Delta post 1.5B fourth quarter profit.

[topDawg]

Congrats to all Delta employees world wide. 1.5 billion in profit sharing heading out way. 
 
http://ir.delta.com/news-and-events/news/news-release-details/2016/Delta-Air-Lines-Announces-December-Quarter-and-Full-Year-2015-Profit/default.aspx
 
 
Listening to call, 17% operating margin, that is just absolutely crazy for 4Q.
 
will post back if anything good comes up in the call.  

 

[topDawg]

Some notes from the call
Delta has the goal to be at a flat PRASM to up by summer. However If oil keeps falling it is going to keep putting pressure on the goal. 
capex will be inflated over the YOY goal, but that is due to PS payouts. (for Q1)
Over the year in 2016 capex will be closer to the high end of the goal(3Bs) 
Delta has bought ~7% of its market cap in share buy backs (not sure if that number was in 2015 or total) 
Share buy backs to be (much) higher in 2016 v 2015
Aeormexico deal expected to close this year
Capacity discipline, capacity discipline, capacity discipline
7 747-400 planned for 2016, to be parked in 2017 with A350 indoc
Jame Baker asking about Delta's schedule changes and pretty much when Delta sets the schedule for good.
Glen told him Delta changes on the fly. Gave example of Paris attacks and quickly cutting capacity to CDG/BRU 
Richard added in that due to pilot issues at DCI they make changes as close as a week out in the domestic marketplace. 
Forward booking looking very good. Committed on Feb-apr and said summer is very strong but obviously a long way out 
Demand doesn't show signs of falling. Corp demand very high. Up 3% in 4Q
Thanksgiving and Christmas were some of the highest loads in DL history. Revenue also very high and solid. 
Capacity expected flat to 2% basically even if oil becomes free. Not chasing marketshare with unprofitable flying with high oil. 
Because of the fleet Delta can reduce capacity easy (ie parking M88s that are owned) but limited on growth due to things such as fleet size, staffing etc. 
Still committed to hedging long term but short term sitting this round out. Asked if they were to hedge today what kind of prices are they seeing Richard said "very low" 
All 4 fare products (F/C, Y+, Y, Y-) to be completely rolled out across all markets by 2018
Thoughts on C-Series. At the right price its a very competitive airplane, Richard likes GTF. Says its as important to industry 787(carbon fiber). (fingers crossed for a GTF MRO in the TechOps future, having said that I will be interested to see if DL works with Pratt when they have a CFM option (ie 320NEO). Delta has had a lot of issues with Pratt and is still in court with them (the latest round) for Pratt 4000 issues) )
very seriously looking at buying the airplane. 
Asked on LAX move, "no comment". Ed said it still has a long way to go, no set timeline on making the move. 
Very happy with the refinery, full profit just under 300M. 
Richard added in they paid 150M for it.
and then the reported ask "so its doing well then?" I was really hoping someone would say sarcastically "Nope" 
 
 
One thing I will say about this leadership team, I hear a lot of people say they dislike Anderson, but I love listening to these calls. He sometimes reminds me of professors I had in college the way he will break things down and explain them.

 

[700UW]

http://www.thestreet.com/story/13426877/1/delta-could-save-3-billion-in-2016-as-oil-falls-but-forex-hurts.html
 

Passenger revenue per available seat mile in the fourth quarter declined 1.6%, which includes roughly 2 points of impact from foreign currency, the airline said. The biggest declines were 6.6% in Latin American and 4.1% in the trans-Atlantic; domestic PRASM declined 1.4%. Delta had guided toward an overall PRASM decline of 1.5%.

Looking ahead, "We have a significant opportunity to improve our performance even further," CEO Richard Anderson said in a prepared statement. President Ed Bastian said the overall demand environment remains strong.

