Air101: Delta reports adjusted pre-tax loss of $3.4 billion in 2021

13 January, 2022

Delta reports adjusted pre-tax loss of $3.4 billion in 2021

Delta Air Lines today reported financial results for the December quarter and full year 2021 and provided its outlook for the March quarter 2022. Highlights of the December quarter and full year 2021 results, including both GAAP and adjusted metrics, are on page five and are incorporated here.

"2021 was a year like no other for Delta, with significant progress in our recovery supported by growing brand preference, enabling us to be the only major U.S. airline to deliver profitability across the second half of the year," said Ed Bastian, Delta's chief executive officer. "As always, our people drove this success, which is why we were happy to announce this morning a special profit-sharing payment for all eligible employees."

"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," Bastian said. "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."

December Quarter 2021 Financial Results

Adjusted pre-tax income of $170 million excludes a net impact of $564 million primarily in equity method losses, mark-to-market adjustments on investments and special profit-sharing payment
Adjusted operating revenue of $8.4 billion, which excludes third-party refinery sales, was 74 percent recovered versus December quarter 2019 on capacity that was 79 percent restored
Total operating expense decreased $833 million compared to the December quarter 2019. Adjusted for costs from third-party refinery sales, total operating expense decreased $1.9 billion or 19% percent in the December quarter 2021 versus the comparable 2019 period
Remuneration from American Express in the quarter was $1.2 billion, up 11 percent compared to the December quarter 2019
At the end of the December quarter, the company had $14.2 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit facilities

Full Year 2021 Financial Results

Adjusted pre-tax loss of $3.4 billion excludes a net benefit of $3.8 billion from items primarily related to the Payroll Support Programs (PSP), partially offset by equity method losses, debt extinguishment charges and special profit-sharing payment
Generated a pre-tax profit of $1.1 billion in the second half of 2021. Excluding PSP, mark-to-market adjustments, equity method losses and debt extinguishment charges reported an adjusted pre-tax profit of $386 million in the second half of 2021
Adjusted operating revenue of $26.7 billion, which excludes third-party refinery sales, was 57 percent recovered versus full year 2019 on capacity that was 71 percent restored
Total operating expense, which includes $4.5 billion of benefit related to PSP, decreased $12.4 billion compared to 2019. Adjusted for the benefits related to PSP and costs from third-party refinery sales, total operating expense, adjusted decreased $10.9 billion or 27 percent versus 2019
Remuneration from American Express for full year 2021 was $4.0 billion, 98 percent restored compared to full year 2019
Invested $2.9 billion back in the business and reduced financial obligations by $7 billion, including fully funding the pension plans on a Pension Protection Act (PPA) basis
The company had total debt and finance lease obligations of $26.9 billion with adjusted net debt of $20.6 billion at the end of December 2021

DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)

	Three Months Ended				Year Ended
	December 31,				December 31,
(in millions, except per share data)	2021	2019	$ Change	% Change	2021	2019	$ Change	% Change
Operating Revenue:
Passenger	$ 7,241	$ 10,245	$ (3,004)	(29)%	$ 22,519	$ 42,277	$ (19,758)	(47)%
Cargo	304	187	117	63%	1,032	753	279	37%
Other	1,925	1,007	918	91%	6,348	3,977	2,371	60%
Total operating revenue	9,470	11,439	(1,969)	(17)%	29,899	47,007	(17,108)	(36)%

Operating Expense:
Salaries and related costs	2,632	3,046	(414)	(14)%	9,728	11,601	(1,873)	(16)%
Aircraft fuel and related taxes	1,577	2,012	(435)	(22)%	5,633	8,519	(2,886)	(34)%
Ancillary businesses and refinery	1,233	299	934	NM	3,957	1,245	2,712	NM
Contracted services	697	742	(45)	(6)%	2,420	2,942	(522)	(18)%
Landing fees and other rents	542	538	4	1%	2,019	2,176	(157)	(7)%
Depreciation and amortization	504	622	(118)	(19)%	1,998	2,581	(583)	(23)%
Regional carrier expense	478	536	(58)	(11)%	1,736	2,158	(422)	(20)%
Aircraft maintenance materials and outside repairs	386	417	(31)	(7)%	1,401	1,751	(350)	(20)%
Passenger commissions and other selling expenses	313	542	(229)	(42)%	953	2,211	(1,258)	(57)%
Passenger service	236	325	(89)	(27)%	756	1,312	(556)	(42)%
Aircraft rent	118	105	13	12%	430	423	7	2%
Restructuring charges	(16)	—	(16)	NM	(19)	—	(19)	NM
Profit sharing	108	387	(279)	(72)%	108	1,643	(1,535)	(93)%
Government grant recognition	—	—	—	NM	(4,512)	—	(4,512)	NM
Other	399	469	(70)	(15)%	1,405	1,827	(422)	(23)%
Total operating expense	9,207	10,040	(833)	(8)%	28,013	40,389	(12,376)	(31)%

