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Continental Joins Star Alliance, Better Positions Airline To Deliver A Broader Network (CAL) -
Oct 27, 2009 (SmarTrend(R) News Watch via COMTEX) --
10/27/2009 - Continental Airlines (NYSE:CAL) officially joined the Star Alliance on Tuesday. The move will give passengers more options and the airline more places to expand. The Star Alliance has 25 members, which includes United, US Airways, Lufthansa and Air Canada. Continental left the SkyTeam alliance over a year ago after Delta and Northwest announced they would merge, reducing Continental to "junior partner status" and preventing the airline from having the kind of input it wanted, according to COO Jeff Smisek. Chairman and CEO Larry Kellner said, "Continental's transition to Star Alliance is one of the most important strategic moves we have accomplished in my career at Continental. Our membership in Star Alliance positions us to deliver a broader network to our customers, and to achieve better business results and a stronger future for my co-workers, our customers and communities as a result of the benefits from participating in the world's largest airline alliance."
Write to Chip Brian at cbrian@tradethetrend.com
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Companies: Continental Airlines, Inc. (CAL)
American Express Reports Third Quarter Earnings from Continuing Operations of $642 Million; EPS of
NEW YORK, Oct 22, 2009 (BUSINESS WIRE) --
American Express Company (NYSE: AXP) today reported third-quarter income from continuing operations of $642 million, down 25 percent from $861 million a year ago. Diluted earnings per share from continuing operations were $0.54, down 27 percent from $0.74 a year ago.
(Millions, except per share amounts)
Quarters Ended Percentage Nine Months Ended Percentage
September 30, Inc/(Dec) September 30, Inc/(Dec)
2009 2008 2009 2008
Total Revenues Net of Interest Expense $ 6,016 $ 7,164 (16 )% $ 18,034 $ 21,859 (17 )%
Income From Continuing Operations $ 642 $ 861 (25 )% $ 1,427 $ 2,565 (44 )%
Loss From Discontinued Operations $ (2 ) $ (46 ) (96 )% $ (13 ) $ (106 ) (88 )%
Net Income $ 640 $ 815 (21 )% $ 1,414 $ 2,459 (42 )%
Earnings Per Common Share - Diluted:
Income From Continuing Operations Attributable to Common $ 0.54 $ 0.74 (27 )% $ 0.95 $ 2.20 (57 )%
Shareholders(1)
Loss From Discontinued Operations $ (0.01 ) $ (0.04 ) (75 )% $ (0.01 ) $ (0.10 ) (90 )%
Net Income Attributable to Common Shareholders(1) $ 0.53 $ 0.70 (24 )% $ 0.94 $ 2.10 (55 )%
Average Diluted Common Shares Outstanding 1,181 1,158 2 % 1,166 1,161 - %
Return on Average Equity 11.7 % 27.8 % 11.7 % 27.8 %
Return on Average Common Equity 10.4 % 27.6 % 10.4 % 27.6 %
The third quarter results included a $180 million ($113 million after-tax) non-recurring benefit associated with the company's accounting for a net investment in consolidated foreign subsidiaries (discussed in more detail later). Excluding that benefit, adjusted diluted earnings per share from continuing operations were $0.44.(2)
Net income totaled $640 million for the quarter, down 21 percent from $815 million a year ago. Diluted per-share net income of $0.53 was down 24 percent from $0.70 a year ago. Excluding the non-recurring benefit mentioned above, adjusted diluted per-share net income was $0.43.(2)
Consolidated revenues net of interest expense declined 16 percent to $6.0 billion, down from $7.2 billion a year ago.
Consolidated provisions for losses totaled $1.2 billion, down 13 percent from $1.4 billion a year ago.
Consolidated expenses totaled $3.9 billion, down 17 percent from $4.7 billion a year ago, reflecting in part the results of the company's reengineering initiatives.
At the end of the quarter, the company's tier-one risk based capital ratio was 9.7 percent. Its tier-one common risk based ratio was 9.7 percent, which compared favorably to the regulatory benchmark(3) of 4 percent.
The company's return on average equity (ROE) was 11.7 percent, down from 27.8 percent a year ago. Return on average common equity (ROCE), was 10.4 percent, down from 27.6 percent a year ago.
"Our results showed further progress in navigating through the most difficult economic environment in decades," said Kenneth I. Chenault, chairman and chief executive officer.
"We generated substantial earnings this quarter due, in part, to the reengineering efforts that have successfully lowered our expense base. Just as important, we stepped up investments in the business with a focus on: premium cobranded products, charge card offerings and brand building initiatives in the U.S. and select international markets. We funded these investments, as expected, from the benefits we realized from better credit metrics during the past several months.
"While third quarter revenues declined because cardmember spending and loan volumes were down from year-ago levels, overall billings have stabilized during the last few months and we saw indications that spending by corporate cardmembers is beginning to pick up.
"During the quarter, we also expanded our deposit gathering activities, raising a net $4.1 billion as part of our funding strategy based on staying liquid at a time when the credit markets remain volatile.
"At the start of the year the economy appeared to be in a freefall, the drop in cardmember spending was accelerating and loan loss rates were rising rapidly. Today, while there is still reason to be cautious about high unemployment levels, we are seeing broad-based improvements in credit quality, the trends in cardmember spending are encouraging and there are signs that the recession may be approaching an end.
"Our three priorities remain: staying liquid, staying profitable and investing selectively for growth. However, in anticipation of sequential improvement in our loan loss provision during the fourth quarter, we are focused more and more on the third priority -- investing in the business to make sure we capitalize on growth opportunities."
During the third quarter, the translation effects of a comparatively stronger U.S. dollar contributed to lower non-U.S. revenues, provisions and expenses, compared to the year-ago quarter.
Discontinued operations
Discontinued operations for the third quarter generated a loss of $2 million compared with a loss of $46 million during the year-ago period.
Segment Results
U.S. Card Services reported third-quarter net income of $109 million, compared to net income of $244 million a year ago.
Total revenues net of interest expense for the third quarter decreased 16 percent to $2.9 billion, driven by reduced cardmember spending, lower securitization income, net and lower loan balances.
Provisions for losses totaled $850 million, a decrease of 10 percent from $941 million a year ago. The decrease reflected lower loans and receivables, as well as recent improvements in credit trends in both the charge and lending portfolios. On a managed basis(4), the net loan write-off rate was 8.9 percent, down from 10.0 percent in the second quarter and up from 5.9 percent a year ago. Owned net write-off rate was 9.8 percent in the quarter, down from 10.3 percent in the second quarter and up from 6.1 percent a year ago.
Total expenses decreased 11 percent. Marketing, promotion, rewards and cardmember services expenses decreased 16 percent from the year-ago period, reflecting lower rewards costs and reduced investments in marketing and promotion. Salaries and employee benefits and other operating expenses decreased 5 percent from year-ago levels, primarily due to the benefits of ongoing reengineering initiatives.
International Card Services reported third-quarter net income of $127 million, compared to $67 million a year ago.
Total revenues net of interest expense decreased 7 percent to $1.1 billion, primarily driven by reduced cardmember spending and lower loan balances.
Provisions for losses totaled $250 million, a decrease of 21 percent from $316 million a year ago, primarily reflecting a lower level of loans and receivables.
Total expenses decreased 16 percent. Marketing, promotion, rewards and cardmember services expenses decreased 22 percent from year-ago levels, reflecting reduced marketing investments and lower rewards costs. Salaries and employee benefits and other operating expenses decreased 11 percent from year-ago levels, primarily due to the benefits of ongoing reengineering initiatives.
Global Commercial Services reported a third quarter net income of $116 million, compared to $134 million a year ago.
Total revenues net of interest expense decreased 17 percent to $997 million, reflecting lower travel commissions and fees and reduced spending by corporate cardmembers compared to year ago levels.
Total expenses decreased 17 percent. Marketing, promotion, rewards and cardmember services expenses decreased 28 percent from the year-ago period, primarily reflecting lower rewards costs. Salaries and employee benefits and other operating expenses decreased 16 percent from the year-ago period, primarily due to the benefits of ongoing reengineering initiatives.
Global Network & Merchant Services reported third-quarter net income of $240 million, compared to $258 million a year ago.
Total revenues net of interest expense decreased 10 percent to $963 million, primarily reflecting lower merchant-related revenues driven by a decrease in global card billed business.
Total expenses decreased 11 percent. Marketing and promotion expenses increased 5 percent from the year-ago period, primarily reflecting higher brand-related marketing investments. Salaries and employee benefits and other operating expenses decreased 15 percent, primarily due to the benefits of ongoing reengineering initiatives.
Corporate and Other reported a third-quarter net income of $50 million, compared with net income of $158 million a year ago. The results for both periods reflected the recognition of $220 million ($136 million after-tax) for the previously announced MasterCard and Visa settlements.
This year's quarter included the previously mentioned non-recurring $180 million ($113 million after-tax) benefit associated with the company's accounting for a net investment in consolidated foreign subsidiaries. Of this benefit, $135 million ($85 million after-tax) represents a correction of an error related to the accounting for cumulative translation adjustments in prior periods. The impact of the incorrect accounting was not material to any of the quarterly or annual periods in which it occurred. The error resulted in a $60 million ($38 million after-tax) income overstatement in the second quarter 2009, a $135 million ($85 million after-tax) income understatement in the fourth quarter 2008 and minimal amounts for all other periods affected dating back to third quarter 2007, when the incorrect accounting originated. A non-recurring $45 million ($28 million after-tax) related benefit was also recorded in the current quarter as a result of changes in the fair value of certain foreign exchange forward contracts that are economic hedges to foreign currency exposures of net investments in consolidated foreign subsidiaries.
These amounts were more than offset by items that included higher tax expense due primarily to a revision in the company's estimated annual effective tax rate and increased funding costs.
American Express Company is a leading global payments and travel company founded in 1850. For more information, visit www.americanexpress.com.
***
The 2009 third Quarter Earnings Supplement will be available today on the American Express web site at http://ir.americanexpress.com. An investor conference call will be held at 5:00 p.m. (ET) today to discuss third-quarter earnings results. Live audio and presentation slides for the investor conference call will be available to the general public at the same web site. A replay of the conference call will be available later today at the same web site address.
