Delta Air Lines reported adjusted operating revenue of $11.8 billion for the first quarter of 2023 (Q1 2023), a 45% increase year-on-year and 14% up on 2019.
The carrier's reported net loss of $363 million was much improved on the $940 million for Q1 2022.
Operating income came to $546 million with the margin reported as 4.6%. Pre-tax income was $217 million and the margin 1.8%. Earnings per share (EPS) came to 25 cents.
The end of the quarter left the carrier with operating cash flow of $2.9bn and free cash flow of a billion less. At the same time it reported $9.5bn in liquidity and adjusted net debt of $21bn, a reduction of $1.3bn from the end of 2022. Liquidity came to $9.5bn at quarter-end, including $2.9bn in undrawn revolver capacity
Unadjusted or GAAP revenue came to $12.8bn, with the equivalent pre-tax loss coming to $506 million and the operating loss $277 million. Debt and lease obligations were $22bn by the end of March 2023 and the operating cash flow was $2.2bn.
The carrier reported an adjusted operating expense of $11.3bn for the quarter, $8.5bn of which was non-fuel, leaving non-fuel CASM 4.7 % higher "year over year", which included a 1 point impact from flying lower capacity than initially planned due to winter storms. Fuel outlay was up 30% compared to the first quarter of 2022, Delta said.
"Non-fuel costs are progressing as expected. For the June quarter, we expect non-fuel unit costs to be 1% to 3% higher year over year," said Dan Janki, chief financial officer. "We remain confident in our ability to deliver unit cost declines in the second half of 2023, while generating industry-leading operating margins of 10 to 12% for the full year."
The carrier updated on its deleveraging, saying it had "record March quarter free cash flow of $1.9bn" which "enabled $1.2 bn of debt repayment and positions us to complete our full year planned debt reduction in the first half of the year."
"We are on track to reduce leverage to 3x to 3.5x in 2023 and remain committed to returning to investment grade metrics by next year. The recent upgrades on our debt rating outlooks by S&P and Fitch recognise our continued progress on delevering our balance sheet," Janki added.
The carrier reported payments on debt and finance lease obligations of $1.2bn in the March quarter, including $455 million of maturities and $695 million of accelerated repurchases of debt instruments with an average interest rate of 7%.
The carrier said it was doing well out of revenue diversification across its loyalty programmes. "Revenue from Premium products and diverse revenue streams in the March quarter was 56% of adjusted operating revenue. Premium revenue growth continues to outpace main cabin."
"Loyalty revenue improvement was driven by strong co-brand acquisitions and spend growth, with American Express remuneration for the March quarter a record $1.7bn", or up almost 40% year-on-year, Delta reported.
Overall March quarter advance cash bookings were nearly 20% higher than 2019,m the carrier explained, with March quarter adjusted total unit revenue (TRASM) up 16% versus 2019 and 23% higher versus 2022.
"We delivered record March quarter revenue with total unit revenue that was 16 percent higher than the same period in 2019. These results reflect the strength in the underlying demand environment and continued momentum in premium products and loyalty revenue," said Glen Hauenstein, Delta's president. "With record advance bookings for the summer, we expect June quarter revenue to be 15 to 17% higher on capacity growth of 17% year over year."
"Delta is building momentum, with the best people in the industry generating nearly $5 billion of operating profit over the last twelve months," said Ed Bastian, the airline's chief executive, "For the June quarter, we expect to deliver record revenue, and an adjusted operating margin of 14 to 16 percent with earnings per share of $2 to $2.25."
"With solid March quarter profitability and a strong outlook for the June quarter, we are confident in our full-year guidance for revenue growth of 15 to 20 percent year over year, earnings of $5 to $6 per share and free cash flow of over $2 billion," Bastian added.