EX-99.1 2 dal3132018ex991.htm EXHIBIT 99.1 Exhibit
DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)
 
Year Ended December 31,
(in millions)
 
2017
 
2016
Operating Revenue:
 
 
 
 
  Passenger
 
$
36,947

 
$
35,814

Cargo
 
744

 
684

   Other
 
3,447

 
2,952

  Total operating revenue
 
41,138

 
39,450

 
 
 
 
 
Operating Expense:
 
 
 
 
Salaries and related costs
 
10,058

 
9,394

Aircraft fuel and related taxes
 
6,756

 
5,985

Regional carriers expense, excluding fuel
 
3,466

 
3,447

Depreciation and amortization
 
2,222

 
1,886

Contracted services
 
2,108

 
1,918

Passenger commissions and other selling expenses
 
1,827

 
1,751

Aircraft maintenance materials and outside repairs
 
1,591

 
1,434

Landing fees and other rents
 
1,501

 
1,472

Ancillary businesses and refinery expense
 
1,495

 
1,182

Passenger service
 
1,123

 
964

Profit sharing
 
1,065

 
1,115

Aircraft rent
 
351

 
285

Other
 
1,609

 
1,621

Total operating expense
 
35,172

 
32,454

 
 
 
 
 
Operating Income
 
5,966

 
6,996

 
 
 
 
 
Non-Operating Expense:
 
 
 
 
Interest expense, net
 
(396
)
 
(388
)
Unrealized gain/(loss) on investments
 
—

 
—

Miscellaneous, net
 
(70
)
 
(255
)
Total non-operating expense, net
 
(466
)
 
(643
)
 
 
 
 
 
Income Before Income Taxes
 
5,500

 
6,353

 
 
 
 
 
Income Tax Provision
 
(2,295
)
 
(2,158
)
 
 
 
 
 
Net Income
 
$
3,205

 
$
4,195

 
 
 
 
 
Diluted Earnings Per Share
 
$
4.43

 
$
5.55

 
 
 
 
 

The Consolidated Statements of Operations above reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from audited financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2017.

1


The following tables adjust our previously reported consolidated financial statements for the adoption of Accounting Standard Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" and ASU No. 2017-07, "Compensation—Retirement Benefits (Topic 715)" on a quarterly basis for 2017 and 2016.
 
Three Months Ended
(Unaudited)
March 31, 2017
 
June 30, 2017
 
September 30, 2017
 
December 31, 2017
(in millions, except per share data and metrics)

Previously Reported
As Adjusted
 
Previously Reported
As Adjusted
 
Previously Reported
As Adjusted
 
Previously Reported
As Adjusted
GAAP
 
 
 
 
 
 
 
 
 
 
 
Income statement:
 
 
 
 
 
 
 
 
 
 
 
Passenger revenue
$
7,688

$
8,178

 
$
9,231

$
9,768

 
$
9,399

$
9,979

 
$
8,501

$
9,022

Cargo revenue
160

163

 
183

187

 
187

191

 
200

203

Other revenue
1,300

760

 
1,377

792

 
1,474

891

 
1,544

1,004

Operating expense
8,095

8,102

 
8,763

8,765

 
9,221

9,238

 
9,052

9,067

Non-operating expense
(138
)
(150
)
 
(137
)
(151
)
 
(34
)
(47
)
 
(104
)
(118
)
Net income
603

561

 
1,224

1,186

 
1,178

1,159

 
572

299

Diluted earnings per share
$
0.82

$
0.77

 
$
1.68

$
1.62

 
$
1.64

$
1.61

 
$
0.80

$
0.42

 
 
 
 
 
 
 
 
 
 
 
 
Operating statistics:
 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin
10.0
%
9.3
%
 
17.5
%
17.0
%
 
16.3
%
16.1
%
 
10.6
%
10.2
%
Passenger mile yield

16.03
¢

17.05
¢
 

16.03
¢

16.97
¢
 

15.41
¢

16.36
¢
 

16.61
¢

17.63
¢
PRASM

13.28
¢

14.13
¢
 

13.94
¢

14.75
¢
 

13.40
¢

14.22
¢
 

14.15
¢

15.02
¢
TRASM

15.81
¢

15.73
¢
 

16.29
¢

16.23
¢
 

15.76
¢

15.76
¢
 

17.06
¢

17.03
¢
CASM

13.99
¢

14.00
¢
 

13.23
¢

13.23
¢
 

13.14
¢

13.17
¢
 

15.07
¢

15.10
¢
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet:
 