EXHIBIT 1
AMERICAN EXPRESS COMPANY
U.S. Card Services
(Billions, except percentages)
Quarter Ended Quarter Ended Quarter Ended
September 30, 2009 June 30, 2009 September 30, 2008
Cardmember lending - owned basis (A):
Average Loans $23.4 $26.5 $36.3
Net write-off rate 9.8 % 10.3 % 6.1 %
Cardmember lending - managed basis (B):
Average Loans $52.9 $55.1 $64.6
Net write-off rate 8.9 % 10.0 % 5.9 %
(A) "Owned," a GAAP basis measurement, reflects only cardmember loans included in the company's Consolidated Balance Sheets. (B) The managed basis presentation assumes that there have been no off-balance sheet securitization transactions, i.e., all securitized cardmember loans and related income effects are reflected as if they were in the company's balance sheets and income statements, respectively. The difference between the "owned basis" (GAAP) information and "managed basis" information is attributable to the effects of securitization activities. The company presents U.S. Card Services information on a managed basis because that is the way the company's management views and manages the business. Management believes that a full picture of trends in the company's cardmember lending business can only be derived by evaluating the performance of both securitized and non-securitized cardmember loans. Management also believes that use of a managed basis presentation presents a more comprehensive portrayal of the key dynamics of the cardmember lending business. Irrespective of the on and off-balance sheet funding mix, it is important for management and investors to see metrics for the entire cardmember lending portfolio because they are more representative of the economics of the aggregate cardmember relationships and ongoing business performance and trends over time. It is also important for investors to see the overall growth of cardmember loans and related revenue in order to evaluate market share. These metrics are significant in evaluating the company's performance and can only be properly assessed when all non-securitized and securitized cardmember loans are viewed together on a managed basis. The company does not currently securitize international loans.
(1) Represents income from continuing operations or net income, as applicable, less:
(i) accelerated preferred dividend accretion of $212 million for the nine months ended September 30, 2009 due to the repurchase of $3.39 billion of preferred shares issued as part of the Capital Purchase Program (CPP),
(ii) preferred shares dividends and related accretion of $94 million for the nine months ended September 30, 2009, and
(iii) earnings allocated to participating share awards and other items of $8 million and $5 million for the three-months ended September 30, 2009 and 2008, respectively, and $13 million and $14 million for the nine months ended September 30, 2009 and 2008, respectively.
(2) Management believes the adjusted per share numbers provide useful metrics to evaluate the ongoing operating performance of the company.
(3) The regulatory benchmark of 4 percent was used by the Federal Reserve within the Supervisory Capital Assessment Program earlier this year.
(4) Please refer to the information set forth on Exhibit I for further discussion of the owned and managed basis presentations.
Forward Looking Statements:
This report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are subject to risks and uncertainties. The forward-looking statements, which address the Company's expected business and financial performance, among other matters, contain words such as "believe," "expect," "anticipate," "optimistic," "intend," "plan," "aim," "will," "may," "should," "could," "would," "likely," and similar expressions. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the Company's ability to manage credit risk related to consumer debt, business loans, merchants and other credit trends, which will depend in part on (i) the economic environment, including, among other things, the housing market, the rates of bankruptcies and unemployment, which can affect spending on card products, debt payments by individual and corporate customers and businesses that accept the Company's card products, (ii) the effectiveness of the Company's credit models and (iii) the impact of recently enacted statutes and proposed legislative initiatives affecting the credit card business, including, without limitation, The Credit Card Accountability Responsibility and Disclosure Act of 2009; the impact of the Company's efforts to deal with delinquent cardmembers in the current challenging economic environment, which may affect payment patterns of cardmembers and the perception of the Company's services, products and brands; the Company's near-term write-off rates, including those for the fourth quarter of 2009, which will depend in part on changes in the level of the Company's loan balances, delinquency rates of cardmembers, unemployment rates and the volume of bankruptcies; differences between owned (i.e., GAAP) and managed write-off rates, which can be impacted by factors such as the various types of customer accounts in the portfolios of the Company and the lending securitization trust; consumer and business spending on the Company's credit and charge card products and Travelers Cheques and other prepaid products and growth in card lending balances, which depend in part on the economic environment, and the ability to issue new and enhanced card and prepaid products, services and rewards programs, and increase revenues from such products, attract new cardmembers, reduce cardmember attrition, capture a greater share of existing cardmembers' spending, and sustain premium discount rates on its card products in light of regulatory and market pressures, increase merchant coverage, retain cardmembers after low introductory lending rates have expired, and expand the Global Network Services business; the write-off and delinquency rates in the medium- to long-term of cardmembers added by the Company during the past few years, which could impact their profitability to the Company; the Company's ability to effectively implement changes in the pricing of certain of its products and services; fluctuations in interest rates (including fluctuations in benchmarks, such as LIBOR and other benchmark rates, and credit spreads), which impact the Company's borrowing costs, return on lending products and the value of the Company's investments; the actual amount to be spent by the Company on marketing, promotion, rewards and cardmember services based on management's assessment of competitive opportunities and other factors affecting its judgment, and during the remainder of 2009, the extent of provision benefit, if any, from lower than expected write offs; the ability to control and manage operating, infrastructure, advertising and promotion expenses as business expands or changes, including the ability to accurately estimate the provision for the cost of the Membership Rewards program; fluctuations in foreign currency exchange rates; the Company's ability to grow its business and generate excess capital and earnings in a manner and at levels that will allow the Company to return a portion of capital to shareholders, which will depend on the Company's ability to manage its capital needs, and the effect of business mix, acquisitions and rating agency and regulatory requirements, including those arising from the Company's status as a bank holding Company; the ability of the Company to meet its objectives with respect to the growth of its brokered retail CD program, brokerage sweep account program and the direct deposit initiative; the success of the Global Network Services business in partnering with banks in the United States, which will depend in part on the extent to which such business further enhances the Company's brand, allows the Company to leverage its significant processing scale, expands merchant coverage of the network, provides Global Network Services' bank partners in the United States the benefits of greater cardmember loyalty and higher spend per customer, and merchant benefits such as greater transaction volume and additional higher spending customers; the ability of the Global Network Services business to meet the performance requirements called for by the Company's settlements with MasterCard and Visa; trends in travel and entertainment spending and the overall level of consumer confidence; the uncertainties associated with business acquisitions, including, among others, the failure to realize anticipated business retention, growth and cost savings, as well as the ability to effectively integrate the acquired business into the Company's existing operations; the success, timeliness and financial impact (including costs, cost savings, and other benefits, including increased revenues), and beneficial effect on the Company's operating expense to revenue ratio, both in the short-term (including during 2009) and over time, of reengineering initiatives being implemented or considered by the Company, including cost management, structural and strategic measures such as vendor, process, facilities and operations consolidation, outsourcing (including, among others, technologies operations), relocating certain functions to lower-cost overseas locations, moving internal and external functions to the internet to save costs, and planned staff reductions relating to certain of such reengineering actions; the Company's ability to reinvest the benefits arising from such reengineering actions in its businesses; bankruptcies, restructurings, consolidations or similar events (including, among others, the Delta Air Lines/Northwest Airlines merger) affecting the airline or any other industry representing a significant portion of the Company's billed business, including any potential negative effect on particular card products and services and billed business generally that could result from the actual or perceived weakness of key business partners in such industries; the triggering of obligations to make payments to certain co-brand partners, merchants, vendors and customers under contractual arrangements with such parties under certain circumstances; a downturn in the Company's businesses and/or negative changes in the Company's and its subsidiaries' credit ratings, which could result in contingent payments under contracts, decreased liquidity and higher borrowing costs; the ability of the Company to satisfy its liquidity needs and execute on its funding plans, which will depend on, among other things, the Company's future business growth, its credit ratings, market capacity and demand for securities offered by the Company, performance by the Company's counterparties under its bank credit facilities and other lending facilities, regulatory changes, including changes to the policies, rules and regulations of the Board of Governors of the Federal Reserve System and the Federal Reserve Bank of San Francisco, the Company's ability to securitize and sell receivables and the performance of receivables previously sold in securitization transactions and the Company's ability to meet the criteria for participation in certain liquidity facilities and other funding programs, including the Commercial Paper Funding Facility and the Temporary Liquidity Guarantee Program, being made available through the Federal Reserve Bank of New York, the Federal Deposit Insurance Corporation and other federal departments and agencies; accuracy of estimates for the fair value of the assets in the Company's investment portfolio and, in particular, those investments that are not readily marketable, including the valuation of the interest-only strip relating to the Company's lending securitizations and the ability of our charge card and lending trusts to maintain excess spreads at levels sufficient to avoid material set-asides or early amortization of our charge card and lending securitizations, which will depend on various factors such as income derived from the relevant portfolios and their respective credit performances; the increase in excess spread resulting from the designation of discount option receivables with respect to the American Express Credit Account Master Trust, which will depend in part on the monthly principal payment rate posted to accounts in, and the credit performance of, the securitized lending portfolio; the Company's ability to avoid material losses on its investment portfolio, including its investments in state and municipal obligations, the issuers of which could be adversely affected by the challenging economic environment; the Company's ability to invest in technology advances across all areas of its business to stay on the leading edge of technologies applicable to the payment industry; the Company's ability to attract and retain executive management and other key employees; the Company's ability to protect its intellectual property rights (IP) and avoid infringing the IP of other parties; the potential negative effect on the Company's businesses and infrastructure, including information technology, of terrorist attacks, natural disasters or other catastrophic events in the future; political or economic instability in certain regions or countries, which could affect lending and other commercial activities, among other businesses, or restrictions on convertibility of certain currencies; changes in laws or government regulations; the potential impact of The Credit Card Accountability Responsibility and Disclosure Act of 2009 and regulations recently adopted by federal bank regulators relating to certain credit and charge card practices, including, among others, the imposition by card issuers of interest rate increases on outstanding balances and the allocation of payments in respect of outstanding balances with different interest rates, which could have an adverse impact on the Company's net income; accounting changes, including the Financial Accounting Standards Board's recent adoption of changes to the accounting of off-balance sheet activities or other potential regulatory interpretations in this area, which, when effective, will result in the Company's having to consolidate the assets and liabilities of the lending securitization trust, thereby requiring the Company to reestablish loss reserves, which could reduce the Company's regulatory capital ratios and/or change the presentation of its financial statements; outcomes and costs associated with litigation and compliance and regulatory matters; and competitive pressures in all of the Company's major businesses. A further description of these and other risks and uncertainties can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, the Company's Quarterly Reports on Form 10-Q for the quarters ended March 31 and June 30, 3009, and the Company's other reports filed with the SEC.
