The paragraph introduces the Delta Air Lines June Quarter 2024 Financial Results Conference Call and provides information about the participants, the purpose of the call, and the format. It also includes a disclaimer about forward-looking statements and non-GAAP financial measures. CEO Ed Bastian will give an overview of Delta's performance and strategy, President Glen Hauenstein will discuss the revenue environment, and CFO Dan Janki will cover costs and the balance sheet. After the prepared remarks, there will be a Q&A session for analysts and media.

Delta reported strong second quarter results, with pre-tax earnings of $2 billion and record quarterly revenue. They achieved a 15% operating margin and generated $1.3 billion of free cash flow. Delta's leadership and operational performance have been recognized, with rankings in the Fortune 500 return on leadership and as the most reliable airline in the US. They were also named the 2024 Global Airline of the Year and the best US airline. Delta values their employees and has been recognized for their total rewards program.

Delta has provided a 5% pay raise and accrued over $640 million in profit sharing for eligible employees. They are making investments to improve customer experiences, such as airport rebuilds, expanding premium offerings, and offering fast free Wi-Fi on board. They have also opened a new Delta One Lounge in JFK with plans to open more in other cities. They have upgraded their Delta Premium Select Cabin and released a comprehensive update to their Fly Delta app. More customers are joining their loyalty program and using their Delta SkyMiles American Express credit card.

Delta's new card acquisitions are attracting a younger demographic and their portfolio is shifting to a more premium mix, positioning them well to reach their long-term goal of $10 billion. They have also announced an exclusive partnership with Riyadh Air, a new global carrier that will expand connectivity and premium travel options. Despite strong demand for air travel, domestic industry growth has impacted yield performance in the main cabin. However, Delta remains insulated due to their diversified revenue base and is expected to generate 50% of the industry's profitability in the first half of the year. The industry is taking actions to improve financial performance, and Delta is confident that the industry backdrop will become more constructive in the second half of the year and into 2025.

The paragraph discusses Delta's outlook and performance, highlighting their strong position in the travel industry and their focus on providing a premium experience. They expect continued demand strength and a double-digit operating margin in the third quarter, and remain confident in their full year guidance. The company's revenue for the June quarter increased to a record high, but total unit revenue was down due to increased seat growth in the domestic industry. The paragraph also mentions an upcoming Investor Day in November.

Delta is expecting an improvement in unit revenue trends in August and beyond, with strong demand for summer travel to Europe. The company also had a successful operation with high completion rates, and saw growth in premium revenue and loyalty revenue. Cargo revenue also showed significant improvement. These diverse revenue streams are contributing to Delta's strong financial performance. Domestic and international passenger revenue both saw growth, with double-digit volume growth in the high-value business segment. Demand for travel on Delta remains strong, particularly for premium products.

Delta expects strong growth in business travel to continue in the back half of the year, with 90% of companies intending to maintain or increase travel volumes. International demand is strong and benefiting from various factors. Delta's capacity growth will slow down in the second half of the year as they approach full restoration of their international network and retire aircraft. They anticipate positive unit revenue growth in September and improvements in transatlantic and Latin American unit revenue trends. The Pacific region is also showing positive results due to their multi-year restructuring. Delta expects to maintain a unit revenue premium, double-digit margins, and returns well above their cost of capital for the full year. The company's differentiation and leadership have allowed them to deliver outstanding results while the industry continues to establish equilibrium. The Delta team is congratulated for their performance in the first half of the year and they are well positioned to continue their momentum in the second half and beyond. The financials will be discussed by Dan.

In the June quarter, Delta reported pre-tax income of $2 billion and earnings of $2.36 per share, in-line with guidance and 2019 despite higher fuel prices. Non-fuel CASM was up 0.6% year-over-year, but better than expected due to a strong completion factor. The company also had a 99.5% system completion factor and generated strong cash flow, allowing for debt repayment and a 50% increase in quarterly dividend. For the September quarter, Delta expects an operating margin of 11% to 13% and earnings of $1.70 to $2 per share, in line with top-line growth.