 
 
 
 
 
 
 
 
 
 
Deferred income taxes, net
 
 
 
 
 
 
 
 
 
$
935

$
1,354

Air traffic liability
 
 
 
 
 
 
 
 
 
4,888

4,364

Frequent flyer deferred revenue (current and noncurrent)
 
 
 
 
 
 
 
 
 
4,118

6,200

Other liabilities (current and noncurrent)
 
 
 
 
 
 
 
 
 
3,969

4,210

Retained earnings
 
 
 
 
 
 
 
 
 
9,636

8,256

 
 
 
 
 
 
 
 
 
 
 
 
ADJUSTED
 
 
 
 
 
 
 
 
 
 
 
Income statement:
 
 
 
 
 
 
 
 
 
 
 
Operating expense, adjusted
$
8,179

$
8,186

 
$
8,815

$
8,817

 
$
9,295

$
9,312

 
$
9,101

$
9,116

Net income, adjusted
560

518

 
1,201

1,163

 
1,127

1,108

 
681

652

Diluted earnings per share, adjusted
$
0.77

$
0.71

 
$
1.64

$
1.59

 
$
1.57

$
1.54

 
$
0.96

$
0.92

 
 
 
 
 
 
 
 
 
 
 
 
Operating statistics:
 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin, adjusted
9.3
%
8.6
%
 
17.3
%
16.8
%
 
15.8
%
15.6
%
 
10.2
%
9.8
%
TRASM, excluding refinery

15.70
¢

15.62
¢
 

16.19
¢

16.13
¢
 

15.58
¢

15.58
¢
 

16.65
¢

16.62
¢
CASM-Ex, excluding profit sharing

10.66
¢

10.67
¢
 

9.73
¢

9.73
¢
 

9.60
¢

9.63
¢
 

10.77
¢

10.80
¢

Recast results reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2017.

2


 
Three Months Ended
(Unaudited)
March 31, 2016
 
June 30, 2016
 
September 30, 2016
 
December 31, 2016
(in millions, except per share data and metrics)

Previously Reported
As Adjusted
 
Previously Reported
As Adjusted
 
Previously Reported
As Adjusted
 
Previously Reported
As Adjusted
GAAP
 
 
 
 
 
 
 
 
 
 
 
Income statement:
 
 
 
 
 
 
 
 
 
 
 
Passenger revenue
$
7,762

$
8,280

 
$
8,970

$
9,506

 
$
9,071

$
9,551

 
$
7,974

$
8,477

Cargo revenue
162

165

 
165

169

 
167

172

 
174

178

Other revenue
1,327

781

 
1,312

731

 
1,245

661

 
1,310

779

Operating expense
7,711

7,673

 
8,024

7,980

 
8,514

8,415

 
8,438

8,386

Non-operating expense
(106
)
(187
)
 
(73
)
(154
)
 
(69
)
(149
)
 
(68
)
(153
)
Net income
946

903

 
1,546

1,497

 
1,259

1,209

 
622

586

Diluted earnings per share
$
1.21

$
1.16

 
$
2.03

$
1.96

 
$
1.69

$
1.63

 
$
0.84

$
0.80

 
 
 
 
 
 
 
 
 
 
 
 
Operating statistics:
 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin
15.5
%
14.8
%
 
22.5
%
21.8
%
 
18.1
%
17.5
%
 
10.1
%
9.5
%
Passenger mile yield

16.26
¢

17.35
¢
 

15.90
¢

16.85
¢
 

15.38
¢

16.20
¢
 

15.95
¢

16.96
¢
PRASM

13.35
¢

14.24
¢
 

13.59
¢

14.41
¢
 

13.14
¢

13.84
¢
 

13.58
¢

14.44
¢
TRASM

15.91
¢

15.87
¢
 

15.83
¢

15.77
¢
 

15.19
¢

15.05
¢
 

16.11
¢

16.07
¢
CASM

13.26
¢

13.20
¢
 

12.16
¢

12.09
¢
 

12.33
¢

12.19
¢
 

14.37
¢

14.28
¢
 
 
 
 
 
 
 
 
 
 
 
 
Balance sheet:
 
 
 
 
 
 
 
 
 
 
 
Deferred income taxes, net
 
 
 
 
 
 
 
 
 
$
3,064

$
3,653

Air traffic liability
 
 
 
 
 
 
 
 
 
4,626

4,080

Frequent flyer deferred revenue (current and noncurrent)
 