All information in the following tables is presented on a basis prepared in accordance with U.S. generally accepted accounting principles (GAAP), unless otherwise indicated.
(Preliminary)
American Express Company
Consolidated Statements of Income
(Millions)
Quarters Ended Nine Months Ended
September 30, Percentage September 30, Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
Revenues
Non-interest revenues
Discount revenue $ 3,373 $ 3,848 (12 ) % $ 9,744 $ 11,557 (16 ) %
Net card fees 538 541 (1 ) 1,602 1,614 (1 )
Travel commissions and fees 383 499 (23 ) 1,155 1,566 (26 )
Other commissions and fees 448 573 (22 ) 1,340 1,785 (25 )
Securitization income, net 71 200 (65 ) 210 871 (76 )
Other 449 553 (19 ) 1,569 1,591 (1 )
Total non-interest revenues 5,262 6,214 (15 ) 15,620 18,984 (18 )
Interest income
Interest and fees on loans 1,059 1,560 (32 ) 3,432 4,795 (28 )
Interest and dividends on investment securities 229 200 15 579 603 (4 )
Deposits with banks and other 9 74 (88 ) 48 235 (80 )
Total interest income 1,297 1,834 (29 ) 4,059 5,633 (28 )
Interest expense
Deposits 109 109 - 299 381 (22 )
Short-term borrowings 2 114 (98 ) 36 411 (91 )
Long-term debt and other 432 661 (35 ) 1,310 1,966 (33 )
Total interest expense 543 884 (39 ) 1,645 2,758 (40 )
Net interest income 754 950 (21 ) 2,414 2,875 (16 )
Total revenues net of interest expense 6,016 7,164 (16 ) 18,034 21,859 (17 )
Provisions for losses
Charge card 143 351 (59 ) 716 937 (24 )
Cardmember lending 989 958 3 3,706 3,304 12
Other 46 50 (8 ) 143 153 (7 )
Total provisions for losses 1,178 1,359 (13 ) 4,565 4,394 4
Total revenues net of interest expense after provisions for losses 4,838 5,805 (17 ) 13,469 17,465 (23 )
Expenses
Marketing and promotion 504 649 (22 ) 1,201 1,906 (37 )
Cardmember rewards 983 1,132 (13 ) 2,858 3,301 (13 )
Cardmember services 132 148 (11 ) 374 402 (7 )
Salaries and employee benefits 1,261 1,465 (14 ) 3,884 4,430 (12 )
Professional services 575 608 (5 ) 1,693 1,764 (4 )
Occupancy and equipment 374 398 (6 ) 1,124 1,185 (5 )
Communications 105 118 (11 ) 315 348 (9 )
Other, net (14 ) 209 # 140 816 (83 )
Total 3,920 4,727 (17 ) 11,589 14,152 (18 )
Pretax income from continuing operations 918 1,078 (15 ) 1,880 3,313 (43 )
Income tax provision 276 217 27 453 748 (39 )
Income from continuing operations 642 861 (25 ) 1,427 2,565 (44 )
Loss from discontinued operations, net of tax (2 ) (46 ) (96 ) (13 ) (106 ) (88 )
Net income $ 640 $ 815 (21 ) $ 1,414 $ 2,459 (42 )
Income from continuing operations attributable to common $ 634 $ 856 (26 ) $ 1,108 $ 2,551 (57 )
shareholders (A)
Net income attributable to common shareholders (A) $ 632 $ 810 (22 ) $ 1,095 $ 2,445 (55 )
# - Denotes a variance of more than 100%.
(A) Represents income from continuing operations or net income, as applicable, less (i) accelerated preferred dividend accretion of $212 million for the nine months ended September 30, 2009 due to the repurchase of $3.39 billion of preferred shares issued as part of the Capital Purchase Program (CPP), (ii) preferred shares dividends and related accretion of $94 million for the nine months ended September 30, 2009, and (iii) earnings allocated to participating share awards and other items of $8 million and $5 million for the three months ended September 30, 2009 and 2008, respectively, and $13 million and $14 million for the nine months ended September 30, 2009 and 2008, respectively.
(Preliminary)
American Express Company
Condensed Consolidated Balance
Sheets
(Billions)
September 30, December 31,
2009 2008
Assets
Cash $ 19 $ 21
Accounts receivable 35 37
Investment securities 24 13
Loans 29 41
Other assets 13 14
Total assets $ 120 $ 126
Liabilities and Shareholders' Equity
Customer deposits $ 24 $ 15
Short-term borrowings 2 9
Long-term debt 53 60
Other liabilities 27 30
Total liabilities 106 114
Shareholders' equity 14 12
Total liabilities and shareholders' equity $ 120 $ 126
(Preliminary)
American Express Company
Financial Summary
(Millions)
Quarters Ended Nine Months Ended
September 30, Percentage September 30, Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
Total revenues net of interest
expense
U.S. Card Services $ 2,903 $ 3,459 (16 ) % $ 8,782 $ 10,774 (18 ) %
International Card Services 1,148 1,232 (7 ) 3,262 3,683 (11 )
Global Commercial Services 997 1,200 (17 ) 2,944 3,652 (19 )
Global Network & Merchant Services 963 1,071 (10 ) 2,709 3,157 (14 )
6,011 6,962 (14 ) 17,697 21,266 (17 )
Corporate & Other,
including adjustments and eliminations 5 202 (98 ) 337 593 (43 )
CONSOLIDATED TOTAL REVENUES NET OF INTEREST EXPENSE $ 6,016 $ 7,164 (16 ) $ 18,034 $ 21,859 (17 )
Pretax income (loss) from
continuing operations
U.S. Card Services $ 139 $ 364 (62 ) $ (243 ) $ 1,092 #
International Card Services 127 1 # 184 191 (4 )
Global Commercial Services 170 191 (11 ) 397 735 (46 )
Global Network & Merchant Services 358 397 (10 ) 1,083 1,187 (9 )
794 953 (17 ) 1,421 3,205 (56 )
Corporate & Other 124 125 (1 ) 459 108 #
PRETAX INCOME FROM CONTINUING OPERATIONS $ 918 $ 1,078 (15 ) $ 1,880 $ 3,313 (43 )
Net income (loss)
U.S. Card Services $ 109 $ 244 (55 ) $ (116 ) $ 788 #
International Card Services 127 67 90 230 315 (27 )
Global Commercial Services 116 134 (13 ) 273 512 (47 )
Global Network & Merchant Services 240 258 (7 ) 713 780 (9 )
592 703 (16 ) 1,100 2,395 (54 )
Corporate & Other 50 158 (68 ) 327 170 92
Income from continuing operations 642 861 (25 ) 1,427 2,565 (44 )
Loss from discontinued operations, net of tax (2 ) (46 ) (96 ) (13 ) (106 ) (88 )
NET INCOME $ 640 $ 815 (21 ) $ 1,414 $ 2,459 (42 )
# - Denotes a variance of more than 100%.
(Preliminary)
American Express Company
Financial Summary (continued)
Quarters Ended Nine Months Ended
September 30, Percentage September 30, Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
EARNINGS PER COMMON SHARE
BASIC
Income from continuing operations attributable to common $ 0.54 $ 0.74 (27) % $ 0.95 $ 2.21 (57) %
shareholders
Loss from discontinued operations - (0.04) # (0.01) (0.09) (89)
Net income attributable to common shareholders $ 0.54 $ 0.70 (23) % $ 0.94 $ 2.12 (56) %
Average common shares outstanding (millions) 1,178 1,154 2 % 1,164 1,154 1 %
DILUTED
Income from continuing operations attributable to common $ 0.54 $ 0.74 (27) % $ 0.95 $ 2.20 (57) %
shareholders
Loss from discontinued operations (0.01) (0.04) (75) (0.01) (0.10) (90)
Net income attributable to common shareholders $ 0.53 $ 0.70 (24) % $ 0.94 $ 2.10 (55) %
Average common shares outstanding (millions) 1,181 1,158 2 % 1,166 1,161 - %
Cash dividends declared per common share $ 0.18 $ 0.18 - % $ 0.54 $ 0.54 - %
Selected Statistical Information
Quarters Ended Nine Months Ended
September 30, Percentage September 30, Percentage
2009 2008 Inc/(Dec) 2009 2008 Inc/(Dec)
Return on average equity (A) 11.7% 27.8% 11.7% 27.8%
Return on average common equity (A) 10.4% 27.6% 10.4% 27.6%
Return on average tangible common equity (A) 13.5% 34.2% 13.5% 34.2%
Common shares outstanding (millions) 1,189 1,160 3 % 1,189 1,160 3 %
Book value per common share $ 11.72 $ 10.79 9 % $ 11.72 $ 10.79 9 %
Shareholders' equity (billions) $ 13.9 $ 12.5 11 % $ 13.9 $ 12.5 11 %
# - Denotes a variance of more than 100%.
(A) Refer to Appendix I for components of return on average equity, return on average common equity and return on average tangible common equity.
To view full financial tables, go to http://ir.americanexpress.com.
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6080452&lang=en
SOURCE: American Express Company
American Express Company Media: Joanna Lambert, 212-640-9668 joanna.g.lambert@aexp.com or Michael O'Neill, 212-640-5951 mike.o'neill@aexp.com or Investors/Analysts: Malkah Groner, 212-640-6657 malkah.y.groner@aexp.com or Ron Stovall, 212-640-5574 ronald.stovall@aexp.com
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Companies: American Express Co. (AXP)
Egencia Releases 2010 Forecast and Annual Hotel Negotiability Index for Corporate Travel - Zibb.com
BELLEVUE, Wash., Nov. 3, 2009 (Canada NewsWire via COMTEX) --
<<
Index Shows Corporations to Retain Hotel Buying Power into 2010
>>
Egencia®, an Expedia, Inc. company, today unveiled its 2010 Corporate Travel Forecast and Hotel Negotiability Index, finding that average ticket prices (ATPs) for corporate travelers to top business travel destinations are expected to increase globally, with a 5 to 10 percent increase anticipated in key North American cities. Egencia's Hotel Negotiability Index looks at city-specific data to help business decision makers gauge travel program opportunities while planning. This year's Index analyzes corporations' buying power in nearly 40 global cities.
The study evaluates global industry trends, macroeconomic factors, in-depth research of supplier markets and capacity to deliver a current report on air, hotel and car rental trends in both domestic and international destinations.
