 2018 |
December 31, 2017 |
|||||||||
|
Pre-tax margin |
12.5% |
10.2% |
||||||||
|
Adjusted for: |
||||||||||
|
MTM adjustments and settlements |
(0.3)% |
(0.5)% |
||||||||
|
Equity investment MTM adjustments |
0.5% |
(0.2)% |
||||||||
|
Unrealized gain/(loss) on investments |
(1.7)% |
-% |
||||||||
|
Third-party refinery sales |
-% |
0.3% |
||||||||
|
Pre-tax margin, adjusted |
11.0% |
9.8% |
||||||||
|
Year Ended |
||||||||||
|
December 31, 2018 |
December 31, 2017 |
|||||||||
|
Pre-tax margin |
11.6% |
13.4% |
||||||||
|
Adjusted for: |
||||||||||
|
MTM adjustments and settlements |
(0.1)% |
(0.6)% |
||||||||
|
Equity investment MTM adjustments |
-% |
-% |
||||||||
|
Unrealized gain/(loss) on investments |
-% |
-% |
||||||||
|
Third-party refinery sales |
0.1% |
0.2% |
||||||||
|
Pre-tax margin, adjusted |
11.6% |
12.9% |
||||||||
Operating Expense, adjusted. We adjust operating expense for MTM adjustments and settlements and third-party refinery sales for the same reasons described above under the headings pre-tax income and net income, adjusted and operating revenue and TRASM, adjusted to determine operating expense, adjusted.
|
Three Months Ended |
|||||||||
|
December 31, |
|||||||||
|
(in millions) |
2018 |
2017 |
|||||||
|
Operating expense |
$ |
9,652 |
$ |
9,067 |
|||||
|
Adjusted for: |
|||||||||
|
MTM adjustments and settlements |
33 |
49 |
|||||||
|
Third-party refinery sales |
(11) |
(245) |
|||||||
|
Operating expense, adjusted |
$ |
9,673 |
$ |
8,870 |
|||||
|
Year-over-year change |
$ |
803 |
|||||||
|
Year Ended |
|||||||||
|
December 31, |
|||||||||
|
(in millions) |
2018 |
2017 |
|||||||
|
Operating expense |
$ |
39,174 |
$ |
35,172 |
|||||
|
Adjusted for: |
|||||||||
|
MTM adjustments and settlements |
53 |
259 |
|||||||
|
Third-party refinery sales |
(548) |
(502) |
|||||||
|
Operating expense, adjusted |
$ |
38,679 |
$ |
34,929 |
|||||
Non-Fuel Unit Cost or Cost per Available Seat Mile, ("CASM-Ex"). We adjust CASM for the following items to determine CASM-Ex for the reasons described below:
Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes allows investors to understand and analyze our non-fuel costs and year-over-year financial performance.
Ancillary businesses and refinery. These expenses include aircraft maintenance we provide to third parties,our vacation wholesale operations and refinery cost of sales to third parties. Results also include staffing services performed by DAL Global Services. Because these businesses are not related to the generation of a seat mile, we adjust for the costs related to these areas to provide a more meaningful comparison of the costs of our airline operations to the rest of the airline industry.
Profit sharing. We adjust for profit sharing because this adjustment allows investors to better understand and analyze our recurring cost performance and provides a more meaningful comparison of our core operating costs to the airline industry.
|
Three Months Ended |
||||||||||||||||||||
|
December 31, 2018 |
December 31, 2017 |
Change |
||||||||||||||||||
|
CASM (cents) |
15.44 |
15.10 |
||||||||||||||||||
|
Adjusted for: |
||||||||||||||||||||
|
Aircraft fuel and related taxes |
(3.72) |
(3.00) |
||||||||||||||||||
|
Ancillary businesses and refinery |
(0.48) |
(0.87) |
||||||||||||||||||
|
Profit sharing |
(0.50) |
(0.44) |
||||||||||||||||||
|
CASM-Ex |
10.74 |
10.80 |
(0.5)% |
|||||||||||||||||
|
Year Ended |
||||||||||||||||||||
|
December 31, 2018 |
December 31, 2017 |
Change |
||||||||||||||||||
|
CASM (cents) |
14.87 |
13.83 |
||||||||||||||||||
|
Adjusted for: |
||||||||||||||||||||
|
Aircraft fuel and related taxes |
(3.43) |
(2.66) |
||||||||||||||||||
|
Ancillary businesses and refinery |
(0.64) |
(0.58) |
||||||||||||||||||
|
Profit sharing |
(0.49) |
(0.42) |
||||||||||||||||||
|
CASM-Ex |
10.31 |
10.17 |
1.4% |
|||||||||||||||||
Non-operating Income/(Expense), adjusted. We adjust for equity investment MTM adjustments and unrealized gain/loss on investments to determine non-operating income/(expense), adjusted for the same reasons described above in the heading pre-tax income and net income, adjusted.
|
Three Months Ended |
|||||||
|
(in millions) |
December 31, 2018 |
December 31, 2017 |
|||||
|
Non-operating income/(expense) |
$ |
254 |
$ |
(118) |
|||
|
Adjusted for: |
|||||||
|
Equity investment MTM adjustments |
55 |
(15) |
|||||
|
Unrealized gain/loss on investments |
(184) |
- |
|||||
|
Non-operating income/(expense), adjusted |
$ |
124 |
$ |
(134) |
|||
|
Change year-over-year |
$ |
258 |
|||||
|
Year Ended |
|||||||
|
(in millions) |
December 31, 2018 |
December 31, 2017 |
|||||
|
Non-operating income/(expense) |
$ |
(113) |
$ |
(466) |
|||
|
Adjusted for: |
|||||||
|
Equity investment MTM adjustments |
29 |
8 |
|||||
|
Unrealized gain/loss on investments |
(14) |
- |
|||||
|
Non-operating income/(expense), adjusted |
$ |
(98) |
$ |
(457) |
|||
|
Change year-over-year |
$ |
360 |
|||||
Operating Cash Flow, adjusted. We present operating cash flow, adjusted because management believes adjusting for the following items provides a more meaningful measure for investors. Adjustments include:
Hedge deferrals. During the March 2016 quarter, we deferred settlement of a portion of our hedge portfolio until 2017 by entering into transactions that, excluding market movements from the date of inception, would provide approximately $300 million in cash receipts during the second half of 2016 and require approximately $300 million in cash payments in 2017. Operating cash flow is adjusted to include the impact of these deferral transactions in order to allow investors to understand the net impact of hedging activities in the period shown.
