Business
Delta Air Lines Announces September Quarter Profit
- Adjusted pre-tax income1 of $2.2 billion, an increase of $547 million year over year on a similar basis.
- Adjusted earnings of $1.74 per diluted share.
- On a GAAP basis, pre-tax income of $2.1 billion and earnings of $1.65 per share.
- Returned $532 million to shareholders through dividends and share repurchases.
ATLANTA, Oct. 14, 2015 – Delta Air Lines (NYSE:DAL) today reported financial results for the September 2015 quarter, including adjusted net income1 of $1.4 billion or $1.74 per diluted share, up 45% from the September quarter of 2014.
“Despite currency volatility and global economic uncertainty which drove a modest decline in revenues, we expanded operating margins by over five points to 21%, grew earnings per share by 45%, and generated $1.4 billion of free cash flow in the September quarter as demand remains solid and fuel prices have dropped materially. We expect that strong performance to continue in the December quarter with operating margins of 16 to 18% and over 40% earnings per share growth,” said Richard Anderson, Delta’s chief executive officer. “It’s an honor to recognize the hard work of 80,000 outstanding Delta employees with over $1 billion of profit sharing accrued so far this year. Our team consistently delivers best-in-class operations and service to our customers, develops innovative solutions with our global partners, and produces strong returns for our shareholders.”
Revenue Environment
Delta’s operating revenue for the September quarter decreased 0.6%, or $71 million, including $235 million in foreign currency pressures. Passenger unit revenues declined 4.9%, which includes approximately 2.5 points of impact from foreign currency.
Delta continues to successfully implement its Branded Fares initiative, increasing paid first class load factor by 8 points to 56% and expanding its Basic Economy product to over 450 markets. In total, Branded Fares products produced more than $75 million in incremental revenue in the September quarter.
“Our commercial initiatives are delivering solid benefits as we’ve expanded our revenue premium to the industry, strengthened our hubs in New York, Seattle and Los Angeles, and deepened our partnerships around the globe. However, low fuel prices and foreign currency have pressured our revenue performance,” said Ed Bastian, Delta’s president. “By keeping our system capacity flat for the December quarter, we are taking action to drive improvement in our unit revenues which we forecast will decline 2.5-4.5% for the quarter including 2 points of impact from foreign currency. Our conservative growth in this low fuel environment is evidence of our commitment to getting RASM back on a positive trajectory, which is a key component to achieving our long-term margin targets.”
Bastian continued, “As we look ahead, fuel prices remain volatile and we are not recasting the business for low fuel prices. Our plan is for 2016 capacity growth of 0-2%, which we believe is the appropriate level to balance supply and demand and to ensure the momentum in our business continues.”
December 2015 Quarter GuidanceFollowing are Delta’s projections for the December 2015 quarter:
Cost PerformanceAdjusted fuel expense2 declined over $1.1 billion compared to the same period in 2014, as 50% lower market fuel prices and an $87 million increase in profit at the refinery offset $250 million in settled hedge losses. CASM-Ex3 increased 0.9% for the September quarter on a year-over-year basis, with foreign exchange and the benefits of Delta’s domestic refleeting and other cost initiatives offsetting the company’s investments in its employees, products and operations. The September quarter also included approximately 1 point of unit cost pressure from benefit accruals related to recently announced pay increases for Delta employees. Delta’s debt reduction initiative continued to improve the company’s interest expense, producing $33 million in interest savings for the quarter compared to the same period in 2014.
“We continue to benefit from the decline in fuel prices, which provided a $1 billion-plus tailwind this quarter and, at current prices, will drive a $750 million benefit in the December quarter,” said Paul Jacobson, Delta’s chief financial officer. “With volatile fuel prices and revenues under pressure, we are using the current environment to evaluate and prune costs across all parts of the business, including our overhead functions, making sure we’re investing in the right parts of the airline and at levels we can sustain over time.”
Cash Flow, Shareholder Returns, and Adjusted Net Debt4Delta generated $2.4 billion of adjusted operating cash flow and $1.4 billion of free cash flow during the quarter. The company used this strong cash generation to reinvest $1.0 billion back into the business, including $450 million for its 3.5% ownership position in China Eastern. The company returned $532 million to its owners through $107 million of dividends and $425 million of share repurchases, while also strengthening its balance sheet by reducing its adjusted net debt to $6.4 billion. During the quarter, Delta refinanced its senior secured credit facility ahead of its scheduled maturity. The new borrowings include a $1.5 billion undrawn revolver, a $500 million term loan, and a $500 million EETC with a blended rate of 3.77%. The improved strength of Delta’s balance sheet allowed it to lower the overall rate on the borrowing and increase its revolver capacity by $275 million. In addition, the company reduced the outstanding principal amount by $320 million as it continues toward its $4 billion debt target by 2017.