Current quarter PRASM is expected to decline between 2.5% and 4.5%, reflecting international volatility and currency pressure. "Delta provided updated (and raised) guidance for Mar Q 2016 which suggests not only is the company benefiting from lower fuel prices, but it appears PRASM is trending better than what we initially expected," wrote Deutsche Bank analyst Mike Linenberg in a note
 

 

[swamt]

Nice 4th Q. Dawg, congrats to you and all the employees for a very successful 2015.  Here's to hoping all the airlines will continue the record quarters and years thru-out the teen years and into a new decade.  Again congrats.  Looks like you guys will be looking forward to PS checks...

 

[Kev3188]

Some notes from the call
Delta has the goal to be at a flat PRASM to up by summer. However If oil keeps falling it is going to keep putting pressure on the goal. 
capex will be inflated over the YOY goal, but that is due to PS payouts. (for Q1)
Over the year in 2016 capex will be closer to the high end of the goal(3Bs) 
Delta has bought ~7% of its market cap in share buy backs (not sure if that number was in 2015 or total) 
Share buy backs to be (much) higher in 2016 v 2015
Aeormexico deal expected to close this year
Capacity discipline, capacity discipline, capacity discipline
7 747-400 planned for 2016, to be parked in 2017 with A350 indoc
Jame Baker asking about Delta's schedule changes and pretty much when Delta sets the schedule for good.
Glen told him Delta changes on the fly. Gave example of Paris attacks and quickly cutting capacity to CDG/BRU 
Richard added in that due to pilot issues at DCI they make changes as close as a week out in the domestic marketplace. 
Forward booking looking very good. Committed on Feb-apr and said summer is very strong but obviously a long way out 
Demand doesn't show signs of falling. Corp demand very high. Up 3% in 4Q
Thanksgiving and Christmas were some of the highest loads in DL history. Revenue also very high and solid. 
Capacity expected flat to 2% basically even if oil becomes free. Not chasing marketshare with unprofitable flying with high oil. 
Because of the fleet Delta can reduce capacity easy (ie parking M88s that are owned) but limited on growth due to things such as fleet size, staffing etc. 
Still committed to hedging long term but short term sitting this round out. Asked if they were to hedge today what kind of prices are they seeing Richard said "very low" 
All 4 fare products (F/C, Y+, Y, Y-) to be completely rolled out across all markets by 2018
Thoughts on C-Series. At the right price its a very competitive airplane, Richard likes GTF. Says its as important to industry 787(carbon fiber). (fingers crossed for a GTF MRO in the TechOps future, having said that I will be interested to see if DL works with Pratt when they have a CFM option (ie 320NEO). Delta has had a lot of issues with Pratt and is still in court with them (the latest round) for Pratt 4000 issues) )
very seriously looking at buying the airplane. 
Asked on LAX move, "no comment". Ed said it still has a long way to go, no set timeline on making the move. 
Very happy with the refinery, full profit just under 300M. 
Richard added in they paid 150M for it.
and then the reported ask "so its doing well then?" I was really hoping someone would say sarcastically "Nope" 
 
 
One thing I will say about this leadership team, I hear a lot of people say they dislike Anderson, but I love listening to these calls. He sometimes reminds me of professors I had in college the way he will break things down and explain them.

I'm not a fan of Andrrson, but I am one of both Hauenstein & Jacobsen.

 

[topDawg]

http://www.thestreet.com/story/13426877/1/delta-could-save-3-billion-in-2016-as-oil-falls-but-forex-hurts.html
 

Do you have a point? 
All of the industry is facing PRASM headwinds. Something that doesn't say that they did say on the call(that I didn't think about) is with fuel lowering it is effecting PRASM (negatively) because fuel charges are now going away and fares (obviously) aren't rising to cover the lost revenue from those charges.
 
but as I said in my notes, Delta expect to be PRASM flat to positive in the summer (assuming they mean the July quarter)  
 

Nice 4th Q. Dawg, congrats to you and all the employees for a very successful 2015.  Here's to hoping all the airlines will continue the record quarters and years thru-out the teen years and into a new decade.  Again congrats.  Looks like you guys will be looking forward to PS checks...

