DELTA AIR LINES, INC. Q4 FY2024 earnings call

Key Remarks - Ed Bastian: - Delivered strong close to 2024 operationally and financially, with December quarter pre-tax profit of $1.6 billion and earnings per share of $1.85. - Full-year 2024 pre-tax income was $5.2 billion, return on invested capital 13%, and full-year earnings per share $6.16. - Recognized for operational excellence, including industry-leading system completion factor and on-time performance. - Announced $1.4 billion profit sharing for employees in February 2025. - ### Glen Hauenstein: - December quarter revenue was a record $14.4 billion, 5.7% higher than 2023. - Total unit revenue grew four-tenths of a point over prior year, with sequential improvement in all geographies. - Expected March quarter revenue growth 7%-9%, with transatlantic unit revenue expected to lead, Latin unit revenue to improve sequentially, and Pacific leading in overall revenue growth. - Network plans for 2025 include increasing capacity with >85% of incremental seats in premium cabins, 80% domestic growth in core hubs. - ### Dan Janki: - December quarter earnings $1.85 per share, top end of guidance, operating margin 12% up two points year over year. - Full-year operating margin double-digit, free cash flow $3.4 billion. - Balance sheet returned to investment grade at all three major credit agencies. - Outlook for March quarter: revenue growth 7%-9%, operating margin 6%-8%, EPS $0.70-$1; full-year EPS >$7.35, free cash flow >$4B, leverage <2x.

For the full year 2024, Delta Air Lines reported a record revenue of $57 billion, which was 4% above 2023's prior record. Diversified streams contributed to this. Premium revenue performance outpaced Main Cabin throughout the year, up 8% over the prior year with positive unit revenues in all four quarters of 2024. Total loyalty revenue was up 9% over 2023, with remuneration from American Express reaching approximately $7.4 billion for the year, driven by high single-digit growth in co-brand spend and over one million new card acquisitions. Cargo revenue grew 14% over 2023 with sequential improvement throughout the year. Premium revenue contributed a significant portion to total revenue, although exact percentage wasn't specified but it was noted to outpace Main Cabin.

March Quarter - Expected revenue growth of 7% to 9%, operating margin of 6% to 8%, and earnings of $0.70 to $1 per share. - Non-fuel unit cost growth expected to be up low single digits year over year. ### Full Year - Expected earnings per share greater than $7.35, increasing more than 20% compared to 2024 as reported. - Expected free cash flow over $4 billion, supporting further debt reduction and bringing leverage ratio down to two times or less. - Expect revenue growth 7%-9%, expand margins by two points, and nearly double earnings over last year compared to 2024.

• Wildfires in Southern California could impact travel demand in the affected region, though initial monitoring shows a decline in sales but not a wholesale reduction or significant uptick in cancellations. - Potential impact of tariffs on aircraft deliveries; Delta has alternative ways to receive deliveries to mitigate such impacts, but hopes Airbus isn't subject to tariffs as a substantial portion of aircraft are produced in the US. - General risks associated with forward-looking statements, including factors that could cause actual results to differ from projections, as detailed in SEC filings.

Q: Catherine O'Brien asked about the $7.35 full-year guide and if a conservative back-half revenue outlook is baked in, and what drives upside from $7.35.

A: Dan Janki responded that they're focused on controllable factors like capacity placement, premium revenue growth, loyalty, and driving efficiencies, with good visibility on first half and potential margin upside from main cabin as year progresses.

Q: Catherine O'Brien asked about standout geographic improvement in fourth quarter and capacity allocation over 2025.

A: Glen Hauenstein said transatlantic was a standout with strong advanced bookings and close-in business travel, driven by US point of origin and favorable travel conditions in Europe, and capacity allocation plans focus on high-margin core hubs and premium cabins.

Q: Brandon Oglenski asked about monetizing SkyMiles and keeping CAS in low single digits.

A: Ed Bastian said partnerships are about creating long-term customer experience, not immediate monetization; Dan Janki discussed levers like capacity utilization, workforce growth, maintenance normalization, and asset utilization to keep CAS in low single digits.

Q: Conor Cunningham asked about 1Q comps and international supply setup.

A: Glen Hauenstein said 1Q is off to strong start with record sales, and international supply in transatlantic is set for robust return with favorable competitive dynamics and no negative impact from Paris Olympics like last year.

Q: Tom Fitzgerald asked about customer segments and core hubs.

A: Glen Hauenstein said premium driven by boomers with potential for next generations, strong consumer leisure and corporate demand, and encouraged by competitive dynamics in hubs though not giving hub-by-hub details.

Q: Jamie Baker asked about fuel recapture and corporate behavior post-COVID.

A: Glen Hauenstein said fuel recapture is shorter due to industry pressure, and corporate behavior is reverting on margin with closing picking up but not back to pre-COVID levels.

Q: Duane Pfennigwerth asked about revenue surprise in 4Q and Latin entity rebuild.

A: Glen Hauenstein said post-election sales uptick was a surprise, and Latin entity is moving into more mature position after investment phase.

Q: Shannon Doherty asked about premium vs main cabin RASM and Easter shift.

A: Glen Hauenstein said premium revenue growth to continue with potential main cabin upside, and Easter shift impact depends on season compression and offsetting by longer travel season.

Q: Ravi Shanker asked about Europe strength and cabin pricing algorithm.

A: Glen Hauenstein said Europe strength due to favorable exchange rate and consumer behavior, and Delta aims to control premium revenue growth by optimizing without pricing out main cabin customers.

Q: Andrew Didora asked about domestic schedule growth and Atlantic growth.

A: Glen Hauenstein said 1Q growth between 4.5-5%, 2Q schedules to adjust, transatlantic growth slightly above average, and domestic growth slightly below average.

Q: David Vernon asked about corporate demand volume vs yield and capacity balance.

A: Glen Hauenstein said Delta's corporate share near record highs, and capacity balance focuses on high-margin cabins and core hubs.

Q: Savi Syth asked about CapEx and non-OpEx.

A: Dan Janki said CapEx expected around $5 billion with ~40 aircraft deliveries, non-OpEx to be flattish with deleveraging benefit and other moving pieces like pension and equity earnings.

Q: Sheila Kahyaoglu asked about fleet retirements and maintenance spend.

A: Dan Janki said expected ~30 aircraft retirements in 2025, maintenance spend to move towards normalized levels with improvement year over year.