“The strong cash flows we are producing are allowing us to reinvest in our business and our employees, while working toward achieving an investment grade balance sheet and also returning increasing levels of cash to shareholders,” Jacobson continued. “Since initiating our capital return program, we have already retired 8% of Delta’s outstanding share count while reducing our adjusted net debt by nearly $4 billion over that same time period.”
GAAP Metrics Related to Fuel, Cost Performance and Cash Flow Below are GAAP metrics corresponding to the non-GAAP figures cited above. Special ItemsSpecial items, net of taxes, in the September 2015 quarter totaled $69 million, including:
- A $69 million charge primarily for mark-to-market adjustments on fuel hedges settling in future periods.
Special items, net of taxes, in the September 2014 quarter totaled $657 million, including:
- a $397 million charge for fleet and other items;
- a $215 million charge for mark-to-market adjustments on fuel hedges settling in future periods;
- an $87 million charge for debt extinguishment and other items; and
- a $42 million gain related to a litigation settlement.
About Delta
Delta Air Lines serves more than 170 million customers each year. Delta was named to FORTUNE magazine’s top 50 World’s Most Admired Companies in addition to being named the most admired airline for the fourth time in five years. Additionally, Delta has ranked No.1 in the Business Travel News Annual Airline survey for four consecutive years, a first for any airline. With an industry-leading global network, Delta and the Delta Connection carriers offer service to 318 destinations in 58 countries on six continents. Headquartered in Atlanta, Delta employs nearly 80,000 employees worldwide and operates a mainline fleet of more than 800 aircraft. The airline is a founding member of the SkyTeam global alliance and participates in the industry’s leading trans-Atlantic joint venture with Air France-KLM and Alitalia as well as a joint venture with Virgin Atlantic. Including its worldwide alliance partners, Delta offers customers more than 15,000 daily flights, with key hubs and markets including Amsterdam, Atlanta, Boston, Detroit, Los Angeles, Minneapolis/St. Paul, New York-JFK, New York-LaGuardia, Paris-Charles de Gaulle, Salt Lake City, Seattle and Tokyo-Narita. Delta has invested billions of dollars in airport facilities, global products and services, and technology to enhance the customer experience in the air and on the ground. Additional information is available on the Delta News Hub, as well as delta.com, Twitter @DeltaNewsHub, Google.com/+Delta, Facebook.com/delta and Delta’s blog takingoff.delta.com.
End Notes
- Note A to the attached Consolidated Statements of Operations provides a reconciliation of non-GAAP financial measures used in this release to the comparable GAAP metric and provides the reasons management uses those measures.
- Adjusted fuel expense reflects, among other things, the impact of mark-to-market (“MTM”) adjustments and settlements. MTM adjustments are defined as fair value changes recorded in periods other than the settlement period. Such fair value changes are not necessarily indicative of the actual settlement value of the underlying hedge in the contract settlement period. Settlements represent cash received or paid on hedge contracts settled during the period. These items adjust fuel expense to show the economic impact of hedging, including cash received or paid on hedge contracts during the period. See Note A for a reconciliation of adjusted fuel expense and average fuel price per gallon to the comparable GAAP metric.
- CASM – Ex: In addition to fuel expense, profit sharing and special items, Delta believes adjusting for certain other expenses is helpful to investors because other expenses are not related to the generation of a seat mile. These expenses include aircraft maintenance and staffing services Delta provides to third parties, Delta’s vacation wholesale operations, and refinery cost of sales to third parties. The amounts excluded were $306 million and $175 million for the September 2015 and September 2014 quarters, respectively and $945 million and $616 million for the nine months ended September 30, 2015 and 2014, respectively. Management believes this methodology provides a more consistent and comparable reflection of Delta’s airline operations.
- Adjusted net debt includes $381 million of hedge margin receivable, which is cash that we have posted with counterparties as hedge margin. See Note A for additional information about our calculation of adjusted net debt.