"Overall, we expect to see some year-over-year recovery of business travel in 2010 as economies stabilize around the world," said Rob Greyber, President of Egencia. "The resulting demand coupled with suppliers maintaining capacity discipline is expected to push air prices higher in many business destinations."
<<
North America
>>
Despite continued depressed demand for front of cabin travel, increased low-cost competition and ancillary fees contributing downward pressure on ATPs, several factors are likely to push corporate travel prices upward, including: the post-recession economy impacting corporate travel demand, airlines maintaining capacity discipline, recent airline industry mergers, and the persistent inflation risk.
Conversely, average daily rates (ADRs) for business travelers are expected to stay flat or decrease up to 5 percent year-over-year for key cities. Though pent-up demand, renewed strength in certain business sectors and increased meetings/conference spend are expected to contribute upward pressure on pricing, lower air capacity bringing fewer travelers is likely to maintain or decrease ADRs. Additionally, the abundance of short term hotel supply from 2008 - 2009, rising air prices and corporate contracts leveraging reduced rates already in place for 2010 will add further downward pressure.
Charts below illustrate year-over-year 2010 vs. 2009 ATP and ADR figures in the local currency in selected business travel destinations around the world for North American points of sale.
<<
>>
North America
<<
Destination ATP YoY ADR YoY
----------- ------- -------
Atlanta -1% 3%
Boston 2% 2%
Calgary 3% -1%
Chicago 3% -2%
Dallas 5% -3%
Denver 9% -5%
Houston 6% -4%
Los Angeles 4% -1%
Minneapolis/St.
Paul 5% -1%
--------------- --- ---
>>
<<
Destination ATP YoY ADR YoY
----------- ------- -------
Montreal 5% -1%
New York 5% -4%
Philadelphia 11% -4%
Phoenix 12% -6%
San Diego 16% -6%
San Francisco 4% -2%
Seattle 10% -3%
Toronto 5% 0%
Washington, DC 9% -2%
Vancouver 2% 0%
--------- --- ---
>>
International
<<
Destination ATP YoY ADR YoY
----------- ------- -------
Hong Kong 1% -4%
London 3% 1%
Paris 2% 1%
Tokyo 1% -1%
----- --- ---
>>
For the U.S. car rental industry, 2009 was an unusual year. Car rental prices for business travelers increased 10 to 20 percent, while lack of financing coupled with the troubled automaker industry made it difficult for rental agencies to replenish their fleets. Egencia expects the situation to be alleviated somewhat in 2010 with car rental prices decreasing 5 percent year-over-year due to restored financing and increased competition for consumers/business travelers.
<<
Supply Outlook: Hotel Negotiability
>>
Egencia's Hotel Negotiability Index, an indicator of the overall supply landscape in top North American cities, suggests that 2010 will remain a buyer's market for corporations during at least the first two quarters. The majority of major North American business destinations will maintain high negotiability, with the exceptions of Boston and Washington DC.
Boston, for example, has been less affected by the recession compared with other business destinations, so the anticipated influx of business travel and limited new capacity could make negotiations for that region more challenging. Washington DC will be a challenging destination for negotiations due to the increased role government is playing in multiple sectors of the economy.
<<
2010 Hotel Negotiability Index for North America
(Photo: http://www.newscom.com/cgi-bin/prnh/20091103/CG03756)
>>
"With a few exceptions, the hotel negotiation opportunity for travel and business decision makers is strong for 2010," said Pam Keenan Fritz, Senior Vice President of Egencia North America. "We advise our clients to move forward with negotiations now or in the near term to take full advantage of the climate, arming themselves with data to show how they can influence volumes."
<<
Travel Management Trends
>>
Egencia surveyed more than 100 travel managers on cost control measures, travel spend and expectations for 2010. According to survey respondents, 59 percent say company travel has slightly or significantly reduced this year, compared with 48 percent a year ago in October 2008. Ten percent reported a slight increase in business travel compared with only 3 percent a year ago.
<<
The top cost-cutting measures travel managers are using include:
-- Advanced booking of airline tickets (57%, up from 55% in fall 2008)
-- Rigorous enforcement of travel policy (52%, up from 44%)
-- Active tracking of unused tickets (45%, up from 44%)
-- Requiring pre-trip approval (44%, up from 43%)
>>
"The difficult economy of 2009 coupled with better travel management reporting and tools has driven travel and procurement managers to take stronger control of their programs," said Keenan Fritz. "This is evident in the trends we are seeing with policy enforcement data and negotiations - one third of travel managers say they are evaluating and making changes to their travel programs more frequently.*"
Strategic meetings management has been a growing theme for the corporate travel industry in 2009, and there is healthy opportunity for further consolidation between meetings and business travel programs into 2010. As companies resume investment in meetings and incentives, there is a greater focus on budget management and delivering significant ROI on meetings spend.
<<
Europe
>>
Pricing for both corporate travel ATPs and ADRs in top European business travel destinations are expected to rise slowly. European cities have shown signs of positive growth, and business demand will begin to increase in travel especially in finance markets. Recent airline capacity cuts, increased focus on carrier profitability and recent shifts in the airline industry including the Delta/Northwest merger and Air France and Air Italia consolidation are also contributing upward pressure. Hotels located in these business hubs are likely to benefit from the increased demand.
Charts below illustrate year-over-year 2010 vs. 2009 ATP and ADR figures in U.S. dollars in selected business travel destinations for European points of sale.
<<
Destination ATPYoY ADR
----------- ------ ---
Amsterdam 3% 0%
Barcelona 7% -1%
Berlin 0% 2%
Brussels 0% 3%
Frankfurt 4% 1%
London 1% 1%
Madrid 1% 2%
Milan 2% 1%
Munich 2% 1%
Paris 0% 1%
----- --- ---
Asia-Pacific
>>
Corporate travel ATPs are expected to rise just slightly across Asia-Pacific cities due to increased demand outstripping supply. However, Egencia expects fewer business travelers to the region to mean lower to flat ADRs, with the exceptions of Sydney and Singapore, which may see a small rebound in pricing.
Charts below illustrate year-over-year 2010 vs. 2009 ATP and ADR figures in U.S. dollars in selected business travel destinations for Asia-Pacific points of sale.
<<
Destination ATP ADR
----------- --- ---
Beijing 4% -8%
Delhi 4% -4%
Hong Kong 4% -4%
Melbourne 3% -1%
Mumbai 1% 0%
Shanghai 2% -1%
Singapore 1% 1%
Sydney 0% 1%
Tokyo 0% -1%
----- --- ---
>>
Negotiability Indexes for APAC and Europe are available. Further insights into Egencia's 2010 Corporate Travel Forecast and Negotiability Index are available upon request.
<<
Research Methodology
>>
Projections are based on the statistical analysis of the past and current industry trends, macroeconomic factors, research of supplier markets, and vendors' capacity forecasts for 2010.
<<
Disclaimer
>>
This data refers to business destinations and business travel pricing. These projections are based on information gathered from various internal and external sources. The forecast represents an opinion based on current market factors and is not a representation or warranty as to the accuracy of the forecasts or projections made herein. Actual changes in ticket prices and hotel rates could vary significantly from forecasted numbers, impacted by unforeseen future economic and political factors.
<<
About Egencia, an Expedia, Inc. Company
>>
Egencia is the fifth largest travel management company in the world. As part of Expedia, Inc., (Nasdaq: EXPE), the world's largest travel marketplace, Egencia helps businesses get ahead by offering the only truly integrated corporate travel service. Egencia's industry expertise helps drive results that matter, delivering meaningful advancements that have a real impact. By combining a powerful offline and online service, Egencia delivers a complete corporate travel offering supported by global market expertise and a best-in-class technology platform.
<<
For more information, go to www.egencia.com
>>
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are not guarantees of future performance. These forward-looking statements are based on management's expectations as of the date of this press release and assumptions which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Actual results and the outcome of events may differ materially from those expressed or implied in the forward-looking statements for a variety of reasons, including declines or disruptions in the travel industry caused by, among others, prolonged adverse economic conditions, health risks, increased adverse weather, war and/or terrorism and bankruptcies.
Egencia and the Egencia logo are either registered trademarks or trademarks of Expedia, Inc. in the U.S. and/or other countries. Other logos or product and company names mentioned herein may be the property of their respective owners.
<<
© 2009 Egencia, LLC. All rights reserved. CST #: 2083922-50/
>>
*33% evaluating/negotiating programs more frequently versus 6% doing so less frequently
<<
>>
SOURCE: Egencia
Lauren Berg of Edelman, +1-312-233-1390, lauren.berg@edelman.com; or Canada, Noor Marzook, +1-416-979-1120, noor.marzook@edelman.com, both for Egencia Web Site: http://www.egencia.com http://www.expediacorporate.com
Tags: airline asia beijing budget business calgary car rental carrier corporate currency economy europe finance forecasts frankfurt government health hong kong hotel index inflation investment london madrid market merger milan montreal nasdaq new_york north america online paris policy politics president prices rates research securities shanghai singapore sydney technology terrorism tokyo toronto travel vancouver war washington dc weather
Companies: Expedia, Inc. (EXPE)
Delta to expand service in 17 cities for summer 2010 schedule - Zibb.com
Oct 21, 2009 (AIRLINE INDUSTRY INFORMATION via COMTEX) --
Delta Air Lines (NYSE:DAL) announced on Tuesday changes to its schedule to strengthen its international network for summer 2010.
The changes will expand services in 17 cities and will leverage Delta's joint venture with Air France-KLM, its alliance relationship with Alaska Air Group and increased fleet flexibility from its merger with Northwest Airlines.
The summer 2010 changes are part of the first fully consolidated schedule to be published following Delta and Northwest's merger, allowing the carrier to reallocate existing capacity to new routes.
The new and expanded non-stop routes for summer 2010 will focus on three regions: transpacific, transatlantic and Africa.
Comments on this story may be sent to aii.feedback@m2.com
Tags: africa joint venture merger nyse schedule
Companies: Air France-KLM (AKH), Alaska Air Group, Inc. (ALK), Delta Air Lines, Inc. (DAL), Delta Air Lines, Inc. (DALw), Northwest Airlines Corp. (NWA)
Northwest Airlines pilots who overflew Minneapolis-St Paul Airport were using laptops during flight
Oct 27, 2009 (AIRLINE INDUSTRY INFORMATION via COMTEX) --
The US National Transportation Safety Board (NTSB) reported on Monday the findings from its interviews with the pilots of the Northwest Airlines flight which became a NORDO (no radio communications) flight on 21 October and overflew its destination airport, Minneapolis-St Paul International/Wold-Chamberlain Airport (MSP), by around 150 miles, while flying from San Diego.