 
 
 
 
 
 
 
 
3,926

5,803

Other liabilities (current and noncurrent)
 
 
 
 
 
 
 
 
 
3,785

4,053

Retained earnings
 
 
 
 
 
 
 
 
 
7,903

6,894

 
 
 
 
 
 
 
 
 
 
 
 
ADJUSTED
 
 
 
 
 
 
 
 
 
 
 
Income statement:
 
 
 
 
 
 
 
 
 
 
 
Operating expense, adjusted
$
7,556

$
7,518

 
$
8,641

$
8,597

 
$
8,491

$
8,392

 
$
8,449

$
8,397

Operating expense, adjusted, normalized
7,686

7,648

 
8,748

8,704

 
8,634

8,535

 
8,069

8,017

Net income, adjusted
1,026

983

 
1,124

1,075

 
1,263

1,213

 
604

568

Diluted earnings per share, adjusted
$
1.32

$
1.26

 
$
1.47

$
1.41

 
$
1.70

$
1.63

 
$
0.82

$
0.78

 
 
 
 
 
 
 
 
 
 
 
 
Operating statistics:
 
 
 
 
 
 
 
 
 
 
 
Pre-tax margin, adjusted
17.0
%
16.3
%
 
16.2
%
15.5
%
 
18.2
%
17.6
%
 
9.9
%
9.3
%
Pre-tax margin, adjusted, normalized
15.6
%
14.8
%
 
15.1
%
14.4
%
 
16.8
%
16.2
%
 
13.9
%
13.3
%
TRASM, excluding refinery

15.77
¢

15.73
¢
 

15.76
¢

15.70
¢
 

15.17
¢

15.03
¢
 

15.95
¢

15.91
¢
CASM-Ex, excluding profit sharing

9.86
¢

9.80
¢
 

9.05
¢

8.98
¢
 

9.11
¢

8.97
¢
 

10.92
¢

10.83
¢
CASM-Ex, excluding profit sharing, normalized

10.07
¢

10.01
¢
 

9.21
¢

9.14
¢
 

9.32
¢

9.18
¢
 

10.27
¢

10.18
¢

Recast results reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2016.

3


DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended
(in millions)
 
March 31,
2017
 
June 30,
2017
 
September 30,
2017
 
December 31,
2017
Operating Revenue:
 
 
 
 
 
 
 
 
Passenger
 
$
8,178

 
$
9,768

 
$
9,979

 
$
9,022

Cargo
 
163

 
187

 
191

 
203

Other
 
760

 
792

 
891

 
1,004

  Total operating revenue
 
9,101

 
10,747

 
11,061

 
10,229

 
 
 
 
 
 
 
 
 
Operating Expense:
 
 
 
 
 
 
 
 
Salaries and related costs
 
2,386

 
2,521

 
2,619

 
2,532

Aircraft fuel and related taxes
 
1,482

 
1,687

 
1,785

 
1,802

Regional carriers expense, excluding fuel
 
864

 
838

 
887

 
877

Depreciation and amortization
 
537

 
531

 
571

 
583

Contracted services
 
505

 
525

 
543

 
535

Passenger commissions and other selling expenses
 
404

 
467

 
499

 
457

Aircraft maintenance materials and outside repairs
 
432

 
392

 
390

 
377

Landing fees and other rents
 
361

 
373

 
392

 
375

Ancillary businesses and refinery expense
 
292

 
296

 
387

 
520

Passenger service
 
234

 
284

 
331

 
274

Profit sharing
 
151

 
338

 
314

 
262

Aircraft rent
 
84

 
86

 
89

 
92

Other
 
370

 
427

 
431

 
381

Total operating expense
 
8,102

 
8,765

 
9,238

 
9,067

 
 
 
 
 
 
 
 
 
Operating Income
 
999

 
1,982

 
1,823

 
1,162

 
 
 
 
 
 
 
 
 
Non-Operating Expense:
 
 
 
 
 
 
 
 
Interest expense, net
 
(94
)
 
(103
)
 
(100
)
 
(99
)
Unrealized gain/(loss) on investments
 
—

 
—

 
—

 
—

Miscellaneous, net
 
(56
)
 
(48
)
 
53

 
(19
)
Total non-operating expense, net
 
(150
)
 
(151
)
 
(47
)
 
(118
)
 
 
 
 
 
 
 
 
 
Income Before Income Taxes
 
849

 
1,831

 
1,776

 
1,044

 
 
 
 
 
 
 
 
 
Income Tax Provision
 
(288
)
 
(645
)
 
(617
)
 
(745
)
 
 
 
 
 
 
 
 
 
Net Income
 
$
561

 
$
1,186

 
$
1,159

 
$
299

 
 
 
 
 
 
 
 
 
Diluted Earnings Per Share
 
$
0.77

 
$
1.62

 
$
1.61

 
$
0.42

 
 
 
 
 
 
 
 
 

The Consolidated Statements of Operations above reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2017.

