Delta first quarter income swings to $37 million profit

Delta Air Lines has posted a GAAP net income profit of $37 million in the first quarter of the year, a significant improvement from its net loss of $363 million in the first quarter of 2023. Its operating income swung from a loss of $277 million in the first quarter of 2023 to a positive $614 million in the first quarter of this year. Additionally, its GAAP operating revenue improved 8% year-on-year to $13.7bn and its adjusted operating revenue improved 6% to $12.5bn. ""For the March quarter, we delivered record revenue on outstanding operational performance, enabling strong earnings growth,"" said Delta CEO Ed Bastian. ""We repaid nearly $1 billion of debt and ended the quarter with 2.9x of leverage,"" said Delta chief financial officer Dan Janki. Delta's adjusted net debt stood at $20.2bn by the first quarter's end, with an adjusted debt to EBITDAR of 2.9x, down from 3.0x at the end of last year. The airline ended the first quarter with a liquidity of $7.4bn, including $2.9bn in undrawn revolver capacity. Janki added: ""We expect to repay at least $4 billion of debt this year and are on track to improve full year leverage. Our commitment to strengthening the balance sheet was recognised this quarter with positive outlook updates from Moody's and Fitch, marking our continued progress towards an investment grade rating."" Bastian added: ""We anticipate continued strong momentum for our business, and in the June quarter, we expect to deliver record revenue, a mid-teens operating margin and earnings of $2.20 to $2.50 per share. We remain confident in our full year targets for earnings of $6 to $7 per share and free cash flow of $3 to $4 billion."" Its adjusted earnings per share was 45 cents, while its GAAP earnings per share were reported at six cents. Its cargo revenue was down 15% YoY to $178 million, while its loyalty revenues increased by 12% YoY, with its loyalty travel awards revenues up to $844 million and loyalty program revenue up at $795 million in the first quarter of 2024. Furthermore, Delta's premium ticket revenue was up 10% YoY to $4.4bn, while its main cabin revenue was up 4$ to $5.4bn for the fourth quarter. Delta EVP Peter Carter said in an earnings call that its premium offering was ""probably a 50/50 split between traffic and yield."" In the earnings call, Carter also discussed the recent US Government Department of Transport's (DOT) decision to not renew the antitrust immunity agreement regarding its joint cooperation agreement with Aeromexico. He said: ""This was an example of regulatory overreach which is why we challenged it. It's bad for consumers. It's bad for competition. It's bad for the local economies that those flights had served."" Carter added: ""We are currently engaged with the administration and discussing less punitive solutions than the tentative order that was proposed."" Delta believes it will ""take some time"" before the DOT issues a final order, but that it is ""cautiously optimistic"" for that a ""better solution"" will materialise. TD Cowen analyst Helane Becker said that while the first quarter is typically a weaker season, Delta has ""delivered robust results"" and added that the airline is seeing strong demand for its premium products. Becker added that its loyalty program ""continues to be a strong spot"" after it reported $1.7bn in cash remuneration from American Express for the first quarter.