The NTSB stated that it interviewed both the first officer and the captain of the Airbus A320 aircraft separately in Minnesota on Sunday.
Both pilots reportedly told the NTSB that they were not fatigued, both having had a 19-hour layover in San Diego prior to the incident, and said that neither fell asleep or dozed during the flight. The pilots also stated that they did not have a heated argument.
According to the NTSB, the pilots reported that there was a distraction in the cockpit and there was a concentrated period of discussion, during which they did not monitor the aircraft or calls from the ATC although they heard conversation on the radio.
The pilots told the NTSB that they lost track of time during the flight and had been discussing the new monthly crew flight scheduling system which is in place following the merger of Northwest Airlines with Delta Air Lines (NYSE:DAL). Both pilots used their laptops while discussing the airline crew flight scheduling procedure.
Delta Air Lines (NYSE:DAL) stated that it has suspended the pilots who were in command of Northwest flight 188 on 21 October until the investigations into the incident have been completed. The carrier also said that the use of laptops is against its flight deck policies and that violations of that policy will result in termination.
Comments on this story may be sent to aii.feedback@m2.com
Tags: aircraft airport communications minnesota nyse policy radio track
Companies: Northwest Airlines Corp. (NWA)
Delta Air Lines Reports September 2009 Quarter Financial Results - Zibb.com
ATLANTA, Oct 22, 2009 /PRNewswire-FirstCall via COMTEX/ --
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
$0.06 per share, excluding $212 million in special items(1). This
result is $115 million better than prior year on a combined basis(2).
-- Delta's reported net loss for the September 2009 quarter was $161
million, or $0.19 per share.
-- Delta raised $600 million in incremental liquidity, addressed 40% of
2010 debt maturities and ended the September 2009 quarter with $5.8
billion in unrestricted liquidity.
-- Delta has achieved $500 million in merger benefits in the first three
quarters of 2009, reaching its 2009 target ahead of plan.
-- Delta's 2010 system capacity is expected to decline approximately 3%
compared to 2009.
"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."
(Logo: http://www.newscom.com/cgi-bin/prnh/20090202/DELTALOGO )
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%.
(in millions) 3Q09 3Q08 Incr 3Q09 3Q08 Incr
GAAP GAAP (Decr) GAAP Combined (Decr)
----- ----- ------ ----- -------- -------
Passenger $6,524 $4,978 31% $6,524 $8,329 (22)%
Cargo 177 162 9% 177 364 (51)%
Other, net 873 579 51% 873 839 4%
--- --- --- ---
Total Operating
Revenue $7,574 $5,719 32% $7,574 $9,532 (21)%
------ ------ ------ ------
On a combined basis:
-- Total operating revenue declined 21% versus prior year due to the global
economic recession.
-- Passenger revenue decreased 22%, or $1.8 billion, compared to the prior
year period due to the global economic recession and a 4% capacity
reduction. Passenger unit revenue (PRASM) declined 18%, driven by a 19%
decline in yield.
-- Cargo revenue declined 51%, or $187 million, reflecting lower volume and
yields. Freighter capacity was 38% lower year over year as a result of
the actions Delta is taking to discontinue freighter flying by the end
of 2009.
-- Other, net revenue grew 4%, or $34 million, primarily due to increased
baggage fee revenue.
Comparisons of revenue-related statistics are as follows:
Increase (Decrease)
3Q09 (GAAP) versus 3Q08 (Combined)
----------------------------------
3Q09 ($M) Change Unit
GAAP YOY Revenue Yield Capacity
--------- --------------------------------- --------
Passenger Revenue
Domestic $2,901 (19.7)% (16.8)% (17.2)% (3.5)%
Atlantic 1,353 (30.1)% (22.7)% (25.8)% (9.6)%
Latin America 294 (22.2)% (18.2)% (20.3)% (4.9)%
Pacific 574 (27.8)% (25.8)% (23.9)% (2.7)%
---
Total mainline 5,122 (23.8)% (19.5)% (20.6)% (5.3)%
Regional 1,402 (12.8)% (14.0)% (15.6)% 1.5%
-----
Consolidated $6,524 (21.7)% (18.1)% (19.1)% (4.4)%
"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.
(in millions, except where noted)
3Q09 3Q08 Incr 3Q09 3Q08 Incr
GAAP GAAP (Decr) GAAP Combined (Decr)
---- ---- ------ ---- -------- ------
Operating
expense $7,370 $5,588 32% $7,370 $9,619 (23)%
Operating
expense
ex-
special
items $7,241 $5,564 30% $7,241 $9,316 (22)%
Consoli-
dated
CASM 11.56 cents 13.47 cents (14)% 11.56 cents 14.30 cents (19)%
Consoli-
dated
CASM
ex-fuel
expense
and
special
items 7.82 cents 7.66 cents 2% 7.82 cents 7.63 cents 2%
Mainline
CASM 10.54 cents 11.82 cents (11)% 10.54 cents 13.13 cents (20)%
Mainline
CASM
ex-fuel
expense
and
special
items 6.94 cents 6.58 cents 5% 6.94 cents 6.81 cents 2%
Non-
operating
expense $383 $181 112% $383 $277 38%
On a combined basis:
-- Both consolidated and mainline unit cost (CASM(4)), excluding fuel
expense and special items, increased 2% year over year in the September
2009 quarter due to higher pension expense.
-- Non-operating expenses excluding special items increased $23 million in
the September 2009 quarter primarily due to non-cash debt discount
amortization.
"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.
The company is on track in its integration efforts and expects to obtain a Single Operating Certificate by the end of 2009. Recent achievements include:
-- Creating the world's largest airline loyalty program by combining the
Northwest WorldPerks program and Delta SkyMiles;
-- Relocating the Northwest System Operations Center from Minneapolis to
Delta's Operations Control Center in Atlanta;
-- Transitioning reservations agents in five pre-merger Northwest call
centers to the Delta Reservations system;
-- Continuing pilot and flight attendant training to prepare for single
carrier operations;
-- Renegotiating more than 600 corporate contracts to date, generating
incremental business traffic;
-- Re-branding more than 240 airports to provide consistent Delta branding
at more than 98% of airports served worldwide; and
-- Painting more than 230 pre-merger Northwest aircraft in the Delta
livery.
Fuel Price and Related Hedges
Delta hedged 53% of its fuel consumption for the September 2009 quarter, which resulted in $226 million in realized fuel hedge losses and premiums for the period. As a result, Delta's average fuel price(5) for the September 2009 quarter was $2.13 per gallon, which includes $0.11 per gallon associated with fuel hedge losses.
The table below represents the fuel hedges Delta had in place as of Oct. 16, 2009:
4Q09 1Q10 2Q10 3Q10
----------------------------------
Call options 22% 24% 11% 3%
Collars - 3% - -
Swaps 17% 1% - -
----------------------------------
Total 39% 28% 11% 3%
----------------------------------
Avg. crude call strike $82 $67 $68 $91
Avg crude collar cap - 68 - -
Avg crude collar floor - 60 - -
Avg. crude swap $63 $69 - -
September 2009 Quarter Highlights
During the September 2009 quarter, Delta continued to position itself as the world's No. 1 airline, with an ongoing commitment to employees, customers and communities. Highlights include:
-- Paying more than $50 million year-to-date in employee Shared Rewards for
achieving operational performance goals;
-- Reaching a definitive agreement with US Airways to exchange slots and
airport facilities at New York's LaGuardia and Washington's Reagan
National airports, subject to regulatory approval, which will enable
Delta to serve an additional two million customers at LaGuardia annually
without added congestion;
-- Partnering with the City of Atlanta to reach an agreement to extend
Delta's lease at Hartsfield-Jackson Atlanta International Airport
through 2017 to maintain the airport's position as the leading airport
in the world;
-- Enhancing BusinessElite service from New York by adding full-flat beds
to all flights between New York-JFK and London-Heathrow and new
BusinessElite service flights connecting New York-JFK to Los Angeles and
San Francisco;
-- Announcing the 2010 SkyMiles Medallion program offering frequent flyers
new, industry-leading benefits including a Diamond level status and
rollover Medallion Qualification Miles; and
-- Launching the first joint Delta and Northwest Habitat for Humanity build
in the U.S. with projects in Atlanta, Cincinnati, Detroit, Memphis,
Minneapolis/St. Paul and New York and partnering - for the fifth
consecutive year - with the Breast Cancer Research Foundation to add to
the nearly $1.5 million previously raised through on-board pink product
sales and donations.
Special Items
Delta recorded special charges totaling $212 million in the September 2009 quarter, including:
-- $83 million to write-off unamortized non-cash debt discount associated
with the refinancing of certain Northwest debt;
-- $78 million in merger-related items; and
-- $51 million in charges for employee severance programs.
Delta recorded special charges totaling $24 million in the September 2008 quarter, including:
-- A $14 million charge for early termination fees under contract carrier
arrangements;
-- $7 million in merger-related expenses; and
-- A $3 million net charge primarily for facilities restructuring and
severance.
December 2009 Quarter Guidance
Delta's projections for the December 2009 quarter are below. This guidance is presented on a combined basis(6).
4Q 2009 Forecast 2009 Forecast
---------------- -------------
Fuel price, including taxes and
hedges $2.14 $2.14
Operating margin Breakeven Breakeven
Capital expenditures $250 million $1.4 billion
Total liquidity as of Dec. 31, 2009 $5.0 billion
4Q 2009 Forecast
(compared to 4Q
2008) 2009 vs. 2008
---------------- -------------
Consolidated unit costs - excluding
fuel expense Up 3 - 4% Up 2 - 3%
Mainline unit costs - excluding fuel
expense Up 3 - 4% Up 2 - 3%
System capacity Down 9 - 11% Down 7 - 9%
Domestic Down 5 - 7% Down 7 - 9%
International Down 14 - 16% Down 7 - 9%
Mainline capacity Down 9 - 11% Down 7 - 9%
Domestic Down 6 - 8% Down 7 - 9%
International Down 14 - 16% Down 6 - 8%
Other Matters
Included with this press release are Delta's Consolidated Statements of Operations for the three and nine months ended Sept. 30, 2009 and 2008; a statistical summary for those periods; selected balance sheet data as of Sept. 30, 2009 and Dec. 31, 2008; and a reconciliation of certain non-GAAP financial measures.