Fuel prices are expected to be between $2.60 to $2.80 per gallon, with refinery margins returning to normal. Non-fuel unit costs are expected to increase slightly due to capacity growth. Maintenance expenses have decreased due to investments in fleet health, but are still expected to be higher than last year. Fleet growth is expected to be less than 2%, and the company's unencumbered asset base is expected to grow to $30 billion. Delta is confident in its full year outlook and remains focused on improving its balance sheet and delivering value to shareholders. This success is attributed to the hard work of its employees.

The speaker thanks the Delta employees for their hard work and then hands it over to Ed for final remarks. Ed congratulates Helane Becker on her career and then opens up the Q&A session. A question is asked about the September bookings and the speaker responds by stating that they have about one-third of September bookings and that the base is better than it was for July and August. The speaker also mentions that the industry's capacity is decreasing and that business tends to pick up in September. They also mention that business is not at its peak in July and August.

The speaker expresses confidence in the upcoming business season due to trends in business demand. They also discuss the potential for structural changes in the industry and the quick reaction of the industry to oversupply. The speaker believes that the industry will have to address its capacity and profitability issues in order to survive.

The speaker is discussing the current state of the airline industry and the need for differentiation and providing value to customers. They mention that the industry is in good shape overall, but the lower half is struggling. They also mention the changing definition of value in the industry and the need for reliability and cost efficiency. The speaker acknowledges that their company, Delta, is driving 50% of the industry's profitability and can only do so much on their own. They express optimism for the future and the potential for Delta to benefit from industry improvements.

The speaker discusses the challenges faced by Boeing and Airbus in terms of delivery delays and supply chain issues. They mention that Delta, as one of Airbus' largest customers, is somewhat insulated from the delays. They also mention that they do not anticipate any problems in 2025 with aircraft deliveries. The speaker also discusses operational challenges, such as maintenance and parts supply, but expects improvements as things stabilize and new aircraft are delivered. They also mention that they plan to retire older fleet, which will create more availability for parts.

Glen Hauenstein, the President of Delta Airlines, is encouraged by the performance of LATAM. Unit revenue pressure is coming from short-haul flights, but long-haul flights are positive. The industry is expected to be more disciplined in terms of capacity this winter. Glen is not ready to discuss the details of unbundling the front cabin, but he hints that it will be discussed at the upcoming Investor Day.

The speaker is discussing the concept of premium in the airline industry and how it is more than just adding more room in seats. He mentions that some low-cost airlines are considering implementing premium features, but he believes that Delta's focus on reliability and service sets them apart and allows them to deliver a true premium experience. He also mentions that Delta's partnership with American Express is a testament to their premium offerings.

The speaker believes that there is potential for growth in the airline industry, but companies need to find ways to manage rising costs. They also mention the success of the Delta Premium Select program and the strong margins in first class and Comfort+ cabins. The company plans to roll out Delta Premium Select on more routes, which they expect to be profitable.

Dan Janki, the company's CFO, explains that the team is focused on deleveraging and has made significant progress in reducing debt. Regarding the PSP loans, which will reset to a variable rate in 2025 and 2026, the company will consider market conditions and potentially refinance them with other types of debt. In response to a question about the air traffic liability, the team notes that it has increased since year-end but expects it to shift in the opposite direction in the coming weeks due to seasonal changes in air travel. The company is seeing strength in transatlantic and deep South American routes, which is expected to improve in the second half of the year along with corporate travel.

The speaker is discussing the impact of swings in air traffic liability on their company's cash flow. They mention that the first half of the year has shown an increase in liability, but they expect it to balance out in the back half of the year due to a longer travel season and corporate growth. They also mention that other carriers may cut capacity, potentially creating opportunities for their company to expand into underserved areas.

