Delta earns $2.7 billion in 2013

[FWAAA]

Impressive annual profit.   The refinery lost money, but as Anderson has said before, the goal isn't that the refinery earn profits - the goal is that the refinery cause the crack spreads to decline.   Of course, that benefits AA and UA as well, since both have big NYC-area operations.    Profit sharing of $506 million, which is about 15% of the 2013 profits of $3.2 billion (before profit sharing expense).    When does the reduced profit sharing percentage begin?
 
http://news.delta.com/index.php?s=43&item=2241

 

[700UW]

U.S. carrier Delta Air Lines Inc reported higher fourth- quarter profit on Tuesday, aided by a big income tax benefit
 

 

[BABABOOY]

Actual individual 8.2% Profit sharing for employees.

 

[swamt]

CONGRATS To all for a great profit report!!!   FWAAA,   What does this statement mean in layman's term;  "These results include $8.0 billion non-cash gain associated with the reversal of the company's tax valuation allowance"    To me it sounds as if the company used business tax advantages to reap the greatest reward for the company, just like we do when we use all benefits afforded to us to reap the best possible tax return.   Is this 8.0 billion what allowed Delta to make a profit overall?   Either way their numbers look good for the end of 2013, again congrats to all of you...

 

[FWAAA]

The $8 billion tax valuation reversal was an accounting gimmick and played no part in the $2.7 billion profit (excluding special items).    From the press release:
 

• Delta's net income for 2013 was $2.7 billion, excluding special items, a $1.1 billion increase over 2012.
• Delta's GAAP net income was $8.5 billion, or $9.89 per diluted share, for the December 2013 quarter and$10.5 billion for 2013.  These results include an $8.0 billion non-cash gain associated with the reversal of the company's tax valuation allowance.

 
As a general rule, whenever I post about quarterly or annual profits, I quote the profit EXCLUDING special items, as the GAAP special items can result in very misleading profits, like this $8 billion item.    I'm sure there will be uneducated news editors today who will print headlines like "Delta earned $10.5 billion in 2013 due to income tax accounting."    They would do themselves and their readers a big favor if they ignored the GAAP results.   

 

[WorldTraveler]

actually the $8B does matter because it is related to the requirement for DL to begin changing its accounting to reduce their profits in the future to reflect income taxes - just as WN currently pays. However, DL still has enough tax assets that it won't be paying cash income taxes for quite some time.

The $8B bump in earnings will be offset by lower profits in the future even though cash doesn't change.

AA will record a massive profit boost because of its emergence from BK.

Based on what UA has projected for 4th quarter fuel prices, DL is accruing lower fuel prices than UA. It is not clear where other players will come in. DL is not breaking down its fuel price advantage but that even a penny per gallon difference in fuel prices at the biggest airlines makes a big difference in profits.

More notable than costs is that DL's domestic mainline RASM was up 6.6% on 2.6% more CASM. Like CO, UA doesn't seem to have a focus on domestic system revenues but this data continues to validate that DL's domestic mainline revenues are precisely what are fueling profits for expansion and growth in key markets around the world.

 

[metopower]

I was going to ask that this thread be closed before some one posted something negative. Too late.

 

[traderjake]

He can't help himself, it's a sickness.

 

[southwind]

Company= Bad
 
Union= Good
 
Only problem? A union doesn't sign my check!

 

[Glenn Quagmire]

Congratulations on a very profitable year Delta. Good job.

 

[WorldTraveler]

I'm sorry, meto. Does it hurt you to have to hear that the majority of DL's profits come from its domestic operations at ATL, DTW, and MSP and not by flying 777s across the Pacific?

While DL's int'l operations do make money, the majority of its profits come right where they have for decades - in the domestic market - one where it continues to maintain an advantage over its network peers who can't successfully compete with low fare carriers.

In case you missed it, AA just announced that it is walking away from DCA and LGA to DL's hub on the heels of WN's decision to further downsize ATL.

DL recognizes what PA didn't and what UA doesn't even now.... you can't operate in the domestic market at a disadvantage to your competitors and survive long-term. DL gets it.

BTW, a perfect example of how DL gets it is the fact that DL is using 717s to replace RJs on domestic flights at EWR while flying 767s to Europe out of UA's hub. Let me know what other US carrier operates their own metal on longhaul int'l flights out of another carrier's hubs and you'll understand why DL's domestic strategy provides a platform for its int'l operations.

 

[700UW]

With DOT submission in, here is another quarters look at US network carriers and their international regional route profitability numbers.


Legend is:
Airline - RASM - CASM - Yield cents - Profit/Loss Margin %

Atlantic
AA - 17.75 - 14.94 - 15.17 - 18.8%
DL - 14.95 - 12.13 - 14.24 - 23.2.2%
UA - 15.74 - 14.08 - 15.24 - 11.8%
US - 17.03 - 13.85 - 13.98 - 22.9%

Latin
AA - 19.27 - 15.68 - 17.99 - 22.8%
DL - 14.50 - 14.45 - 14.24 - 0.3%
UA - 17.10 - 15.98 - 16.32 - 7.0%
US - 18.44 - 16.95 - 14.10 - 8.9%

Pacific
AA - 13.93 - 15.76 - 12.02 - (-11.6%)
DL - 15.23 - 13.53 - 15.22 - 12.6%
HA - 10.95 - 11.30 - 13.16 - (-3.1%)
UA - 16.79 - 14.86 - 15.47 - 13.0%

 

[700UW]

Some information from another board and poster:
 

First off, this is a relatively large improvement over last years (-21%) margin across the Pacific. The fact that the losses aren't as bad shows the new cost structure is slightly helping AA's situation.

Now, a few things will help AA across the Pacific:
1) As Commavia and Jayunited have mentioned, the 777 reconfiguration will be dramatically helpful. Less F, a little more J and perhaps an additional 15-20 seats in Y with 10 abreast will help stem the losses.

2) The addition of the 787 this fall will help lower operating cost significantly. I assume these aircraft will be deployed on highly competitive routes out of LAX and ORD.

3) AA will now be getting feed from US. This feed used to go to UA b/c they were STAR partners, but most of those people will now be flowed through the AA network. Hopefully his will ensure planes go out full. After all, an empty seat is money lost.

4) Increased presence in the region (through new flights like DFW-PVG,HKG, ICN) and time will help AA develop as a serious competitor in the region..... Let's not forget AA is relatively new in the Asia market (outside of Japan). They are nowhere near as mature as DL or especially UA.

These things will certainly help AA across the Pacific, but they certainly won't make AA a profitable sensation overnight.
 

 

[metopower]

Do you really think that was aimed at you? Really. Really?

 

[700UW]

Do you not understand the concept of a message board?