About Delta
Delta Air Lines is the world's No. 1 airline. From its hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis-St. Paul, New York-JFK, Salt Lake City, Paris-Charles de Gaulle, Amsterdam and Tokyo-Narita, Delta, its Northwest subsidiary and Delta Connection carriers offer service to 355 destinations in 64 countries and serve more than 170 million passengers each year. Delta's marketing alliances allow customers to earn and redeem SkyMiles on more than 16,000 daily flights offered by SkyTeam and other partners. Delta's more than 70,000 employees worldwide are reshaping the aviation industry as the only U.S. airline to offer a full global network. Customers can check in for flights, print boarding passes, check bags and flight status at delta.com.
Endnotes
1. Note A to the attached Consolidated Statements of Operations provides a
reconciliation of non-GAAP financial measures used in this release and
provides the reasons management uses those measures.
2. Combined financial information includes the combined results of Delta and
Northwest for the September 2008 quarter.
3. Delta's financial results under generally accepted accounting principles
(GAAP) include the results of Northwest Airlines for the periods
following the completion of the merger, which occurred on Oct. 29, 2008.
Unless otherwise indicated, Delta presents financial results on a GAAP
basis which reflects both Delta and Northwest financial results for the
September 2009 quarter, but only Delta standalone results for the
September 2008 quarter. The company also presents financial and
operating information on a "combined basis", which management believes is
more meaningful for comparing year-over-year performance. The combined
basis compares Delta's GAAP results for the September 2009 quarter to the
combined results of Delta and Northwest for the September 2008 quarter.
4. Delta excludes from mainline unit cost ancillary businesses not related
to the generation of a seat mile, including Delta's providing maintenance
and staffing services to third parties, dedicated freighter operations
and Delta's vacation wholesale operations. Similarly, Delta excludes from
passenger unit revenues, and includes in other revenue, revenues received
for providing aircraft maintenance and staffing services to third
parties, freighter operations and MLT. Management believes these
classifications provide a more consistent and comparable reflection of
Delta's mainline operations.
5. Delta's September 2009 quarter average fuel price of $2.13 per gallon
reflects the consolidated cost per gallon for mainline and regional
operations, including contract carrier operations, net of fuel hedge
impact.
6. Year-over-year guidance comparisons assume the 2008 financial information
for the applicable periods include Delta and Northwest results for the
entire period, excluding special items and out-of-period fuel hedge
losses.
Submission of Stockholder Proposals
To be considered for inclusion in the Delta proxy statement for the 2010 annual meeting, stockholder proposals must be submitted in writing and received no later than 5:00 p.m., local time, on Dec. 30, 2009 at the following address:
Corporate Secretary
Delta Air Lines, Inc.
Dept. 981
P.O. Box 20574
Atlanta, Georgia 30320
This deadline supersedes the Nov. 9, 2009 deadline contained in Delta's proxy statement for the 2009 annual meeting.
Forward-looking Statements
Statements in this news release that are not historical facts, including statements regarding our estimates, expectations, beliefs, intentions, projections or strategies for the future, may be "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from the estimates, expectations, beliefs, intentions, projections and strategies reflected in or suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to, the cost of aircraft fuel; the effects of the global recession; the effects of the global financial crisis; the impact of posting collateral in connection with our fuel hedge contracts; the impact that our indebtedness will have on our financial and operating activities and our ability to incur additional debt; the restrictions that financial covenants in our financing agreements will have on our financial and business operations; labor issues; the ability to realize the anticipated benefits of our merger with Northwest; the integration of the Delta and Northwest workforces; interruptions or disruptions in service at one of our hub airports; our increasing dependence on technology in its operations; our ability to retain management and key employees; the ability of our credit card processors to take significant holdbacks in certain circumstances; the effects of terrorist attacks; and competitive conditions in the airline industry.
Additional information concerning risks and uncertainties that could cause differences between actual results and forward-looking statements is contained in our Securities and Exchange Commission filings, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2008 and our Quarterly Report on Form 10-Q for the period ended June 30, 2009. Caution should be taken not to place undue reliance on our forward-looking statements, which represent our views only as of October 22, 2009, and which we have no current intention to update.
DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)
Three Three
Months Months
Ended Ended
(in millions, except Sept. 30, Sept. 30, $ Change % Change
per share data) 2009 2008(1) H(L) H(L)
------------------- ---- ------ --- ---
OPERATING REVENUE:
Passenger:
Mainline $5,122 $3,921 $1,201 31%
Regional
carriers 1,402 1,057 345 33%
----- ----- ---
Total passenger
revenue 6,524 4,978 1,546 31%
Cargo 177 162 15 9%
Other, net 873 579 294 51%
--- --- ---
Total operating
revenue 7,574 5,719 1,855 32%
OPERATING EXPENSE:
Aircraft fuel and
related taxes 1,973 1,952 21 1%
Salaries and related
costs 1,894 1,086 808 74%
Contract carrier
arrangements (2) 1,009 941 68 7%
Contracted services 415 272 143 53%
Depreciation and
amortization 385 293 92 31%
Aircraft maintenance
materials and
outside repairs 334 273 61 22%
Passenger
commissions and
other selling
expenses 384 259 125 48%
Landing fees and
other rents 340 179 161 90%
Passenger service 181 122 59 48%
Aircraft rent 123 70 53 76%
Restructuring and
merger-related
items 129 24 105 NM
Other 203 117 86 74%
--- --- --
Total operating
expense 7,370 5,588 1,782 32%
----- ----- -----
OPERATING INCOME 204 131 73 56%
OTHER (EXPENSE)
INCOME:
Interest expense (319) (140) (179) NM
Interest income 4 21 (17) -81%
Loss on
extinguishment of
debt (83) - (83) NM
Miscellaneous, net 15 (62) 77 NM
-- --- --
Total other expense,
net (383) (181) (202) NM
---- ---- ----
LOSS BEFORE INCOME
TAXES (179) (50) (129) NM
INCOME TAX BENEFIT 18 - 18 NM
-- --- --
NET LOSS $(161) $(50) $(111) NM
===== ==== =====
BASIC AND DILUTED LOSS
PER SHARE $(0.19) $(0.13)
====== ======
BASIC AND DILUTED
WEIGHTED AVERAGE
SHARES OUTSTANDING 828 396
=== ===
(1) Pursuant to GAAP, results for the September 2008 quarter presented
in this table reflect Delta standalone results only. See Note A for
a representation of "Combined" results for the September 2008
quarter, which includes Northwest results for that period.
(2) Contract carrier arrangements expense includes $251 million and $368
million for the three months ended September 30, 2009 and 2008,
respectively, for aircraft fuel and related taxes.
DELTA AIR LINES, INC.
Consolidated Statements of Operations
(Unaudited)
Nine Nine
Months Months
Ended Ended
(in millions, except Sept. 30, Sept. 30, $ Change % Change
per share data) 2009 2008(1) H(L) H(L)
-------------------- ---- ------ --- ---
OPERATING REVENUE:
Passenger:
Mainline $14,053 $10,609 $3,444 32%
Regional
carriers 3,975 3,239 736 23%
----- ----- ---
Total passenger
revenue 18,028 13,848 4,180 30%
Cargo 535 456 79 17%
Other, net 2,695 1,680 1,015 60%
----- ----- -----
Total operating
revenue 21,258 15,984 5,274 33%
OPERATING EXPENSE:
Aircraft fuel and
related taxes 5,678 5,052 626 12%
Salaries and
related costs 5,652 3,269 2,383 73%
Contract carrier
arrangements (2) 2,882 2,836 46 2%
Contracted services 1,249 783 466 60%
Depreciation and
amortization 1,152 892 260 29%
Aircraft maintenance
materials and
outside repairs 1,150 836 314 38%
Passenger commissions
and other
selling expenses 1,069 732 337 46%
Landing fees and
other rents 971 519 452 87%
Passenger service 477 311 166 53%
Aircraft rent 363 201 162 81%
Impairment of
goodwill and other
intangible assets - 7,296 (7,296) NM
Restructuring and
merger-related
items 286 144 142 99%
Other 607 330 277 84%
--- --- ---
Total operating
expense 21,536 23,201 (1,665) -7%
------ ------ ------
OPERATING LOSS (278) (7,217) 6,939 -96%
OTHER (EXPENSE) INCOME:
Interest expense (951) (428) (523) NM
Interest income 23 73 (50) -68%
Loss on extinguishment
of debt (83) - (83) NM
Miscellaneous, net 63 (31) 94 NM
-- --- --
Total other expense,
net (948) (386) (562) NM
---- ---- ----
LOSS BEFORE INCOME
TAXES (1,226) (7,603) 6,377 -84%
INCOME TAX BENEFIT 14 119 (105) -88%
-- --- ----
NET LOSS $(1,212) $(7,484) 6,272 -84%
======= ======= =====
BASIC AND DILUTED
LOSS PER SHARE $(1.47) $(18.91)
====== =======
BASIC AND DILUTED
WEIGHTED AVERAGE
SHARES OUTSTANDING 826 396
=== ===
(1) Pursuant to GAAP, results for the nine months ended September 30,
2008 presented in this table reflect Delta standalone results only.
(2) Contract carrier arrangements expense includes $658 million and $1.1
billion for the nine months ended September 30, 2009 and 2008,
respectively, for aircraft fuel and related taxes.
DELTA AIR LINES, INC.
Selected Balance Sheet Data
(In Millions)
Sept. 30, Dec. 31,
2009 2008
---- ----
(Unaudited)
Cash and cash equivalents $5,396 $4,255
Short-term investments 92 212
Restricted cash and cash equivalents (short-term
and long-term) 499 453
Total assets 44,853 45,084
Total debt and capital leases, including current
maturities 17,684 16,571
Total stockholders' equity 900 874
DELTA AIR LINES, INC.