During a conference call, a question was asked about Delta's capacity plans for 2025. The company's president, Glen Hauenstein, stated that they would not be disclosing that information at this time. He also emphasized the importance of looking at seat count rather than available seat miles (ASM) when analyzing capacity growth. He mentioned that their capacity growth in the second quarter was 8%, but their seat growth was only around 5% due to longer stage lengths. He advised focusing on seats within theater when trying to understand the industry's capacity.

In the paragraph, Dan Janki and Glen Hauenstein discuss the growth of domestic capacity in their core hubs, which will be restored to 2019 levels in the fourth quarter. They also mention that the current forward fuel price is lower than last year, and they expect an inflection in unit revenue and strong international demand to positively impact earnings in the fourth quarter. The question is raised about how the industry capacity issues will affect Q4, and it is unclear if this will improve or worsen in 2025 if Boeing increases delivery cadence.

The speaker expresses appreciation for the models that have helped guide the company's full year expectations. They mention last year's experience with changing the full year guide and express confidence in ending up within the range. They do not want to speculate on Q4. A question is asked about Boeing's delivery cadence and the speaker responds by saying they have no Boeing aircraft coming in the near future and it will take time for Boeing to improve their cadence. Another question is asked about corporate travel in September and the speaker mentions a headwind from strikes last year. The speaker also briefly discusses the outlook for transatlantic travel in the third quarter.

The speaker discusses the recent Olympics and a bet they lost, but mentions that they see a strong demand for transatlantic flights in the fall. They also mention that they have other levers they can pull to improve margins, such as investing in new offerings and controlling costs.

The speaker discusses the opportunity for growth in headcount and cost efficiency in the upcoming year for Delta. They state that the company is not waiting for the industry to fix itself and is already showing strong profitability. They also mention the growth of resources and capabilities, including people, aircraft, and investment in airports. The CEO adds that the company is generating significant free cash flow and will continue to delever the balance sheet, differentiating Delta from other companies in the industry.

Ravi Shanker from Morgan Stanley asks about Delta's international performance and whether it is due to spillover from the Olympics. Glen Hauenstein explains that there is an extension of the season into September and October, particularly in Europe and the Pacific. He also mentions the increase in US tourists to Japan due to the strong US dollar. Ravi then asks about Delta's ability to push up prices as low-cost carriers move towards premium. Glen clarifies that there is still room for Delta to increase prices as the industry becomes more premium, but they do not have a specific limit in mind.

During an analyst Q&A session, Delta executives discussed their strategy for growing premium demand and the potential impact of other airlines also focusing on premium products. They believe that as other airlines upgrade their products, it will force them to raise their prices, which will benefit Delta's main cabin revenues. The company expects to see 2% fleet growth this year and around 50 deliveries next year, with a steady number of retirements through 2025.

Delta Airlines CEO Ed Bastian discusses the retirement of older aircraft and the potential benefits for the company's maintenance operations. He also mentions that the company is still carrying more debt than he is comfortable with, but declines to give specifics until the November call. The call then transitions to media questions, with the first being from Leslie Josephs of CNBC, who asks about premium economy and whether travelers are buying it at the beginning or upgrading later, and if it is still the most profitable part of the cabin.

During a conference call, Delta CEO Ed Bastian and President Glen Hauenstein were asked about the progress of Delta Premium Select and Wi-Fi availability on the mainline fleet. Hauenstein stated that over 80% of Delta Premium Select seats are purchased at initial booking and it is the third most profitable cabin after Delta One and domestic first class. Bastian mentioned that the focus is currently on equipping the international fleet with Wi-Fi, with plans to have the transatlantic routes fully equipped by the end of the summer. They are also working on getting the remaining domestic aircraft and regional jets equipped within the next 12-18 months.

Mary Schlangenstein asks for more details about Delta's business in Japan, and Glen Hauenstein explains that the US-Japan market is strong due to the favorable exchange rate. On the business side, it also remains strong. There is no update on the refinery partnership or sale. The call concludes.

This summary was generated with AI and may contain some inaccuracies.