Operating Income	263	1,399	(1,136)	(81)%	1,886	6,618	(4,732)	(72)%

Non-Operating Expense:
Interest expense, net	(265)	(72)	(193)	NM	(1,279)	(301)	(978)	NM
Impairments and equity method (losses)/gains	(232)	18	(250)	NM	(337)	(62)	(275)	NM
Gain/(Loss) on investments, net	(197)	136	(333)	NM	56	119	(63)	(53)%
Loss on extinguishment of debt	(54)	—	(54)	NM	(319)	—	(319)	NM
Miscellaneous, net	90	(84)	174	NM	391	(176)	567	NM
Total non-operating expense, net	(658)	(2)	(656)	NM	(1,488)	(420)	(1,068)	NM

(Loss)/Income Before Income Taxes	(395)	1,397	(1,792)	NM	398	6,198	(5,800)	(94)%

Income Tax Provision	(13)	(298)	285	(96)%	(118)	(1,431)	1,313	(92)%

Net (Loss)/Income	(408)	1,099	(1,507)	NM	$ 280	$ 4,767	$ (4,487)	(94)%

Basic (Loss)/Earnings Per Share	$ (0.64)	$ 1.71			$ 0.44	$ 7.32
Diluted (Loss)/Earnings Per Share	$ (0.64)	$ 1.71			$ 0.44	$ 7.30

Basic Weighted Average Shares Outstanding	637	642			636	651
Diluted Weighted Average Shares Outstanding	637	644			641	653

DELTA AIR LINES, INC.
Passenger Revenue
(Unaudited)

	Three Months Ended				Year Ended
	December 31,				December 31,
(in millions)	2021	2019	$ Change	% Change	2021	2019	$ Change	% Change
Ticket - Main cabin	$ 3,687	$ 5,238	$ (1,551)	(30)%	$ 11,626	$ 21,919	$ (10,293)	(47)%
Ticket - Business cabin and premium products	2,585	3,684	(1,099)	(30)%	7,713	14,989	(7,276)	(49)%
Loyalty travel awards	573	726	(153)	(21)%	1,786	2,900	(1,114)	(38)%
Travel-related services	396	597	(201)	(34)%	1,394	2,469	(1,075)	(44)%
Total passenger revenue	$ 7,241	$ 10,245	$ (3,004)	(29)%	$ 22,519	$ 42,277	$ (19,758)	(47)%



DELTA AIR LINES, INC.
Other Revenue
(Unaudited)

	Three Months Ended				Year Ended
	December 31,				December 31,
(in millions)	2021	2019	$ Change	% Change	2021	2019	$ Change	% Change
Refinery	$ 1,040	$ 2	$ 1,038	NM	$ 3,229	$ 97	$ 3,132	NM
Loyalty program	510	519	(9)	(2)%	1,770	1,962	(192)	(10)%
Ancillary businesses	207	305	(98)	(32)%	793	1,200	(407)	(34)%
Miscellaneous	168	181	(13)	(7)%	556	718	(162)	(23)%
Total other revenue	$ 1,925	$ 1,007	$ 918	91%	$ 6,348	$ 3,977	$ 2,371	60%

DELTA AIR LINES, INC.
Total Revenue
(Unaudited)

			Increase (Decrease)
			4Q21 versus 4Q19
Revenue		4Q21 ($M)	Change	Unit Revenue	Yield	Capacity
Domestic	$	5,951	(22)%	(13)%	(9)%	(10)%
Atlantic		617	(53)%	(20)%	—%	(42)%
Latin America		560	(20)%	(13)%	(3)%	(8)%
Pacific		113	(81)%	(37)%	61%	(69)%
Total Passenger	$	7,241	(29)%	(11)%	(2)%	(21)%
Cargo Revenue		304	63%
Other Revenue		1,925	91%
Total Revenue	$	9,470	(17)%	5%
Third Party Refinery Sales		(1,040)
Total Revenue, adjusted	$	8,430	(26)%	(6)%

DELTA AIR LINES, INC.
Statistical Summary
(Unaudited)