Forward Looking Statements
Statements in this press release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the availability of aircraft fuel; the impact of rebalancing our hedge portfolio, recording mark-to-market adjustments or posting collateral in connection with our fuel hedge contracts; the possible effects of accidents involving our aircraft; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; interruptions or disruptions in service at one of our hub or gateway airports; disruptions or security breaches of our information technology infrastructure; our dependence on technology in our operations; the effects of weather, natural disasters and seasonality on our business; the effects of an extended disruption in services provided by third party regional carriers; failure or inability of insurance to cover a significant liability at Monroe’s Trainer refinery; the impact of environmental regulation on the Trainer refinery, including costs related to renewable fuel standard regulations; our ability to retain management and key employees; competitive conditions in the airline industry; the effects of extensive government regulation on our business; the sensitivity of the airline industry to prolonged periods of stagnant or weak economic conditions; the effects of terrorist attacks or geopolitical conflict; and the effects of the rapid spread of contagious illnesses.
Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2014. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of Oct. 14, 2015, and which we have no current intention to update.
NNPCL and Corruption’s Final Throes
By Pius Olasanmi
In the twilight of the Obasanjo administration, when Nigerians were still capable of being outraged, when Turn Around Maintenance (TAM) of refineries was a buzzword that still held some mysticism to bamboozle citizens, during a conversation, a certain man said something profound. The man said, “As a businessman, if I were the owner of these refineries, knowing that they are three decades old, I would take the last money I have, hire bulldozers, raze them to the ground, and obtain loans to build new ones.”
When we pressed him further on why he would engage in such waste, he explained that repairing the refineries is the real waste. He explained that even if the TAM were honestly carried out, a thirty-year-old refinery would never compete favourably with a new one that would integrate contemporary technology. Operating at its best, such a refinery would never be comparatively more efficient. It is therefore pointless to have spent another one naira on the refineries at that point.
A few months later, I had a conversation with a then-lawmaker on an entirely different matter. I mentioned that the National Assembly has failed by not crafting legislation that would criminalise and punish public office holders who foist wrong decisions on the country. The logic: a public office holder need not steal to be punished, wrong decisions should attract penalties for an office holder who opts for the worst of all options when there are less injurious ones.
These established premises speak to the ongoing nauseating efforts at revisionism by those who wrecked the Nigerian National Petroleum Company Limited (NNPCL) and its previous iteration, the Nigerian National Petroleum Corporation (NNPC). Notably, this campaign to rewrite history is traceable to Engineer Mele Kolo Kyari, the disgraced immediate past Chief Executive Officer of NNPCL and his hirelings. They have suffocated the news and the public opinion space with even more lies than they spun while in office.
The Saint Kyari campaign is anchored on convincing Nigerians that the Port Harcourt, Warri and Kaduna Refineries were fully functional when he was booted out of office. So brazen is the campaign that one of its talking heads challenged the group chief executive officer (GCEO), Engr. Bayo Ojulari, to “inform Nigerians categorically what happened to the functioning refineries he inherited from his predecessor, Engr. Mele Kyari.” The effrontery.
We have not forgotten so soon the charade that followed the baffling claim that Nigeria has spent $2.8 billion on the repair of the refineries, while they are not churning out even a single litre of refined product among them. Saint Kyari and his goons played all manner of tricks, all of which embarrassed President Bola Tinubu, who had counted on ticking off the return to productivity of the refineries as part of his achievements, only to realise that he was deceived into celebrating phantoms. Tragic.
Lest we forget, 200 trucks were arranged as props in a well-directed video clip to celebrate the re-streaming of the Port Harcourt Refinery. The disappointment. Nigerians were to learn from several reports that the Port Harcourt refinery was not producing and was instead using old, stored petroleum products to load trucks. Worse still, the Kyari crew was passing off sanction-tainted Russian-sourced crude oil refined in Malta as locally refined products. More insult was piled on the assault on our collective sensibility with the lies that the Port Harcourt Refinery exported semi-finished products. Brazen.
Meanwhile, Kyari and his hirelings called those who pointed out or protested these glaring scams all manner of names. They hid behind industry technicalities and jargon to create the impression that those of us who knew Nigerians were being robbed did not understand what we were saying. The point remains that a $2.8 billion investment can potentially build a refinery with a capacity of around 100,000 barrels per day (bpd). Of course, the actual capacity of such a refinery will depend on various factors, including the complexity of the refinery, the technology used, and the location. That is the amount that Kyari’s regime at the NNPCL took and did not give Nigerians refined products.