Statistical Summary
(Unaudited)
Three Months Ended Sept. 30,
---------------------------
2008
2009 Combined(1) Change
---- ---------- ------
Consolidated:
Revenue Passenger
Miles (millions)(2) 53,371 55,133 (3.2)%
Available Seat Miles
(millions)(2) 62,234 65,092 (4.4)%
Passenger Mile
Yield(2) 12.22 cents 15.11 cents (19.1)%
Passenger Revenue
per Available Seat
Mile (PRASM)(2) 10.48 cents 12.80 cents (18.1)%
Operating Cost Per
Available Seat
Mile (CASM)(2) 11.56 cents 14.30 cents (19.2)%
CASM excluding
Special Items(2)
- See Note A 11.35 cents 13.83 cents (17.9)%
CASM excluding
Special Items
and Fuel Expense
and Related
Taxes(2,3) -
See Note A 7.82 cents 7.63 cents 2.5%
Passenger Load
Factor (2) 85.8 cents 84.7% 1.1 pts
Fuel Gallons Consumed
(millions)(2) 1,043 1,089 (4.2)%
Average Price Per
Fuel Gallon, net of
hedging activity(2) $2.13 $3.81 (44.1)%
Number of Aircraft
in Fleet, End of
Period 1,001 1,020 (19) aircraft
Full-Time Equivalent
Employees, End of
Period 81,740 85,507 (4.4)%
Mainline:
Revenue Passenger
Miles (millions) 46,552 48,534 (4.1)%
Available Seat Miles
(millions) 53,772 56,755 (5.3)%
Operating Cost Per
Available Seat
Mile (CASM) 10.54 cents 13.13 cents (19.7)%
CASM excluding
Special Items
- See Note A 10.31 cents 12.62 cents (18.3)%
CASM excluding
Special Items
and Fuel
Expense and
Related Taxes
- See Note A 6.94 cents 6.81 cents 1.9%
Fuel Gallons Consumed
(millions) 845 898 (5.9)%
Average Price Per Fuel
Gallon, net of
hedging activity $2.18 $4.07 (46.4)%
Number of Aircraft
in Fleet, End of
Period 750 770 (20) aircraft
(1) Data presented reflects operations for both Delta and Northwest for
the September 2008 quarter.
(2) Data presented includes operations under our contract carrier
arrangements.
(3) Excludes $251 million and $497 million, for the September 2009 and
2008 quarters, respectively, for fuel expense incurred under contract
carrier arrangements.
DELTA AIR LINES, INC.
Statistical Summary
(Unaudited)
Nine Months Ended Sept. 30,
---------------------------
2008
2009 Combined(1) Change
---- ------------- ------
Consolidated:
Revenue Passenger Miles
(millions)(2) 145,384 155,878 (6.7)%
Available Seat Miles
(millions)(2) 177,003 188,066 (5.9)%
Passenger Mile
Yield(2) 12.40 cents 14.79 cents (16.2)%
Passenger Revenue per
Available Seat Mile
(PRASM)(2) 10.19 cents 12.26 cents (16.9)%
Operating Cost Per
Available Seat Mile
(CASM)(2) 11.85 cents 19.85 cents (40.3)%
CASM excluding
Special Items(2) -
See Note A 11.69 cents 13.43 cents (13.0)%
CASM excluding
Special Items and
Fuel Expense and
Related Taxes(2,3)
- See Note A 8.16 cents 7.95 cents 2.6%
Passenger Load Factor (2) 82.1% 82.9% (0.8) pts
Fuel Gallons Consumed
(millions)(2) 2,951 3,182 (7.3)%
Average Price Per Fuel
Gallon, net of hedging
activity(2) $2.15 $3.34 (35.6)%
Number of Aircraft in
Fleet, End of Period 1,001 1,020 (19) aircraft
Full-Time Equivalent
Employees, End of
Period 81,740 85,507 (4.4)%
Mainline:
Revenue Passenger Miles
(millions) 126,169 136,551 (7.6)%
Available Seat Miles
(millions) 152,141 163,254 (6.8)%
Operating Cost Per
Available Seat Mile
(CASM) 10.92 cents 19.53 cents (44.1)%
CASM excluding
Special Items -
See Note A 10.74 cents 12.14 cents (11.5)%
CASM excluding
Special Items and
Fuel Expense and
Related Taxes -
See Note A 7.28 cents 7.08 cents 2.8%
Fuel Gallons Consumed
(millions) 2,378 2,604 (8.7)%
Average Price Per
Fuel Gallon,
net of hedging
activity $2.24 $3.32 (32.5)%
Number of Aircraft
in Fleet, End of
Period 750 770 (20) aircraft
(1) Data presented reflects operations for both Delta and Northwest for
the nine months ended Sept. 30, 2008.
(2) Data presented includes operations under our contract carrier
arrangements.
(3) Excludes $658 million and $1.4 billion, for the nine months ended
September 2009 and 2008, respectively, for fuel expense incurred under
contract carrier arrangements
Note A: The following tables show reconciliations of non-GAAP financial measures. The reasons Delta uses these measures are described below.
-- Delta completed its merger with Northwest Airlines on October 29, 2008.
Accordingly, Delta's financial results under GAAP include the results of
Northwest Airlines for the period January 1, 2009 through September 30,
2009.
Under GAAP, Delta does not include in its financial results the results of Northwest Airlines prior to the completion of the merger. Accordingly, Delta's financial results under GAAP for the September 2008 quarter do not include the results of Northwest Airlines for that period. This impacts the comparability of Delta's financial statements under GAAP for the September 2009 and 2008 quarters.
Delta presents its financial results for the September 2009 and September 2008 quarters under GAAP as well as on a "combined basis." "Combined basis" means the company combines the financial results of Delta and Northwest as if the merger had occurred prior to the beginning of the applicable period. Delta believes presenting this financial information on a combined basis provides a more meaningful basis for comparing Delta's year-over-year financial performance than the GAAP financial information.
This press release also includes guidance for the December 2009 quarter. Please note the year-over-year guidance comparisons assume the 2008 financial statements for the applicable periods were prepared on a combined basis, excluding special items and out-of-period fuel hedge losses. Delta is unable to reconcile certain forward-looking projections to GAAP, including projected consolidated cost per available seat mile (CASM) and Mainline non-fuel CASM, as the nature or amount of special items cannot be estimated at this time.
-- Delta excludes special items because management believes the exclusion
of these items is helpful to investors to evaluate the company's
recurring operational performance.
-- Delta excludes non-cash mark-to-market (MTM) adjustments related to fuel
hedges settling in future periods in order to present financial results
related to operations in the period shown.
-- Delta presents consolidated and Mainline CASM excluding fuel expense and
related taxes because management believes the volatility in fuel prices
impacts the comparability of year-over-year financial performance.
-- Consolidated and Mainline CASM excludes ancillary businesses not
associated with the generation of a seat mile. These transactions
include expenses related to Delta's providing maintenance and staffing
services to third parties, dedicated freighter operations and Delta's
vacation wholesale operations.
-- Delta presents net capital expenditures because management believes this
metric is helpful to investors to evaluate the company's investing
activities.
DELTA AIR LINES, INC.
Unaudited Combined Statements of Operations
Three Months Ended Sept. 30, 2008
---------------------------------
Special
(in millions) Delta(1) Northwest(1) Items Combined
------- ----------- ------- --------
OPERATING REVENUE:
Passenger:
Mainline $3,921 $2,801 $- $6,722
Regional carriers 1,057 550 - 1,607
----- --- --- -----
Total passenger revenue 4,978 3,351 - 8,329
Cargo 162 202 - 364
Other, net 579 260 - 839
--- --- --- ---
Total operating revenue 5,719 3,813 - 9,532
OPERATING EXPENSE:
Aircraft fuel and related
taxes 1,952 1,946 (250) (2) 3,648
Salaries and related
costs 1,086 706 (18) (3) 1,774
Contract carrier
arrangements 941 275 - 1,216
Aircraft maintenance
materials and outside
repairs 273 168 - 441
Contracted services 272 198 - 470
Passenger commissions and
other selling expenses 259 226 - 485
Depreciation and
amortization 293 122 - 415
Landing fees and other
rents 179 144 - 323
Aircraft rent 70 57 - 127
Passenger service 122 65 - 187
Restructuring and
merger-related items 24 1 (25) (4) -
Other 117 123 (10) (5) 230
--- --- --- ---
Total operating expense 5,588 4,031 (303) 9,316
----- ----- ---- -----
OPERATING INCOME (LOSS) 131 (218) 303 216
OTHER (EXPENSE) INCOME:
Interest expense (140) (112) - (252)
Interest income 21 21 - 42
Miscellaneous, net (62) (5) - (67)
--- --- --- ---
Total other expense, net (181) (96) - (277)
---- --- --- ----
LOSS BEFORE INCOME TAXES (50) (314) 303 (61)
INCOME TAX PROVISION - (3) - (3)
--- --- --- ---
NET LOSS $(50) $(317) $303 $(64)
==== ===== ==== ====
Notes:
Combined Contract carrier arrangements expense includes $497 million for
fuel expense incurred under these arrangements.
(1) We reclassified prior period amounts to conform to current
presentations
(2) $250 million in out-of-period fuel hedges
(3) $18 million of merger-related expenses
(4) $14 million in contract carrier restructuring, $11 million in
facilities and merger-related charges
(5) $10 million in merger-related charges
DELTA AIR LINES, INC.
Unaudited Combined Statements of Operations
Three Oct. 1,
Months 2008
Ended through Three Months
Dec. 31, Oct. 31, Ended
2008 2008 Dec. 31, 2008
-------- -------- -----------------
Special
(in millions) Delta(1) Northwest(1) Items Combined
------------ -------- ------------ ------- --------
OPERATING REVENUE:
Passenger:
Mainline $4,528 $741 $- $5,269
Regional carriers 1,207 181 - 1,388
----- --- --- -----
Total passenger
revenue 5,735 922 - 6,657
Cargo 230 55 - 285
Other, net 748 78 - 826
--- --- --- ---
Total operating
revenue 6,713 1,055 - 7,768
OPERATING EXPENSE:
Aircraft fuel and
related taxes 2,294 750 (301) (2) 2,743
Salaries and related
costs 1,533 245 (25) (3) 1,753
Contract carrier
arrangements 930 81 - 1,011
Aircraft maintenance
materials and outside
repairs 333 49 - 382
Contracted services 370 65 - 435
Passenger commissions
and other selling
expenses 298 72 - 370
Depreciation and
amortization 374 39 - 413
Landing fees and other
rents 268 40 - 308
Aircraft rent 106 17 - 123
Passenger service 129 20 - 149
Restructuring and
merger-related items 987 224 (1,211) (4) -
Other 188 39 - 227
--- --- --- ---
Total operating
expense 7,810 1,641 (1,537) 7,914
----- ----- ------ -----
OPERATING (LOSS) INCOME (1,097) (586) 1,537 (146)
OTHER (EXPENSE) INCOME:
Interest expense (277) (39) - (316)
Interest income 19 5 - 24
Miscellaneous, net (83) (9) 20 (5) (72)
--- --- --- ---
Total other expense,
net (341) (43) 20 (364)
---- --- --- ----
LOSS BEFORE INCOME TAXES (1,438) (629) 1,557 (510)
INCOME TAX PROVISION - - - -
--- --- --- ---
NET LOSS $(1,438) (629) $1,557 $(510)
======= ==== ====== =====
Notes:
Combined Contract carrier arrangements expense includes $301 million for
fuel expense incurred under these arrangements.