4


DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended
(in millions)
 
March 31,
2016
 
June 30,
2016
 
September 30,
2016
 
December 31,
2016
Operating Revenue:
 
 
 
 
 
 
 
 
Passenger
 
$
8,280

 
$
9,506

 
$
9,551

 
$
8,477

Cargo
 
165

 
169

 
172

 
178

Other
 
781

 
731

 
661

 
779

  Total operating revenue
 
9,226

 
10,406

 
10,384

 
9,434

 
 
 
 
 
 
 
 
 
Operating Expense:
 
 
 
 
 
 
 
 
Salaries and related costs
 
2,154

 
2,231

 
2,302

 
2,707

Aircraft fuel and related taxes
 
1,394

 
1,447

 
1,652

 
1,492

Regional carriers expense, excluding fuel
 
837

 
875

 
885

 
850

Depreciation and amortization
 
482

 
466

 
470

 
468

Contracted services
 
456

 
467

 
504

 
491

Passenger commissions and other selling expenses
 
393

 
448

 
480

 
430

Aircraft maintenance materials and outside repairs
 
362

 
350

 
361

 
361

Landing fees and other rents
 
345

 
370

 
394

 
363

Ancillary businesses and refinery expense
 
313

 
284

 
247

 
338

Passenger service
 
201

 
237

 
279

 
247

Profit sharing
 
272

 
324

 
326

 
193

Aircraft rent
 
66

 
66

 
72

 
81

Other
 
398

 
415

 
443

 
365

Total operating expense
 
7,673

 
7,980

 
8,415

 
8,386

 
 
 
 
 
 
 
 
 
Operating Income
 
1,553

 
2,426

 
1,969

 
1,048

 
 
 
 
 
 
 
 
 
Non-Operating Expense:
 
 
 
 
 
 
 
 
Interest expense, net
 
(107
)
 
(93
)
 
(95
)
 
(93
)
Unrealized gain/(loss) on investments
 
—

 
—

 
—

 
—

Miscellaneous, net
 
(80
)
 
(61
)
 
(54
)
 
(60
)
Total non-operating expense, net
 
(187
)
 
(154
)
 
(149
)
 
(153
)
 
 
 
 
 
 
 
 
 
Income Before Income Taxes
 
1,366

 
2,272

 
1,820

 
895

 
 
 
 
 
 
 
 
 
Income Tax Provision
 
(463
)
 
(775
)
 
(611
)
 
(309
)
 
 
 
 
 
 
 
 
 
Net Income
 
$
903

 
$
1,497

 
$
1,209

 
$
586

 
 
 
 
 
 
 
 
 
Diluted Earnings Per Share
 
$
1.16

 
$
1.96

 
$
1.63

 
$
0.80

 
 
 
 
 
 
 
 
 

The Consolidated Statements of Operations above reflect the adoption of the new standards related to revenue recognition and retirement benefits, as well as other classification changes described in this Form 8-K. These recast results were derived from unaudited financial statements included in the Quarterly Reports on Form 10-Q during the year ended December 31, 2016.

5


Operating Expense, adjusted. We adjust for the following items to determine operating expense, adjusted, as described below. Adjusting for these items allows investors to understand and analyze our core operational performance in the periods shown.

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.

Pilot contract impact, normalized. Delta’s new pilot contract was ratified on December 1, 2016 and was retroactive to January 1, 2016. As a result, Delta recognized $380 million in retroactive wages and other benefits in the December 2016 quarter that related to previous quarters.

The following tables present reconciliations of operating expense, adjusted as previously reported.
 