Fast forward to Kyari’s sack and the appointment of Engineer Bayo Ojulari, who has demonstrated that things can indeed be done differently. Kyari’s exit was expectedly followed by the Economic and Financial Crimes Commission (EFCC) going after him and his associates. The extent of the theft is better understood against the backdrop of N80 billion being found in the bank account of one of his associates. They went on the run.
Perhaps because the EFCC was biding its time on securing international warrants for the arrests of these characters on the lam, they have become emboldened. They have decided to fight back and rewrite the story of their participation in the greatest fraud against Nigerians. Engineer Ojulari’s renewed mindset, which is entrenching a semblance of the transparency Nigerians demand, became their natural target. The demons that once roamed around the corporation came out with malevolence. They started spinning stories of corruption to tarnish the incumbent who refused to hide their crimes. The objective: bring Ojulari down. But alas, he is winning the war as it stands.
His innocence is proven, and it is glaring that those who want him out are mere charlatans who can no longer ply their corrupt wares because of the impact of the new reforms. Corruption in the NNPCL is in its final throes. The fake news being unleashed against the incumbent leadership is akin to corruption’s last kicks as reforms in the sector strangulate it and its practitioners. The reforms must take place in the NNPCL, whether the industry demons like it or not.
As a parting shot, Kyari and his associates would do well to prepare their defence. In addition to accounting for the $2.8 billion they laundered in the name of repairing the moribund refineries, they must also answer for the poor decision to fix that which is irretrievably broken. Awarding contracts for Turn Around Maintenance of 59-year-old refineries that a right-thinking person had suggested should be demolished almost twenty years ago, when they were only 30 years old, is criminal. Trying to deceive Nigerians that the fake repairs worked is treason.
Olasanmi is a public affairs analyst writing from Lagos.
GRANDIS 5STAR LUXURY APARTMENT & SUITES SET TO REDEFINE LIVING IN VICTORIA ISLAND
Set to Rise elegantly against the Lagos skyline, is the Grandis 5Star Luxury Apartment & Suites. According to Adejuwon Ademola, The General Manager of the Development company, it is more than just a residential building
“it’s a lifestyle statement. Standing 17 floors high in the heart of Victoria Island, this revolutionary masterpiece of modern architecture will offer a panoramic 360° view of Eko Atlantic, Victoria Island, and Ikoyi, transforming every apartment into an exclusive penthouse experience for the world’s most discerning elite.”
Developed by Dumarco Construction Limited, a globally acclaimed company with decades of delivering complex, high-value projects in the highly regulated petroleum, oil, and gas industries, Grandis 5Star brings unmatched international safety standards, uncompromising quality, and timeless elegance into Nigeria’s luxury property market.
> “When you live in Grandis, you’re not just buying a home—you’re investing in peace of mind, world-class safety, and an effortless luxury experience that will remain pristine for decades,” says Adejuwon A. Ademola, General Manager of Dumarco Construction Limited.
The Gold Standard in Safety and Quality
Dumarco’s roots in the oil and gas sector mean the company operates to some of the strictest safety protocols in the world. Every stage—from conceptualization, design, construction, to long-term maintenance—follows internationally accepted procedures and quality assurance measures. Cutting corners is simply not in Dumarco’s vocabulary.
> “In the oil and gas industry, there’s no room for compromise. We’ve brought that same discipline and zero-tolerance for mediocrity into property development,” says Ademola. “That’s why Grandis will be one of the safest and most enduring residential developments in Nigeria.”
To ensure transparency and prevent (project complacency), Dumarco deliberately separates the developer, contractor, and consultant roles, engaging only the most competent professionals in each respective field. Dumarco’s project team includes globally recognized contractors such as Julius Berger, Cappa & D’Alberto, and Elalan, Migliore Construczione & Tecniche (MC&T) and their partners VENCO IMTIAZ CONTRACTING COMPANY (VICC) based in Dubai, UAE, Business Contracting Limited, alongside leading consultants like Morgan Omanitan & Abe, LAMBERT, and James Cubitt.
