Delta Air Lines, Inc. (DAL)
Q1 2009 Earnings Call
April 21, 2009 10:00 am ET
Jill Greer – Director of Investor Relations
Richard H. Anderson – Chief Executive Officer
Edward H. Bastian – President
Hank Halter – Chief Financial Officer
Glen W. Hauenstein – Executive VP, Network Planning & Revenue Management
John E. "Ned" Walker – Chief Communications Officer
Michael Linenberg – Banc of America
Gary Chase – Barclays Capital
Helane Becker – Jesup & Lamont
Jamie Baker – J. P. Morgan
Hunter Keay – Stifel Nicolaus & Company
Michael Derchin – FTN Midwest Securities
William Green – Morgan Stanley
Kevin Crissey – UBS
Bob McAdoo - Avondale Partners
Harry Weber – The Associated Press
James Pilcher – The Cincinnati Inquirer
Kelly Yamanouchi – Atlanta Journal
Ted Reed – TheStreet.com
John Crowley – Reuters
Mike Westerfield – Wall Street Journal
John Lomax - St Paul Pioneer Press
Mary Jane Credeur – Bloomberg News
Aaron Karp – Air Transport World
Andy Compart – Aviation Daily
Previous Statements by DAL
» Delta Airlines Q2 2009 Earnings Call Transcript
» Delta Airlines, Inc. Q4 2008 Earnings Call Transcript
» Delta Airlines, Inc. Q3 2008 Earnings Call Transcript
Thank you for joining us today to discuss Delta’s March quarter 2009 financial results. Joining us from Atlanta today are: Richard Anderson, Chief Executive Officer; Ed Bastian, Delta’s President; and Hank Halter, our Chief Financial Officer. Also joining us after the call during the Q&A session are Steve Gorman, our Chief Operating Officer; Glen Hauenstein, EVP of Network and Revenue Management; Mike Campbell, EVP of HR and Labor Relations; Ben Hirst, our General Counsel; Paul Jacobson, Senior Vice President and Treasurer; and Ned Walker, our Senior Vice President and Chief Communications Officer.
Richard will begin the call with a Delta and industry overview, Ed will then address our March 2009 quarter financial and revenue performance and give an update on merger integration. Hank will conclude with a review of Delta’s cost performance and liquidity.
We have allocated 25 minutes for executive comments. After their comments we have allocated 25 minutes for questions from the analysts, and we will then conclude the call with a 10-minute Q&A with the media. When we get to the Q&A I would like to request that you limit yourself to two questions. That should allow us to get as many questions in as possible during today’s call.
Today’s discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual result to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in Delta’s SEC filings.
We will also discuss certain non-GAAP financial measures and you can find the reconciliation of those non-GAAP measures on our investor relations website at www.Delta.com. With that, I’ll turn the call over to our Chief Executive Officer.
Richard H. Anderson
Good morning and thanks for joining us today.
This has been a challenging quarter for the global economy and Delta was certainly not immune. However, it is clear that Delta’s fundamental business strength is solid as we essentially broke even for the quarter, excluding fuel hedges and special items.
We achieved this in one of the worst economic recessions in our lifetime but before I get into the details I want to first thank the Delta team around the world for their work and dedication to running a great airline. While tough days still lie ahead, I have no doubt the people of Delta will get through these challenges with professionalism and unwavering commitment to delivering a first-rate travel experience to our customers.
We have recognized employees for their efforts with more than $10.0 million in shared rewards so far in 2009 for meeting operational performance goals and thanks to the team for some really great work.
For the quarter, Delta reported a net loss, excluding special items, of $693.0 million. These results were impacted by hedging decisions we made last year when crude was climbing to nearly $150 a barrel. What is critical to focus on is excluding special items and fuel hedge losses of $684.0 million, we had a break-even quarter.
We generated positive cash flow from operations of over $600.0 million during the quarter and our strong $5.0 billion liquidity balance was unchanged from the end of fourth quarter 2008. So we are in a sound position to deal with the current economic environment.
We’ve got a strong financial foundation, a diverse global network, unmatched benefits from the merger, and the best employees in the industry.
In the midst of challenging times it’s even more important that we’re running a solid operation. In February Delta and Northwest posted top-tier results in completion factor and on-time arrivals, as reported by the Department of Transportation. In fact, Delta had its best February completion factor performance on record at 99.1%. Northwest kept its performance at the top of the industry during the quarter and Delta improved its baggage results more than 20% year-over-year in the March quarter, so the investments we’ve been making in technology and processes are paying off for our customers.
I think the biggest question out there now is the revenue environment. We have seen some signs of stabilization as the revenue environment appears to have bottomed out, but it’s still a bit early to call and we expect to face significant headwinds throughout 2009.
In addition to our announcement last month to reduce international capacity 10%, starting in September, we’re taking further actions to increase revenue, reduce costs, and preserve liquidity. We continue to believe that unbundling our pricing is the right thing for our customers and our business.