 
Three Months Ended
(in millions)
 
March 31,
2017
 
June 30,
2017
 
September 30,
2017
 
December 31,
2017
Operating expense
 
$
8,095

 
$
8,763

 
$
9,221

 
$
9,052

     MTM adjustments and settlements
 
84

 
52

 
74

 
49

Operating expense, adjusted
 
$
8,179

 
$
8,815

 
$
9,295

 
$
9,101

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
(in millions)
 
March 31,
2016
 
June 30,
2016
 
September 30,
2016
 
December 31,
2016
Operating expense
 
$
7,711

 
$
8,024

 
$
8,514

 
$
8,438

     MTM adjustments and settlements
 
(155
)
 
617

 
(23
)
 
11

Operating expense, adjusted
 
$
7,556

 
$
8,641

 
$
8,491

 
$
8,449

     Pilot contract impact, normalized
 
130

 
107

 
143

 
(380
)
Operating expense, adjusted, including pilot contract impact, normalized
 
$
7,686

 
$
8,748

 
$
8,634

 
$
8,069



The following tables present reconciliations of operating expense, adjusted to include the impact of the adoption of the new standards.
 
 
Three Months Ended
(in millions)
 
March 31,
2017
 
June 30,
2017
 
September 30,
2017
 
December 31,
2017
Operating expense
 
$
8,102

 
$
8,765

 
$
9,238

 
$
9,067

     MTM adjustments and settlements
 
84

 
52

 
74

 
49

Operating expense, adjusted
 
$
8,186

 
$
8,817

 
$
9,312

 
$
9,116

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
(in millions)
 
March 31,
2016
 
June 30,
2016
 
September 30,
2016
 
December 31,
2016
Operating expense
 
$
7,673

 
$
7,980

 
$
8,415

 
$
8,386

     MTM adjustments and settlements
 
(155
)
 
617

 
(23
)
 
11

Operating expense, adjusted
 
$
7,518

 
$
8,597

 
$
8,392

 
$
8,397

     Pilot contract impact, normalized
 
130

 
107

 
143

 
(380
)
Operating expense, adjusted, including pilot contract impact, normalized
 
7,648

 
8,704

 
8,535

 
8,017




6


Net Income, adjusted. We adjust for MTM adjustments and settlements, for the same reasons described above under the heading operating expense, adjusted, and the following items to determine net income, adjusted:

Investment MTM adjustments. We record our proportionate share of earnings from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense. We adjust for these MTM adjustments to allow investors to understand and analyze the company’s core financial performance in the periods shown.

Tax reform charge. As a result of the Tax Cuts and Jobs Act of 2017, Delta recognized a one-time charge of $150 million in the December 2017 quarter from the revaluation of its deferred tax assets and liabilities. We adjust for this charge to allow investors to understand and analyze the company's core financial performance in the periods shown.

The following tables present reconciliations of net income, adjusted as previously reported.
 
 
Three Months Ended
(in millions, except per share data)
 
March 31, 2017
 
June 30, 2017
 
September 30, 2017
 
December 31, 2017
Net income
 
$
603

 
$
1,224

 
$
1,178

 
$
572

Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
(55
)
 
(33
)
 
(47
)
 
(31
)
     Investment MTM adjustments
 
12

 
10

 
(4
)
 
(10
)
     Tax reform charge
 
—

 
—

 
—

 
150

Total adjustments
 
(43
)
 
(23
)
 
(51
)
 
109

Net income, adjusted
 
$
560

 
$
1,201

 
$
1,127

 
$
681

 
 
 
 
 
 
 
 
 
Net income per diluted share
 
$
0.82

 
$
1.68

 
$
1.64

 
$
0.80

Total adjustments
 
(0.05
)
 
(0.04
)
 
(0.07
)
 
0.16

Net income per diluted share, adjusted
 
$
0.77

 
$
1.64

 
$
1.57

 
$
0.96

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
(in millions, except per share data)
 
March 31, 2016
 
June 30, 2016
 
September 30, 2016
 
December 31, 2016
Net income
 
$
946

 
$
1,546

 
$
1,259

 
$
622

Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
98

 
(390
)
 
15

 
(7
)
     Investment MTM adjustments
 
(18
)
 
(32
)
 
(11
)
 
(11
)
Total adjustments
 
80

 
(422
)
 
4

 
(18
)
Net income, adjusted
 
$
1,026

 
$
1,124

 
$
1,263

 
$
604

 
 
 
 
 
 
 
 
 
Net income per diluted share
 
$
1.21

 
$
2.03

 
$
1.69

 
$
0.84

Total adjustments
 
0.11

 
(0.56
)
 
0.01

 
(0.02
)
Net income per diluted share, adjusted
 
$
1.32

 
$
1.47

 
$
1.70

 
$
0.82




7


The following tables present reconciliations of net income, adjusted to include the impact of the adoption of the new standards.
 