Grandis – Investments, appreciation, returns and profitability
Our selection process for the location of the project alone was pains-taking and completely thorough scientific process. Top professional companies were employed to conduct a scientific data acquisition and analytical survey of the entire Victoria Island, Ikoyi, Lekki and Eko Atlantic before a project site is selected. Analyzing and acquiring areas developmental charts and trends, studying and gathering historical and present sale prices, rental charge and occupancy rates over a 50 year period from every individual street before the selection of the location of any of our developments especially true for the Grandis Project
He adds,
“Our clients and residents can be rest assured that the location of Grandis has been scientifically proven through all existing data to provide our clients with a 100% occupancy rate, highest developmental location, highest rental income and investment returns. ”
The Grandis Experience
Located minutes away from international corporate headquarters, embassies, and landmarks such as Eko Hotel, Radisson Blu, and the Radisson Red, Grandis offers unmatched convenience for professionals, diplomats, and high-net-worth individuals. Every residence is designed for both indulgence and efficiency, with high-grade finishes, smart-home systems, and private amenities that ensure seamless living.
From sunrise over the Atlantic to the glittering Lagos night skyline, residents will enjoy uninterrupted luxury, supported by discreet and highly trained staff, advanced security systems, and a design that prioritizes comfort and privacy.
> “We designed Grandis for people who want everything—security, elegance, convenience, and the assurance that their home will look as spectacular in 20 years as it does on day one,” Ademola notes.
A Legacy That Lasts
With its combination of visionary architecture, peerless safety, and meticulous maintenance planning, Grandis is built to remain iconic for generations. Thanks to Dumarco’s meticulous approach, the building’s service charges are expected to remain low while its value and appeal continue to appreciate over time.
In a market often marred by shortcuts and substandard practices, Mr Ademola says
Grandis stands as a beacon of what luxury living should be—safe, spectacular, and built to last.
“Grandis 5Star Luxury Apartment & Suites — Where safety meets sophistication, and every detail is designed for a life well-lived.”
He added
Website -www.dumarcoltd.com
Project website – www.26idowutaylor.com
Email [email protected]
Tel / WhatsApp +234 9077777883
GM – Adejuwon A. Ademola
celebrity radar - gossips
Nationwide Talent, One Broadcaster: Tinubu Picks Pedro, Bello, Din, Mohammed to Lead NTA
Tinubu Overhauls NTA Leadership: Media Powerhouse Rotimi Pedro Takes Helm as DG
President Bola Ahmed Tinubu has announced a major shake-up at the Nigerian Television Authority (NTA), appointing renowned media executive Rotimi Richard Pedro as the new Director-General in a move widely seen as a bold step toward modernising the state broadcaster.
Pedro, a Lagos native, brings nearly 30 years of expertise in broadcasting, sports rights, and marketing communications across Africa, the UK, and the Middle East. A trained entertainment and intellectual property lawyer, he also holds an MSc in Investment Management and Finance from City University Business School, London.
In 1995, Pedro founded Optima Sports Management International (OSMI), which rose to become one of Africa’s leading sports content providers—distributing premium events such as the English Premier League, UEFA Champions League, FIFA World Cup, and CAF competitions to audiences in over 40 countries.
His career highlights include top roles at Bloomberg Television Africa and Rapid Blue Format, as well as advisory work for FIFA, UEFA, Fremantle Media, and the African Union of Broadcasters (AUB). At the AUB, he was instrumental in securing exclusive pan-African free-to-air media rights for all CAF competitions.
Alongside Pedro’s appointment, Tinubu named Karimah Bello from Katsina State as Executive Director of Marketing, Stella Din from Plateau State as Executive Director of News, and Sophia Issa Mohammed from Adamawa State as Managing Director of NTA Enterprises Limited.
Industry insiders credit Pedro with building commercially viable broadcast platforms, driving sponsorship growth, and delivering world-class content to African audiences. His appointment marks one of the most significant leadership changes at NTA in years—signalling the government’s intent to strengthen the broadcaster’s competitiveness in a fast-evolving media landscape.
-
society5 months agoRamadan Relief: Matawalle Distributes Over ₦1 Billion to Support 2.5 Million Zamfara Residents
-
Politics2 months agoNigeria Is Not His Estate: Wike’s 2,000‑Hectare Scandal Must Shake Us Awake
-
society4 months agoBroken Promises and Broken Backs: The ₦70,000 Minimum Wage Law and the Betrayal of Nigerian Workers
-
society3 months agoOGUN INVESTS OVER ₦2.25 BILLION TO BOOST AQUACULTURE
You must be logged in to post a comment Login