Thanks swamt. I really do hope this industry gets on the right track to be able to be profitable during any economic climate.
Hope you guys make good money on your PS!

 

[topDawg]

I'm not a fan of Andrrson, but I am one of both Hauenstein & Jacobsen.

I don't like his track record, but I can't complain to much for what he has done at Delta. I never thought the combined company would be this good and honestly when times get bad I have a feeling we will all be thinking them for cleaning up the balance sheet now. 

 

[Kev3188]

I feel like he's more interested in being seen as the new Woolman than anything else. YMMV.

As far as the balance sheet/network, I will be thanking the other two when the inevitable downturn comes.

 

[WeAAsles]

Congratulations to everyone at Delta for putting in the hard work daily to be successful. Kudos.

 

[NewHampshire Black Bears]

Looks like DALPA (with the ex NW Pilots at the 'helm, PLUS these  BIG  +($$$)   #'s) have NO Trouble getting that  " 40 % " raise !
 
(Sure glad AA doesn't have THAT kind of albatross hanging over thier head)  !!  

 

[NewHampshire Black Bears]

WHOA !    Time out !!
 
Reuters is reporting that Del - DUH had Q4 adjusted total gross earnings  of    " $926M. "
That a helll of a lot different  than " $1.5B "   !!!!!!!!!!!/???????

 

[topDawg]

I feel like he's more interested in being seen as the new Woolman than anything else. YMMV.

As far as the balance sheet/network, I will be thanking the other two when the inevitable downturn comes.

Not going to say that he doesn't want to me looked at as a Woolman type. (he won't be however) 
 
but Ed and Richard are the ones who got the ball rolling on this balance sheet clean up. Jacobson wasn't even a executive when it started and Glen (who, IMO, should be the next CEO) well thats somewhat out of his department I would guess. (he tries to make the company profitable no question but its not really up to him what the company does with the money)  
 

WHOA !    Time out !!
 
Reuters is reporting that Del - DUH had Q4 adjusted total gross earnings  of    " $926M. "
That a helll of a lot different  than " $1.5B "   !!!!!!!!!!!/???????

GAAP profit of $1.5B 
 
Google GAAP if you don't know what it is. 

 

[Kev3188]

Not going to say that he doesn't want to me looked at as a Woolman type. (he won't be however) 
 
but Ed and Richard are the ones who got the ball rolling on this balance sheet clean up. Jacobson wasn't even a executive when it started and Glen (who, IMO, should be the next CEO) well thats somewhat out of his department I would guess. (he tries to make the company profitable no question but its not really up to him what the company does with the money)  

Of course, but it's his retooling of the network that is going a long way toward generate the revenue we're now seeing in the first place.

 

[topDawg]

Of course, but it's his retooling of the network that is going a long way toward generate the revenue we're now seeing in the first place.

well one thing to remember about that, 
 
Glen was the one who put the pre-merger network in-place. I question if things like moving a lot of Europe capacity to AMS/CDG (something NW did) was really him or Anderson. ATL and JFK were dual hubs and till the last year or so we were the larger year round network to Europe. Once Anderson came on then we started taking cuts. It got moved to JFK or cut all together. 
 
Not to take any credit away from him but our networking department has changed a lot compared to when Gerry and Jim were running the show compared to Richard. Its a lot more Northwest like vs legacy Delta. (also not nearly as aggressive. One thing that does worry me about Delta right now is they are sitting back and trying to find JVs to outsource as much flying as possible, while UA and AA are going a lot in the long haul sectors.) Delta is already the third largest to HKG, probably and third largest to China. 
Being this far done with the merger and AA racing by DL in the most important travel market in Asia right now bothers me. All I head about is "China Eastern, China Eastern"...... sounds like the same battle cry for Europe. 
and I don't believe thats Glen, JMO though. 

 

[robbedagain]

Congratulations to all the DL folks job well done