Delta Air Lines Reports September 2009 Quarter Financial Results

ATLANTA , Oct. 22 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL) today reported financial results for the September 2009 quarter. Key points include: -- Delta's net income for the September 2009 quarter was $51 million, or...

ATLANTA, Oct. 22 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL) today reported financial results for the September 2009 quarter. Key points include:

"Our ability to earn a profit for the quarter shows we are making sound decisions for our business in this difficult economic environment. While we now see encouraging revenue and booking trends, we remain cautious in these early stages of an uncertain recovery," said Richard Anderson, Delta's chief executive officer. "My thanks go out to the Delta people who delivered great customer service, ran a solid operation, and moved forward with our merger integration, all against the backdrop of a very challenging economy."

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Revenue Environment

Delta's operating revenue on a GAAP(3) basis grew 32% to $7.6 billion in the September 2009 quarter compared to the prior year period as a result of its merger with Northwest Airlines. On a combined basis, total operating revenue declined $2.0 billion, or 21%, and total unit revenue (RASM) declined 17%.

On a combined basis:

Comparisons of revenue-related statistics are as follows:

"The global recession drove a significant revenue decline for the quarter, but we see improving trends in load factors, yield and business traffic," said Edward Bastian, Delta's president. "We will continue to exercise capacity restraint, coupled with strong cost control to effectively manage this."

Cost Discipline

In the September 2009 quarter, Delta's operating expense on a GAAP basis increased $1.8 billion year over year due to the impact of the company's merger with Northwest Airlines, partially offset by lower fuel price. On a combined basis, excluding special items, operating expense decreased $2.1 billion due to lower fuel expense, productivity improvements and merger benefits.

On a combined basis:

"Despite our significant capacity reductions, Delta successfully mitigated unit cost pressures through improved productivity, strong cost discipline and accelerating our merger synergies," said Hank Halter, chief financial officer. "While we have additional cost pressures in the fourth quarter from new capacity reductions, we expect to offset most, if not all, of this impact."

Liquidity Position

As of Sept. 30, 2009, Delta had $5.8 billion in unrestricted liquidity, including $5.5 billion in cash, cash equivalents and short-term investments and $300 million available in an undrawn revolving credit facility.

During the September 2009 quarter, Delta completed $2.1 billion in new financing transactions, addressing 40% of 2010 debt maturities and generating $600 million in incremental liquidity. The new financing consisted of $1.35 billion of secured notes, a $500 million revolving credit facility and a $250 million term loan facility, all of which were secured by the airline's Pacific routes and related assets.

During the quarter, the company made $1.2 billion of debt and capital lease payments which includes $900 million for the Northwest bank credit facility. In addition the company amended Northwest's revolving credit facility to reduce the total borrowing capacity from $500 million to $300 million.

Capital expenditures during the quarter were approximately $150 million, which includes $75 million for investments in aircraft, parts and modifications.

Merger with Northwest

Through the first three quarters of 2009, Delta has achieved $500 million in synergy benefits from its merger with Northwest Airlines, reaching its 2009 target ahead of plan. The company now expects to generate $700 million in total merger synergies in 2009. Synergies achieved to date include improved revenue from increased market share and Delta's affinity card agreement. In addition, cost reductions have been achieved from streamlined overhead, facilities and technology, elimination of dedicated freighter flying and supply chain savings.

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