Reimbursements from third parties related to build-to-suit facilities and other. Management believes investors should be informed that these reimbursements for build-to-suit leased facilities effectively reduce net cash provided by operating activities and related capital expenditures.
Pension plan contribution. In 2017, we contributed $2 billion to our pension plans using net proceeds from issuance of debt. We adjusted operating cash flow to exclude this contribution to allow investors to understand the cash flows related to our core operations in the periods shown.
|
Three Months Ended |
|||||||||
|
(in millions) |
December 31, 2018 |
December 31, 2017 |
|||||||
|
Net cash provided by operating activities |
$ |
1,245 |
$ |
1,891 |
|||||
|
Adjustments: |
|||||||||
|
Hedge deferrals |
- |
(51 |
|||||||
|
Reimbursements from third parties related to build-to-suit facilities and other |
7 |
(104 |
|||||||
|
Net cash provided by operating activities, adjusted |
$ |
1,252 |
$ |
1,736 |
|||||
|
Year Ended |
|||||||||
|
(in millions) |
December 31, 2018 |
December 31, 2017 |
|||||||
|
Net cash provided by operating activities |
$ |
7,014 |
$ |
5,023 |
|||||
|
Adjustments: |
|||||||||
|
Hedge deferrals |
(19) |
(224 |
|||||||
|
Reimbursements from third parties related to build-to-suit facilities and other |
(96) |
(6 |
|||||||
|
Pension plan contribution |
- |
2,000 |
|||||||
|
Net cash provided by operating activities, adjusted |
$ |
6,899 |
$ |
6,793 |
|||||
Free Cash Flow. We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:
Net purchases (redemptions) of short-term investments. Net purchases (redemptions) of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust free cash flow for this activity, net, to provide investors a better understanding of the company's free cash flow position core to operations.
Reimbursements from third parties related to build-to-suit facilities and other. Management believes investors should be informed that these reimbursements for build-to-suit leased facilities effectively reduce net cash provided by operating activities and related capital expenditures.
|
Three Months Ended |
||||||
|
(in millions) |
December 31, 2018 |
|||||
|
Net cash provided by operating activities |
$ |
1,245 |
||||
|
Net cash used in investing activities |
(1,020 |
|||||
|
Adjustments: |
||||||
|
Net purchases (redemptions) of short-term investments |
(276 |
|||||
|
Reimbursements from third parties related to build-to-suit facilities and other |
96 |
|||||
|
Total free cash flow |
$ |
45 |
||||
|
Year Ended |
||||||
|
(in millions) |
December 31, 2018 |
|||||
|
Net cash provided by operating activities |
$ |
7,014 |
||||
|
Net cash used in investing activities |
(4,393 |
|||||
|
Adjustments: |
||||||
|
Net purchases (redemptions) of short-term investments |
(621 |
|||||
|
Reimbursements from third parties related to build-to-suit facilities and other |
264 |
|||||
|
Total free cash flow |
$ |
2,265 |
||||
Capital Expenditures, net. We present net capital expenditures because management believes investors should be informed that a portion of these capital expenditures are reimbursed by a third party.
|
Three Months Ended |
|||||
|
(in millions) |
December 31, 2018 |
||||
|
Flight equipment, including advance payments |
$ |
871 |
|||
|
Ground property and equipment, including technology |
492 |
||||
|
Reimbursements from third parties related to build-to-suit-facilities and other |
(89 |
||||
|
Capital expenditures, net |
$ |
1,274 |
|||
|
Year Ended |
|||||
|
(in millions) |
December 31, 2018 |
||||
|
Flight equipment, including advance payments |
$ |
3,704 |
|||
|
Ground property and equipment, including technology |
1,464 |
||||
|
Reimbursements from third parties related to build-to-suit-facilities and other |
(432 |
||||
|
Capital expenditures, net |
$ |
4,736 |
|||
Adjusted Debt to Earnings Before Interest, Taxes, Depreciation, Amortization and Rent ("EBITDAR"), adjusted. We present adjusted debt to EBITDAR, adjusted because management believes this metric is helpful to investors in assessing the company's overall debt profile. Adjusted debt includes LGA bonds and operating lease liabilities. We calculate EBITDAR, adjusted by adding depreciation and amortization to GAAP Operating income and adjusting for the fixed portion of operating lease expense.
|
Year Ended |
|||||
|
(in billions) |
December 31, 2018 |
||||
|
Debt and finance lease obligations |
$ |
9 |
|||
|
Plus: Operating lease liability |
7 |
||||
|
Adjusted Debt |
$ |
16 |
|||
|
Year Ended |
|||||
|
(in billions) |
December 31, 2018 |
||||
|
GAAP operating income |
$ |
5 |
|||
|
Adjusted for: |
|||||
|
Depreciation and amortization |
2 |
||||
|
Fixed portion of operating lease expense |
1 |
||||
|
EBITDAR, adjusted |
$ |
8 |
|||
|
Adjusted Debt to EBITDAR, adjusted |
1.9x |
||||
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