Delta Air Lines has reported financial results for the December 2015 quarter, including adjusted pre-tax income of $1.45 billion, a $430 million increase year over year.
Adjusted net income was $926 million or $1.18 per diluted share, up 51 per cent from the December quarter of 2014.
“Our 2015 performance was a record for Delta on all fronts – with industry-leading operational performance, superior customer satisfaction, and a $5.9 billion adjusted pre-tax profit.
“These results show the commitment of the Delta people to running the best airline in the world every day.
“It’s an honor to reward their performance with $1.5 billion in profit sharing for the year,” said Richard Anderson, Delta’s chief executive officer.
“As we look ahead to 2016, we have a significant opportunity to improve our performance even further.
“With over $3 billion in potential savings from lower fuel prices and numerous commercial, operational and cost initiatives already in place, we expect to again perform in the top tier of the S&P Industrials on earnings growth, margins, and cash flows this year despite global economic challenges.”
Delta’s operating revenue for the December quarter decreased two percent, or $145 million, due to $160 million in foreign currency pressures.
Passenger unit revenues declined 1.6 per cent, which includes approximately two points of impact from foreign currency.
“The success of our network actions and commercial initiatives in 2015 allowed us to grow our top line and our unit revenue premium to the industry, while overcoming nearly $700 million of revenue pressure from foreign currency,” said Ed Bastian, Delta president.
“Looking ahead, the overall demand environment remains solid.
“The breadth of our network scale allows us to focus our commercial efforts on those areas of the business with the best opportunity such as the domestic marketplace, while reducing our exposure in some weaker international regions.
“While we expect international volatility and currency pressures to result in unit revenue declines of 2.5 - 4.5 per cent for the March quarter, we should see over ten points of margin improvement given our capacity discipline in the face of a more than 50 per cent decline in fuel prices.”
Adjusted fuel expense declined $726 million compared to the same period in 2014, on 40 per cent lower market fuel prices.
For the quarter, the refinery produced a profit of $8 million.
Settled hedge losses were $336 million, including $60 million of early hedge settlements.
Delta’s debt reduction initiative continued to improve the company’s interest expense, producing $35 million in interest savings for the quarter compared to the same period in 2014.
Non-operating expense includes a $75 million loss for the write-off of Delta’s remaining cash holdings in Venezuela.
“Rigorous cost discipline is a key part of the Delta culture, which was proven by our ability to keep non-fuel unit costs flat in 2015 while significantly investing in our people, products and service,” said Paul Jacobson, Delta chief financial officer.
“The first half of 2016 will see the most pressure to non-fuel unit costs, and we expect performance will improve through the year as we lap last year’s employee wage increases.”