Delta post 1.5B fourth quarter profit.

[topDawg]

Congratulations to all the DL folks job well done

Thanks Rob 
Hope good numbers are on your way and you guys get the TA you have earned! Same to you weAAsles 

 

[robbedagain]

thanks dawg   we hope so too 

 

[jcw]

Great earnings announcement

 

[NewHampshire Black Bears]

Not going to say that he doesn't want to me looked at as a Woolman type. (he won't be however) 
 
but Ed and Richard are the ones who got the ball rolling on this balance sheet clean up. Jacobson wasn't even a executive when it started and Glen (who, IMO, should be the next CEO) well thats somewhat out of his department I would guess. (he tries to make the company profitable no question but its not really up to him what the company does with the money)  
 
GAAP profit of $1.5B 
 
Google GAAP if you don't know what it is. 

 
GAAP / IFRS,..........all I want to know is HOW MUCH pure profit (like cold hard cash on the barrell-head) did Del-DUH ACTUALLY make in Q4 ????????

 

[NewHampshire Black Bears]

 
GAAP / IFRS,..........all I want to know is HOW MUCH pure profit (like cold hard cash on the barrell-head) did Del-DUH ACTUALLY make in Q4 ????????

 
And now I'm reading that( For pure NET INCOME in Q4) DL made $926M and UAL made $934M.
I wonder how much (net income) the BIG DOG will report on 1/29/16.  ??    🙄

 

[topDawg]

thanks dawg   we hope so too 

anytime rob. Hopefully your union will get its ass in gear and get moving on a JCBA after AA announces another huge year. 
 

Great earnings announcement

thanks JCW, good luck to you guys! 
 

 
And now I'm reading that( For pure NET INCOME in Q4) DL made $926M and UAL made $934M.
I wonder how much (net income) the BIG DOG will report on 1/29/16.  ??    🙄

Yes using basic accounting is stupid. Just like spelling Delta right. 
 
FWIW there is a reason why Delta is leading the big three in market cap by 10 Billion dollars. 

 

[NewHampshire Black Bears]

anytime rob. Hopefully your union will get its ass in gear and get moving on a JCBA after AA announces another huge year. 
 
thanks JCW, good luck to you guys! 
 
Yes using basic accounting is stupid. Just like spelling Delta right. 
 
FWIW there is a reason why Delta is leading the big three in market cap by 10 Billion dollars. 

 
Ok topDawg, you can GAAP this, and Market cap that.  All I'm interested in, is how much  tangible (like in someone can ACTUALLY SEE and/or "TOUCH IT")  C A S H, the Big 3 made in Q4, AND total 2015.
(any bets that the 'Horses' finish   (3). DL / (2) UAL / and (1) AMERICAN AIRLINES )  ???
 
An 'old saying' keeps coming to my mind that goes like this,......... " Money Talks, and Bull Shite Walks "  !!!!! 

 

[topDawg]

Ok topDawg, you can GAAP this, and Market cap that.  All I'm interested in, is how much  tangible (like in someone can ACTUALLY SEE and/or "TOUCH IT")  C A S H, the Big 3 made in Q4, AND total 2015.
(any bets that the 'Horses' finish   (3). DL / (2) UAL / and (1) AMERICAN AIRLINES )  ???

Yes I can talk about all the stupid things people, you know care about, and you and single out one thing just to make AA look good. Also, again, net profit does not equal airline size.  
 
As it is, Delta is going to be a net disadvantage because United and American still have a while to go before they start paying taxes again. 

An 'old saying' keeps coming to my mind that goes like this,......... " Money Talks, and Bull Shite Walks "  !!!!!

Again, so basic accounting principles are "bull shite"? good thing to know. 
 
Of course judging any company off of one single stat is about the dumbest thing a person can do. I hope you don't invest money without advise from someone who understand that "bull shite". 

 

[robbedagain]

agree dawg    I hope so and I think we will but the devil will always be in the details  

 

[FWAAA]

As it is, Delta is going to be a net disadvantage because United and American still have a while to go before they start paying taxes again.

Agree with everything except this, as Delta actually paid no federal income taxes, and thus is at no "disadvantage" to AA or UA. None of the three have used up their loss carryforwards.