 
Three Months Ended
(in millions, except per share data)
 
March 31, 2017
 
June 30, 2017
 
September 30, 2017
 
December 31, 2017
Net income
 
$
561

 
$
1,186

 
$
1,159

 
$
299

Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
(55
)
 
(33
)
 
(47
)
 
(31
)
     Investment MTM adjustments
 
12

 
10

 
(4
)
 
(10
)
     Tax reform charge
 
—

 
—

 
—

 
394

Total adjustments
 
(43
)
 
(23
)
 
(51
)
 
353

Net income, adjusted
 
$
518

 
$
1,163

 
$
1,108

 
$
652

 
 
 
 
 
 
 
 
 
Net income per diluted share
 
$
0.77

 
$
1.62

 
$
1.61

 
$
0.42

Total adjustments
 
(0.06
)
 
(0.03
)
 
(0.07
)
 
0.50

Net income per diluted share, adjusted
 
$
0.71

 
$
1.59

 
$
1.54

 
$
0.92

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
(in millions, except per share data)
 
March 31, 2016
 
June 30, 2016
 
September 30, 2016
 
December 31, 2016
Net income
 
$
903

 
$
1,497

 
$
1,209

 
$
586

Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
98

 
(390
)
 
15

 
(7
)
     Investment MTM adjustments
 
(18
)
 
(32
)
 
(11
)
 
(11
)
Total adjustments
 
80

 
(422
)
 
4

 
(18
)
Net income, adjusted
 
$
983

 
$
1,075

 
$
1,213

 
$
568

 
 
 
 
 
 
 
 
 
Net income per diluted share
 
$
1.16

 
$
1.96

 
$
1.63

 
$
0.80

Total adjustments
 
0.10

 
(0.55
)
 
—

 
(0.02
)
Net income per diluted share, adjusted
 
$
1.26

 
$
1.41

 
$
1.63

 
$
0.78






8


Pre-Tax Margin, adjusted. We adjust for MTM adjustments and settlements and pilot contract impact, normalized, for the same reasons described above under the heading operating expense, adjusted, and third-party refinery sales and investment MTM adjustments to determine pre-tax margin, adjusted. Adjusting for these items allows investors to understand and analyze our core operational performance in the periods shown.

Third-party refinery sales. Delta's refinery segment provides jet fuel to the airline segment from its own production and from jet fuel obtained through agreements with third parties. Activities of the refinery segment are primarily for the benefit of the airline. However, from time to time, the refinery sells fuel by-products to third parties. These sales are recorded gross within other revenue and other operating expense.

Investment MTM adjustments. We record our proportionate share of earnings from our equity investments in Virgin Atlantic and Aeroméxico in non-operating expense.

The following tables present reconciliations of pre-tax margin, adjusted as previously reported.
 
 
Three Months Ended
 
 
March 31,
2017
 
June 30,
2017
 
September 30,
2017
 
December 31,
2017
Pre-tax margin
 
10.0
 %
 
17.5
 %
 
16.3
 %
 
10.6
 %
Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
(0.9
)%
 
(0.5
)%
 
(0.7
)%
 
(0.5
)%
     Third-party refinery sales
 
0.1
 %
 
0.1
 %
 
0.2
 %
 
0.3
 %
     Investment MTM adjustments
 
0.1
 %
 
0.2
 %
 
—
 %
 
(0.2
)%
Pre-tax margin, adjusted
 
9.3
 %
 
17.3
 %
 
15.8
 %
 
10.2
 %
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
2016
 
June 30,
2016
 
September 30,
2016
 
December 31,
2016
Pre-tax margin
 
15.5
 %
 
22.5
 %
 
18.1
 %
 
10.1
 %
Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
1.7
 %
 
(5.9
)%
 
0.2
 %
 
(0.1
)%
     Third-party refinery sales
 
0.2
 %
 
0.1
 %
 
—
 %
 
0.1
 %
     Investment MTM adjustments
 
(0.4
)%
 
(0.5
)%
 
(0.1
)%
 
(0.2
)%
Pre-tax margin, adjusted
 
17.0
 %
 
16.2
 %
 
18.2
 %
 
9.9
 %
     Pilot contract impact, normalized
 
(1.4
)%
 
(1.1
)%
 
(1.4
)%
 
4.0
 %
Pre-tax margin, adjusted, including pilot contract impact, normalized
 
15.6
 %
 
15.1
 %
 
16.8
 %
 
13.9
 %


9


The following tables present reconciliations of pre-tax margin, adjusted to include the impact of the adoption of the new standards.
 
