Delta Air Lines Stock Gains After Q4 Results, Expects Strong Spring, Summer Travel Season

  • Delta Air Lines Inc DAL reported a fourth-quarter FY21 adjusted operating revenue decline of 25.9% from 4Q19 to $8.43 billion. GAAP Operating revenue was $9.47 billion, down 17.2% from 4Q19. Analysts expected the company to report revenues of $9.14 billion.
  • The adjusted operating revenue was 74% restored, in line with the company's mid-December guidance update on system capacity that was 79% restored compared to December quarter 2019 levels.
  • Adjusted EPS of $0.22 topped the consensus of $0.13.
  • Total passenger revenue was $7.24 billion, a decline of 29% from 4Q19. Cargo revenue increased by 63% to $304 million, and Other revenue increased by 91% to $1.93 billion, both compared to 4Q19.
  • Q4 operating income declined 81% from 4Q19 to $263 million. Total Non-GAAP operating expenses declined by 18.8% from 4Q19 to $8.08 billion in the quarter.
  • Delta Air Lines generated an operating cash flow of $555 million, compared to $969 million in 4Q19. Free cash flow was negative $441 million for the quarter, with net capital expenditures reinvested in the business of $948 million.
  • Delta Air Lines held cash and equivalents of $11.3 billion and $2.9 billion in undrawn revolver capacity as of December 31, 2021.
  • Total revenue per available seat mile increased by 5% from 4Q19, while the passenger load factor was 78% vs. 86% in 4Q19.
  • Compared to 4Q19, CASM-Ex was 8.3% higher, including a 1.2 point impact primarily due to omicron disruptions in the last two weeks of the December quarter.
  • System yields improved 7%, and system load factors declined by 2 points to 78% versus the September 2021 quarter.
  • 1Q22 Outlook (compared to Q1 2019): Delta Air Lines expects capacity to be between 83%-85% restored, total revenue recovered 72%-76%; capital expenditures to be ~$1.6 billion; adjusted net debt of ~$22 billion.
  • "While the rapidly spreading omicron variant has significantly impacted staffing levels and disrupted travel across the industry, Delta's operation has stabilized over the last week and returned to pre-holiday performance," commented Ed Bastian, Delta's CEO.
  • "Omicron is expected to temporarily delay the demand recovery 60 days, but as we look past the peak, we are confident in a strong spring and summer travel season with significant pent-up demand for consumer and business travel."
  • Price Action: DAL shares are trading higher by 1.58% at $41.25 during the premarket session on Thursday.
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