From the Delta 10-K filed almost a year ago:
 

We released substantially all of our valuation allowance against our net deferred tax assets on December 31, 2013. The release of the allowance primarily resulted in a net tax benefit of $8.0 billion that was recorded in income tax (provision) benefit in our Consolidated Statement of Operations. Our annual effective tax rate for 2014 was 38.5%. At December 31, 2014, we had over $12.0 billion of U.S. federal pre-tax net operating loss carryforwards, which do not begin to expire until 2024. Accordingly, we believe we will not pay any cash federal income taxes during the next few years. See Note 13 of the Notes to the Consolidated Financial Statements for more information.

http://d1lge852tjjqow.cloudfront.net/CIK-0000027904/57b007ce-7d42-4818-a9d6-cdce500d3f52.pdf

I'm not an accountant and I don't pretend to understand the "why" behind the decision to reverse the valuation allowance on Dec 31, 2013, but UA and AA did the same thing at the end of 2015, so the published results of all three will reflect federal income taxes going forward, even though none of them will pay federal income taxes for a while. The gigantic multi-billion dollar losses from the lost decade will shelter a few billion more in profits at all three. Again, I don't understand it, but I do know that even DL paid no tax, and thus when comparing the legacies, it's more useful to focus on "pre-tax" income.

In 2015, DL earned $5.9 billion of adjusted pre-tax profit, far more than UA, and probably more than AA will report. UA's 2015 profit was $4.5 billion, excluding special items.

For Delta, I compare the "adjusted pre-tax" profit to UA, because the GAAP result is misleading. GAAP required that DL recognize all potential hedge losses (the MTM losses) in 2014, which lowered DL's 2014 GAAP profit to just over $1 billion, which was not anywhere near reflective of DL's outstanding 2014. By assuming that the hedge contracts would lose money in 2015, GAAP artificially lowered the 2014 results. By the same token, the 2015 GAAP results are over-stated, because they don't include the actual hedge losses on those 2015 transactions, because GAAP required those losses to be recognized prematurely in 2014. So the "adjusted pre-tax profit" for 2015 accurately reflects DL's hedge losses that it actually suffered in 2015 (and, of course, keeps 2014 profit where it should have been).

Even better for the DL employees, the DL result above ($5.9 billion) is after payment of $1.5 billion of profit sharing to the employees, while the smaller UA result is after payment of only $698 million of profit sharing. So DL's 2015 pre-tax, pre-profit sharing adjusted income was $7.4 billion, while at UA the comparable figure was just $5.2 billion. Once again, DL's results out-classed UA's results. Well done.

 

[BABABOOY]

I think you made NHBB's head explode. 😛

 

[eolesen]

Even better for the DL employees, the DL result above ($5.9 billion) is after payment of $1.5 billion of profit sharing to the employees, while the smaller UA result is after payment of only $698 million of profit sharing. So DL's 2015 pre-tax, pre-profit sharing adjusted income was $7.4 billion, while at UA the comparable figure was just $5.2 billion. Once again, DL's results out-classed UA's results. Well done.

IIRC, the formulas for profit sharing at the two airlines are different, and DL will be reducing the % paid for FY2016.

I'm not a fan of Andrrson, but I am one of both Hauenstein & Jacobsen.

It's hard not to respect Hauenstein and what he's done with the network, although I still question the wisdom of focusing on SEA and the pissing contest with AS. Had DL focused their energy on LAX instead, AA wouldn't have had as much of an opening to exploit.

And, without that revenue generating power, Richard wouldn't have had all the extra cash to do things like refineries, stock buybacks, debt paydowns, etc...

 

[topDawg]

It's hard not to respect Hauenstein and what he's done with the network, although I still question the wisdom of focusing on SEA and the pissing contest with AS. Had DL focused their energy on LAX instead, AA wouldn't have had as much of an opening to exploit.

DL didn't have the space at LA to expand for one and two LAX is so fragmented(both domestic and internationally) that they felt SEA was a better place to build a true hub to Asia. 
 
It was never about a pissing contest with AS, it is just a simple fact, its hard to win the big time HVCs when they can't fly on your airline. Same exact reason why AA desperately needed to add its own LAX-SEA/PDX flights. The idea of "we will just codeshare all of our feed" was amazingly stupid from the begging (but for the MBA types who just loooooove outsourcing it wasn't shocking that some thought it was possible). Plus on top of that, the end game was a DL/AS merge. When that didn't happen(no idea why, not sure if AS said no and Delta didn't want to try a hostile, if they got a hint from the DOJ that they would sue.....) it became obvious DL was going to build a hub on its own. 
Also one thing management has said as of late, now that the balance sheet is in much better shape and the core of the company is a lean mean operating machine, it is time to build in places like SEA/LAX while the market is good and they can build up a following without it putting the company in the red. 
 