 
Three Months Ended
 
 
March 31,
2017
 
June 30,
2017
 
September 30,
2017
 
December 31,
2017
Pre-tax margin
 
9.3
 %
 
17.0
 %
 
16.1
 %
 
10.2
 %
Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
(0.9
)%
 
(0.5
)%
 
(0.7
)%
 
(0.5
)%
     Third-party refinery sales
 
0.1
 %
 
0.1
 %
 
0.2
 %
 
0.3
 %
     Investment MTM adjustments
 
0.1
 %
 
0.2
 %
 
—
 %
 
(0.2
)%
Pre-tax margin, adjusted
 
8.6
 %
 
16.8
 %
 
15.6
 %
 
9.8
 %
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
2016
 
June 30,
2016
 
September 30,
2016
 
December 31,
2016
Pre-tax margin
 
14.8
 %
 
21.8
 %
 
17.5
 %
 
9.5
 %
Adjusted for:
 
 
 
 
 
 
 
 
     MTM adjustments and settlements
 
1.7
 %
 
(5.9
)%
 
0.2
 %
 
(0.1
)%
     Third-party refinery sales
 
0.2
 %
 
0.1
 %
 
—
 %
 
0.1
 %
     Investment MTM adjustments
 
(0.4
)%
 
(0.5
)%
 
(0.1
)%
 
(0.2
)%
Pre-tax margin, adjusted
 
16.3
 %
 
15.5
 %
 
17.6
 %
 
9.3
 %
     Pilot contract impact, normalized
 
(1.5
)%
 
(1.1
)%
 
(1.4
)%
 
4.0
 %
Pre-tax margin, adjusted, including pilot contract impact, normalized
 
14.8
 %
 
14.4
 %
 
16.2
 %
 
13.3
 %

10


Total Revenue Per Available Seat Mile "TRASM", excluding refinery. We adjust TRASM for refinery sales to third parties to determine TRASM, adjusted because these revenues are not related to our airline segment. TRASM, excluding refinery therefore provides a more meaningful comparison of revenue from our airline operations to the rest of the airline industry.

The following tables present reconciliations of TRASM, excluding refinery as previously reported.
 
 
Three Months Ended
 
 
March 31, 2017
 
June 30, 2017
 
September 30, 2017
 
December 31, 2017
TRASM
 

15.81
¢
 

16.29
¢
 

15.76
¢
 

17.06
¢
     Third party refinery sales
 
(0.11
)
 
(0.10
)
 
(0.18
)
 
(0.41
)
TRASM, excluding refinery
 

15.70
¢
 

16.19
¢
 

15.58
¢
 

16.65
¢
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2016
 
June 30, 2016
 
September 30, 2016
 
December 31, 2016
TRASM
 

15.91
¢
 

15.83
¢
 

15.19
¢
 

16.11
¢
     Third party refinery sales
 
(0.14
)
 
(0.07
)
 
(0.02
)
 
(0.16
)
TRASM, excluding refinery
 

15.77
¢
 

15.76
¢
 

15.17
¢
 

15.95
¢


The following tables present reconciliations of TRASM, excluding refinery to include the impact of the adoption of the new standards.
 
 
Three Months Ended
 
 
March 31, 2017
 
June 30, 2017
 
September 30, 2017
 
December 31, 2017
TRASM
 

15.73
¢
 

16.23
¢
 

15.76
¢
 

17.03
¢
     Third party refinery sales
 
(0.11
)
 
(0.10
)
 
(0.18
)
 
(0.41
)
TRASM, excluding refinery
 

15.62
¢
 

16.13
¢
 

15.58
¢
 

16.62
¢
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2016
 
June 30, 2016
 
September 30, 2016
 
December 31, 2016
TRASM
 

15.87
¢
 

15.77
¢
 

15.05
¢
 

16.07
¢
     Third party refinery sales
 
(0.14
)
 
(0.07
)
 
(0.02
)
 
(0.16
)
TRASM, excluding refinery
 

15.73
¢
 

15.70
¢
 

15.03
¢
 

15.91
¢



11


Non-Fuel Unit Cost or Cost per Available Seat Miles, Excluding Profit Sharing ("CASM-Ex"). We adjust CASM for the following items to determine CASM-Ex, excluding profit sharing for the reasons described below:

Aircraft fuel and related taxes. The volatility in fuel prices impacts the comparability of year-over-year financial performance. The adjustment for aircraft fuel and related taxes (including our regional carriers) allows investors to understand and analyze our non-fuel costs and year-over-year financial performance.

