Delta Air Lines, Inc. (NYSE:DAL) Q3 2019 Earnings Conference Call - Final Transcript

Oct 10, 2019 • 10:00 am ET


Delta Air Lines, Inc. (NYSE:DAL) Q3 2019 Earnings Conference Call - Final Transcript


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Edward H. Bastian

This volume growth, coupled with challenging weather patterns, has added costs in the back half of the year and will add about 1 point to our CASM ex-fuel run rate in 2020. I am confident that these are the right investments for the health of our brand. And with the productivity still to come from our fleet, facility and technology investments, we have the right platform to mitigate this cost inflation over the long term.

With that said, it is important to note, our overall fourth quarter unit costs, all in, are expected to be down 1% due to the drop in fuel prices and our margins should expand once again in Q4.

In closing, we are on track to deliver a very strong result in 2019. Demand trends remain healthy and our full year earnings guidance is for more than 20% improvement over last year's earnings per share. We have built a durable foundation through our culture, leading operational reliability, unrivaled network, our loyalty program and relationship with American Express, and an investment-grade balance sheet. These strengths, combined with a great brand powered by the very best professionals in the business, provide the engine to drive long-term value for our owners. I look forward to sharing more details on our strategic outlook and 2020 business plan at our upcoming Investor Day in December.

Now with that, I'd like to turn the call over to Glen and Paul to go through the details of the quarter.

Glen Hauenstein

Thanks, Ed, and good morning. First, I'd like to thank the entire Delta team for their hard work during our busiest summer ever. In the quarter, we ran record load factors and carried 3.3 million more passengers than last year, up 6%. The exceptional operational performance and unmet service our people provide are the foundation for improving customer satisfaction and the reason why more customers than ever are choosing to fly Delta.

When combined with a solid demand backdrop and progress against our commercial initiatives, we delivered a record quarterly revenue of $12.6 billion, up 6.5% over last year. This marks the ninth consecutive quarter of topline growth at a level more than two times GDP. We also continue to diversify our business with 52% of our revenue generated by premium products, loyalty and other non-ticket revenue sources. Premium product revenue grew 9% in the quarter to $4 billion, on top of last year's growth of 13%, momentum is expected to continue from the modernization of our fleet and improved ability to sell these products.

Total loyalty revenues grew 16% to $1.2 billion, driven by double-digit increases in mileage redemptions, co-brand spend, new card acquisitions and roughly $100 million benefit from the new contract with American Express. Enhancing our customer loyalty and trust is at the heart of our business. And together with American Express, we are finding new and innovative ways to reward our customers for their loyalty.

We are on track to achieve another record year of card acquisitions in 2019. Our