 
 
Anderson said last week, the plan going forward is going to be shift a focus on investing on infrastructure and the pension to put the company in a even better position if (and when) the economy takes a tumble. We have just seen the begins of this with some of the announcements this year (new engine shop, ORD hangar, LAX move, SLC terminal, overhaul of ATL etc.) and I'm sure this year we will see some other big things happen (long term(err and a solid short term) solution for the 4 hangar bays in Atlanta being lost, probably growth in maintenance, ATL master plan build outs (6th runway, concourse G/H), JFK terminal 4 complete build out etc. 
 
But as I have said before, if Anderson leaves tomorrow I want Hauenstein as the CEO. I don't think it will be him but I want it to be him. (it will be Ed or maybe Paul, but those finance guys never seem to make good airline CEOs. (and that is coming from a finance guy) 

Agree with everything except this, as Delta actually paid no federal income taxes, and thus is at no "disadvantage" to AA or UA. None of the three have used up their loss carryforwards.

whoopps my mistake. I thought they didn't have enough carry forwards to cover the year. (maybe next time looking at numbers should help)


 

I'm not an accountant and I don't pretend to understand the "why" behind the decision to reverse the valuation allowance on Dec 31, 2013, but UA and AA did the same thing at the end of 2015, so the published results of all three will reflect federal income taxes going forward, even though none of them will pay federal income taxes for a while. The gigantic multi-billion dollar losses from the lost decade will shelter a few billion more in profits at all three. Again, I don't understand it, but I do know that even DL paid no tax, and thus when comparing the legacies, it's more useful to focus on "pre-tax" income.

In 2015, DL earned $5.9 billion of adjusted pre-tax profit, far more than UA, and probably more than AA will report. UA's 2015 profit was $4.5 billion, excluding special items.

For Delta, I compare the "adjusted pre-tax" profit to UA, because the GAAP result is misleading. GAAP required that DL recognize all potential hedge losses (the MTM losses) in 2014, which lowered DL's 2014 GAAP profit to just over $1 billion, which was not anywhere near reflective of DL's outstanding 2014. By assuming that the hedge contracts would lose money in 2015, GAAP artificially lowered the 2014 results. By the same token, the 2015 GAAP results are over-stated, because they don't include the actual hedge losses on those 2015 transactions, because GAAP required those losses to be recognized prematurely in 2014. So the "adjusted pre-tax profit" for 2015 accurately reflects DL's hedge losses that it actually suffered in 2015 (and, of course, keeps 2014 profit where it should have been).

Even better for the DL employees, the DL result above ($5.9 billion) is after payment of $1.5 billion of profit sharing to the employees, while the smaller UA result is after payment of only $698 million of profit sharing. So DL's 2015 pre-tax, pre-profit sharing adjusted income was $7.4 billion, while at UA the comparable figure was just $5.2 billion. Once again, DL's results out-classed UA's results. Well done.

Very fair point. Also your questioning of accounting is exactly why I didn't do accounting. 
what I was reaching for more or less was that looking at one stat is stupid. You need to look at all of the numbers. I am more of a margins person than anything honestly. 

 

[NewHampshire Black Bears]

" And as the 'Horses' cross the finish line in Q4" ........
 
1.  AA   $ 1.3 B
 
2.  UA   $  934 M 
 
' 3.  DL'   $  926 M
 
Some things NEVER change  !!

 

[FWAAA]

On an apples to apples comparison, DL had higher 4th quarter income than AA or UA. All of the following are pre-tax, excluding special items and special credits, for the 4th quarter and full year:

DL: $1.45 billion; $5.9 billion

AA: $1.30 billion; $6.3 billion

UA: $934 million; $4.5 billion

AA had a more profitable year than Delta, primarily because DL recognized fuel hedging losses on contracts settling earlier in 2015 and the fact that its employees will split $1.5 billion in profit-sharing, which reduces its 2015 pre-tax income by that $1.5 billion. Overall, DL was more profitable than AA in 2015 ($7.4 billion v $6.3 billion).

Bottom line: Delta wins 2015.

http://s1.q4cdn.com/231238688/files/earnings/2015/4Q/Delta-Announces-December-Quarter-and-Full-Year-2015-Profit.pdf

http://finance.yahoo.com/news/american-airlines-group-reports-record-123000458.html

http://ir.united.com/phoenix.zhtml?c=83680&p=irol-newsArticle&id=2131053