	Three Months Ended				Year Ended
	December 31,				December 31,
	2021	2019	Change		2021	2019	Change
Revenue passenger miles (millions)	40,402	56,028	(28)	%	134,692	237,680	(43)	%
Available seat miles (millions)	51,744	65,468	(21)	%	194,474	275,379	(29)	%
Passenger mile yield (cents)	17.92	18.29	(2)	%	16.72	17.79	(6)	%
Passenger revenue per available seat mile (cents)	13.99	15.65	(11)	%	11.58	15.35	(25)	%
Total revenue per available seat mile (cents)	18.30	17.47	5	%	15.37	17.07	(10)	%
TRASM, adjusted - see Note A (cents)	16.29	17.39	(6)	%	13.71	16.97	(19)	%
Cost per available seat mile (cents)	17.79	15.34	16	%	14.40	14.67	(2)	%
CASM-Ex - see Note A (cents)	12.56	11.59	8	%	12.12	10.88	11	%
Passenger load factor	78%	86%	(8)	pts	69%	86%	(17)	pts
Fuel gallons consumed (millions)	755	999	(24)	%	2,778	4,214	(34)	%
Average price per fuel gallon	$ 2.09	$ 2.01	4	%	$ 2.02	$ 2.02	—	%
Average price per fuel gallon, adjusted - see Note A	$ 2.10	$ 1.99	6	%	$ 2.02	$ 2.01	—	%

DELTA AIR LINES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
	Three Months Ended
	December 31,
(in millions)	2021	2019
Cash Flows From Operating Activities:
Net (loss)/income	$ (408)	$ 1,099
Depreciation and amortization	504	622
Changes in air traffic liability	(18)	(647)
Changes in balance sheet and other, net	477	(105)
Net cash provided by operating activities	555	969

Cash Flows From Investing Activities:
Property and equipment additions:
Flight equipment, including advance payments	(635)	(570)
Ground property and equipment, including technology	(583)	(502)
Purchase of short-term investments	(1,856)	—
Redemption of short-term investments	2,878	—
Other, net	(283)	293
Net cash used in investing activities	(479)	(779)

Cash Flows From Financing Activities:
Payments on debt and finance lease obligations	(1,148)	(516)
Repurchase of common stock	—	(225)
Proceeds from long-term obligations	—	1,557
Cash dividends	—	(259)
Fuel card obligation	—	297
Other, net	(19)	(12)
Net cash (used in)/provided by financing activities	(1,167)	842

Net (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash Equivalents	(1,091)	1,032
Cash, cash equivalents and restricted cash equivalents at beginning of period	$ 9,660	$ 2,698
Cash, cash equivalents and restricted cash equivalents at end of period	$ 8,569	$ 3,730

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets to the total of the same such amounts shown above:


Current assets:
Cash and cash equivalents	$ 7,933	$ 2,882
Restricted cash included in prepaid expenses and other	163	212
Other assets:
Cash restricted for airport construction	473	636
Total cash, cash equivalents and restricted cash equivalents	$ 8,569	$ 3,730


DELTA AIR LINES, INC.
Consolidated Balance Sheets
(Unaudited)

		December 31,	December 31,
(in millions)		2021	2020
ASSETS
Current Assets:
	Cash and cash equivalents	$ 7,933	$ 8,307
	Short-term investments	3,386	5,789
	Accounts receivable, net	2,404	1,396
	Fuel inventory	694	377
	Expendable parts and supplies inventories, net	404	355
	Prepaid expenses and other	1,119	1,180
	Total current assets	15,940	17,404

Property and Equipment, Net:
	Property and equipment, net	28,749	26,529

Other Assets:
	Operating lease right-of-use assets	7,173	5,733
	Goodwill	9,753	9,753
	Identifiable intangibles, net	6,001	6,011
	Cash restricted for airport construction	473	1,556
	Equity investments	1,712	1,665
	Deferred income taxes, net	1,370	1,988
	Other noncurrent assets	1,300	1,357
	Total other assets	27,782	28,063
Total assets		$ 72,471	$ 71,996

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
	Current maturities of debt and finance leases	$ 1,782	$ 1,732
	Current maturities of operating leases	693	678
	Air traffic liability	6,228	4,044
	Accounts payable	4,240	2,840
	Accrued salaries and related benefits	2,457	2,086
	Loyalty program deferred revenue	2,710	1,777
	Fuel card obligation	1,100	1,100
	Other accrued liabilities	1,746	1,670
	Total current liabilities	20,956	15,927

Noncurrent Liabilities:
	Debt and finance leases	25,138	27,425
	Noncurrent air traffic liability	130	500
	Pension, postretirement and related benefits	6,364	10,630
	Loyalty program deferred revenue	4,849	5,405
	Noncurrent operating leases	7,002	5,713
	Other noncurrent liabilities	4,398	4,862
	Total noncurrent liabilities	47,881	54,535

Commitments and Contingencies

Stockholders' Equity:		3,634	1,534
Total liabilities and stockholders' equity		$ 72,471	$ 71,996