(1) We reclassified prior period amounts to conform to current
presentations
(2) $301 million in out-of-period fuel hedges
(3) $25 million of merger-related expenses
(4) $1.2 billion in merger-related charges and $18 million in facilities
restructuring
(5) $20 million write-down in value of auction rate securities
Three Months
Ended
Sept. 30, 2009
--------------
(in millions)
Net loss $(161)
Items excluded:
Restructuring and merger-related items 129
Loss on extinguishment of debt 83
---
Net income excluding special items $51
===
Weighted average shares outstanding 828
---
Income per share excluding special items $0.06
=====
GAAP Combined GAAP
Three Months Three Months Three Months
Ended Ended Ended
Sept. 30 Sept. 30, Sept. 30,
(in millions) 2009 2008 2008
--------- --------- ---------
Operating Expense $7,370 $9,619 $5,588
Items excluded:
MTM adjustments to fuel
hedges settling in future
periods - (250) -
Restructuring and
merger-related items (129) (53) (24)
---- --- ---
Operating expense excluding
special items $7,241 $9,316 $5,564
====== ====== ======
GAAP
Three Months
Ended
(in millions) Sept. 30, 2009
--------------
Non-operating expense $383
Items excluded:
Loss on extinguishment of debt (83)
---
Non-operating expense excluding special items $300
====
Three Months
Ended
(in millions) Sept. 30, 2009
--------------
Property and equipment additions (GAAP) $(121)
Adjustments:
Aircraft purchases under seller financing (25)
---
Total capital expenditures $(146)
=====
Three Months
Ended
(in millions) Sept. 30, 2009
--------------
Property and equipment additions, flight
equipment (GAAP) $(49)
Adjustments:
Aircraft purchases under seller financing (25)
---
Total investments in aircraft, parts and
modifications $(74)
====
(in millions, Three Months Ended
except unit Sept. 30, 2008 Passenger
data) Delta Northwest Combined Mile Yield PRASM
Passenger and
operating revenue
Domestic $2,058 $1,555 $3,613 13.91 cents 12.14 cents
Atlantic 1,402 534 1,936 13.87 11.59
Latin
America 365 13 378 14.00 11.29
Pacific 96 699 795 13.50 11.46
--- --- ---
Total
mainline 3,921 2,801 6,722 13.85 11.84
Regional
carriers 1,057 550 1,607 24.35 19.27
----- --- -----
Total
passenger
revenue 4,978 3,351 8,329 15.11 12.80
Cargo 162 202 364
Other, net 579 260 839
--- --- ---
Total
operating
revenue $5,719 $3,813 $9,532
====== ====== ======
(in millions, Nine Months Ended
except unit Sept. 30, 2008 Passenger
data) Delta Northwest Combined Mile Yield PRASM
Passenger revenue $13,848 $9,203 $23,051 14.79 cents 12.26 cents
Three Months Ended Sept. 30,
2009 2008 2008
GAAP Combined GAAP
---- -------- ----
(in millions,
except per
cent data)
CASM 11.84 cents 14.78 cents 13.84 cents
Ancillary
businesses (0.28) (0.48) (0.37)
----- ----- -----
CASM excluding
items not
related to
generation
of a seat mile 11.56 cents 14.30 cents 13.47 cents
Items excluded:
Restructuring
and merger-related
items (0.21) (0.08) (0.06)
MTM adjustments
to fuel hedges
settling in
future periods - (0.39) -
--- ----- ---
CASM excluding
special items 11.35 cents 13.83 cents 13.41 cents
Fuel expense
and related
taxes (3.53) (6.20) (5.75)
----- ----- -----
CASM excluding
fuel expense
and related
taxes and
special items 7.82 cents 7.63 cents 7.66 cents
==== ==== ====
ASMs 62,234 65,092 40,371
====== ====== ======
Three Months Ended Sept. 30,
---------------------------
2009 2008 2008
---- ---- ----
GAAP Combined GAAP
---- -------- ----
(in millions, except per
cent data)
Consolidated operating
expense $7,370 $9,619 $5,588
Less regional carriers
operating expense (1,527) (1,854) (1,312)
------ ------ -------
Mainline operating
expense $5,843 $7,765 $4,276
====== ====== ======
Mainline CASM 10.87 cents 13.68 cents 12.26 cents
Ancillary businesses (0.33) (0.55) (0.44)
----- ----- -----
Mainline CASM
excluding items not
related to generation
of a seat mile 10.54 cents 13.13 cents 11.82 cents
Items excluded:
Impairment of goodwill
and other assets - - -
Restructuring and
merger-related items (0.23) (0.07) (0.02)
MTM adjustments to fuel
hedges settling in
future periods - (0.44) -
--- ----- ---
Mainline CASM
excluding special
items 10.31 cents 12.62 cents 11.80 cents
Fuel expense
and related
taxes (3.37) (5.81) (5.22)
----- ----- -----
Mainline CASM
excluding fuel
expense and related
taxes and special
items 6.94 cents 6.81 cents 6.58 cents
==== ==== ====
ASMs 53,772 56,755 34,874
====== ====== ======
Nine Months Ended Sept. 30,
---------------------------
2009 2008
---- ----
GAAP Combined
---- --------
(in millions, except per cent data)
CASM 12.17 cents 20.37 cents
Ancillary businesses (0.32) (0.52)
----- -----
CASM excluding items not related
to generation of a seat mile 11.85 cents 19.85 cents
Items excluded:
Impairment of goodwill and other
assets - (6.26)
Restructuring and merger-related items (0.16) (0.11)
MTM adjustments to fuel hedges
settling in future periods - (0.05)
- -----
CASM excluding special items 11.69 cents 13.43 cents
Fuel expense and related taxes (3.53) (5.48)
----- -----
CASM excluding fuel expense
and related taxes and special items 8.16 cents 7.95 cents
==== ====
ASMs 177,003 188,066
======= =======
Nine Months Ended Sept. 30,
---------------------------
2009 2008
---- ----
GAAP Combined
---- --------
(in millions, except per cent data)
Consolidated operating expense $21,536 $38,307
Less regional carriers operating expense (4,347) (5,442)
------ ------
Mainline operating expense $17,189 $32,865
======= =======
Mainline CASM 11.30 cents 20.13 cents
Ancillary businesses (0.38) (0.60)
----- -----
Mainline CASM excluding items not
related to generation of a seat mile 10.92 cents 19.53 cents
Items excluded:
Impairment of goodwill and other
assets - (7.21)
Restructuring and merger-related
items (0.18) (0.12)
MTM adjustments to fuel hedges
settling in future periods - (0.06)
- -----
Mainline CASM excluding special items 10.74 cents 12.14 cents
Fuel expense and related taxes (3.46) (5.06)
----- -----
Mainline CASM excluding fuel expense
and related taxes and special items 7.28 cents 7.08 cents
==== ====
ASMs 152,141 163,254
======= =======
SOURCE Delta Air Lines
http://www.delta.com
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Companies: Delta Air Lines, Inc. (DAL), Delta Air Lines, Inc. (DALw)
News and Blogs
Total : 151 View more »
Business briefs | detnews.com | The Detroit News
www.detnews.com
...voting rule change that would give it a better chance at winning. The union, which represents attendants at Delta merger partner Northwest Airlines, wants to gain control over attendants at the new Delta, the world's largest airline. Staff...
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www.flightglobal.com | Oct 27, 2009
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The merged Delta-Northwest: Smooth flight | StarTribune.com
www.startribune.com
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Incoming Continental CEO doesn't rule out United merger
www.chicagotribune.com
...losing market share." By 2012, Delta predicts the Northwest deal will have improved its bottom...said. "The market would love a merger," he added. Delta, so far, is absorbing Northwest with relatively few disruptions...
http://www.chicagotribune.com/business/chi-biz-united-nov3,0,7451631.story
Union Fumes Over Punishment of Northwest Pilots
online.wsj.com
...voluntary incident reporting. Since then, all three carriers have reinstated them. Until now, the recent merger of Northwest and Delta was seen boosting voluntary reporting arrangements because the combined company planned to set up an ambitious...
Air T Reports Unaudited Second Quarter Results
www.aviationtoday.com
...of the Department of Justice's Antitrust Division on its Decision to Close its Investigation of the Merger of Delta Air Lines Inc. and Northwest Airlines Corporation 'American Airlines Living Your Dream' Profiles Maryland-Based Entrepreneur...
http://www.aviationtoday.com/pressreleases/Air-T-Reports-Unaudited-Second-Quarter-Results_36328.html
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Australia - Air Force McDonnell Douglas F/A-18A Hornet
www.airliners.net
...Failure Congressman Vito Fossella May Also Go... Photos from the crash site Airbus finalizes Etihad deal worth billions Delta, Northwest Pilots Get Seniority Ruling More Continental customers to fly in style All Aviation Industry News...
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FEATURE: Christine Ourmières (July 2)
www.abtn.co.uk
...agreement to co-operate on transatlantic flights in 2007. Two months ago in Paris, AF KLM signed a global deal with Delta and Northwest Airlines - now being take over by Delta - to co-operate closely on services around the world, including...
http://www.abtn.co.uk/comment/0212725-feature-christine-ourmi%C3%A8res-july-2
Delta Air Lines - Airline Tickets and Airfare to Worldwide Destinations
... Worldwide Sites | Country/Language | Profile | Need Help? | Contact Us | Site Map Delta & Northwest Merger FAQs Experience delta.com in a whole new way—your way. Your current selection is: Country Language ...
delta airlines
www.flightglobal.com
...emerging one year ahead of schedule on 30 April 2007. On 15 April 2008 the airline agreed to merge with Northwest Airlines, through which the Delta identity would be retained by the merged carrier. The merger tool place on 29 October 2008...
http://www.flightglobal.com/landingpage/delta%20airlines.html
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