Other expenses. Other expenses include aircraft maintenance and staffing services we provide to third parties, our vacation wholesale operations, and refinery cost of sales to third parties. Because these businesses are not related to the generation of a seat mile, we adjust for the costs related to these sales to provide a more meaningful comparison of the costs of our airline operations to the rest of the airline industry.

Pilot contract impact, normalized. Delta’s new pilot contract was ratified on December 1, 2016 and was retroactive to January 1, 2016. As a result, Delta recognized $380 million in retroactive wages and other benefits in the December 2016 quarter that related to previous quarters.

The following tables present reconciliations of CASM-Ex as previously reported.
 
 
Three Months Ended
 
 
March 31,
2017
 
June 30,
2017
 
September 30,
2017
 
December 31,
2017
CASM
 

13.99
¢
 

13.23
¢
 

13.14
¢
 

15.07
¢
Adjusted for:
 
 
 
 
 
 
 
 
     Aircraft fuel and related taxes
 
(2.56
)
 
(2.55
)
 
(2.54
)
 
(3.00
)
     Other expenses
 
(0.51
)
 
(0.44
)
 
(0.55
)
 
(0.87
)
     Profit sharing
 
(0.26
)
 
(0.51
)
 
(0.45
)
 
(0.43
)
CASM-Ex, excluding profit sharing
 

10.66
¢
 

9.73
¢
 

9.60
¢
 

10.77
¢
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
2016
 
June 30,
2016
 
September 30,
2016
 
December 31,
2016
CASM
 

13.26
¢
 

12.16
¢
 

12.33
¢
 

14.37
¢
Adjusted for:
 
 
 
 
 
 
 
 
     Aircraft fuel and related taxes
 
(2.40
)
 
(2.19
)
 
(2.39
)
 
(2.54
)
     Other expenses
 
(0.53
)
 
(0.43
)
 
(0.36
)
 
(0.58
)
     Profit sharing
 
(0.47
)
 
(0.49
)
 
(0.47
)
 
(0.33
)
CASM-Ex, excluding profit sharing
 

9.86
¢
 

9.05
¢
 

9.11
¢
 

10.92
¢
     Pilot contract impact, normalized
 
0.21

 
0.16

 
0.21

 
(0.65
)
CASM-Ex, adjusted for pilot contract impact, normalized
 

10.07
¢
 

9.21
¢
 

9.32
¢
 

10.27
¢


12


The following tables present reconciliations of CASM-Ex to include the impact of the adoption of the new standards.
 
 
Three Months Ended
 
 
March 31,
2017
 
June 30,
2017
 
September 30,
2017
 
December 31,
2017
CASM
 

14.00
¢
 

13.23
¢
 

13.17
¢
 

15.10
¢
Adjusted for:
 
 
 
 
 
 
 
 
     Aircraft fuel and related taxes
 
(2.56
)
 
(2.55
)
 
(2.54
)
 
(3.00
)
     Other expenses
 
(0.51
)
 
(0.44
)
 
(0.55
)
 
(0.87
)
     Profit Sharing
 
(0.26
)
 
(0.51
)
 
(0.45
)
 
(0.43
)
CASM-Ex, excluding profit sharing
 

10.67
¢
 

9.73
¢
 

9.63
¢
 

10.80
¢
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31,
2016
 
June 30,
2016
 
September 30,
2016
 
December 31,
2016
CASM
 

13.20
¢
 

12.09
¢
 

12.19
¢
 

14.28
¢
Adjusted for:
 
 
 
 
 
 
 
 
     Aircraft fuel and related taxes
 
(2.40
)
 
(2.19
)
 
(2.39
)
 
(2.54
)
     Other expenses
 
(0.53
)
 
(0.43
)
 
(0.36
)
 
(0.58
)
     Profit sharing
 
(0.47
)
 
(0.49
)
 
(0.47
)
 
(0.33
)
CASM-Ex, excluding profit sharing
 

9.80
¢
 

8.98
¢
 

8.97
¢
 

10.83
¢
     Pilot contract impact, normalized
 
0.21

 
0.16

 
0.21

 
(0.65
)
CASM-Ex, adjusted for pilot contract impact, normalized
 

10.01
¢
 

9.14
¢
 

9.18
¢
 

10.18
¢


13