Delta Air Lines, Inc. (NYSE:DAL) Q4 2014 Earnings Conference Call - Final Transcript

Jan 20, 2015 • 10:00 am ET


Delta Air Lines, Inc. (NYSE:DAL) Q4 2014 Earnings Conference Call - Final Transcript


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Welcome to the Delta Airlines December quarter financial results conference. At this time all participants are in a listen only mode until we conduct a question and answering session following today's presentation. As a reminder, today's call is being recorded. I would now like to turn the call over to Ms. Jill Sullivan Greer, Managing Director of Investor Relations.

Jill Sullivan Greer

Here in Atlanta today we have Richard Anderson our CEO, Ed Bastian our President, and Paul Jacobson, our CFO, and we have the remainder of the leadership team here in the room with us for Q&A. Richard will open the call, Ed will then address our financial and revenue performance, and Paul will conclude with a review of cost performance and cash flows. To get in as many questions as possible during the Q&A, please limit yourself to one question and a brief follow up. (Forward-Looking Cautionary Statements)

With that, I will turn the call over to Richard.

Richard H. Anderson

Good morning. This morning Delta reported a $1 billion pretax profit for the December quarter with EPS of $0.77 which beat consensus of $0.75. We grew the top line 6% despite a fuel price decline of 14%. Delta expanded margins by over four points. For 2014 we generated a $4.5 billion pretax profit, an increase of 70% over 2013. Revenues grew for the full year by 7% and we expanded our operating margin by four points to 13.1%. Our ROIC was 20.7%.

We generated $5.8 billion of operating cash flow and $3.7 billion of free cash flow and returned $1.35 billion of cash to our owners. Delta was the sixth best performing stock in the S&P 500 with a 79% gain. In two years we have increased our market cap by $30 billion. Our $3.7 billion of free cash flow was better than 90% of the S&P Industrials and Delta has the third highest free cash flow yield of the S&P Industrials.

These results include over $1 billion of profit sharing for our employees equal to more than 16% of their 2014 pay. We are proud of that at Delta and I want to thank the entire Delta team for their hard work that is the reason why we were successful in 2014. We ran the best operation in the global aviation industry with 95 days of no main line cancellations, a completion factor of 99.8% and an on time rate of 85% excluding the onetime impacts of the winter storms in 1Q of 2014.

Remarkably, Delta had only 414 main line maintenance cancellations for all of 2014, a number that our competitors sometimes exceed in a single month. That operational excellence, along with investments we've made in products and services drove increases in our customer satisfaction with our domestic net promotor score increasing more than two points to 33%. High customer sat translates into a revenue premium as customers have showed a willingness to pay for high quality service.

For 2014 we generated 107% of industry average revenues across the system and a