DL beats estimates, improves profit

[WorldTraveler]

see, dawg, Tech Ops is growing.

and yes, DL Tech Ops is THE BEST in the business.

and yes, Brazil is a mess. Given that AA has the highest percentage of local revenue of the big 3, AA will be affected and will have to cut capacity.

and again, those fuel hedge losses on an annual basis still amount to just a couple percent of annual revenue.

That is just one reason why DL has grown revenue in order to overcome the fuel hedge losses.

but notice again that DL has positive yen currency hedges that are reducing the impact of the weak yen/strong dollar while the refinery is offsetting a chunk of the fuel hedge losses. DL has already booked $40M in currency hedge gains against the yen while they still have $110 million more. and for the first two quarters, the refinery will offset over $160 million in hedge losses.

so, yes, DL blew it on fuel hedge losses but they have more than offset those losses with increased revenue and also have yen hedges and a profitable refinery.

and finally, while it is apparent that the strategy to add capacity in the marketplace is sound, competitors that haven't planned to do so likely cannot do it - they simply don't have the resources to add capacity if it hasn't already been planned.

and yes dawg, not only is DL the strongest financial turnaround story among large companies in the US but it also has some of the best operational performance which simply cannot be matched by competitors because a big part of the formula is driven by its people.

and operational reliability most certainly does translate into a revenue preference in the marketplace.

 

[Kev3188]

Boom mother f&&kers I am very proud of this stat
 

...As you should be...
 

 

[Kev3188]

I have been at Delta for a long time and I have never seen a management team so focused on operations like this one. I knew Richard was an operations guy, but they have really been driving at being the number 1 airline in operational stats. 
 
I am simply amazed by the turn around of Delta...

Agreed, though I think people are giving RA far too much credit for all of this. Other people are doing much more of the heavy lifting (to say nothing of all of us rank and file employees)...

 

[WorldTraveler]

Nobody including RA is saying that the frontline isn't making it happen.

but every organization that is successful is so because of strong leaders. RA isn't the only one but he managed to pull it all together.

and when you are the leader of a successful enterprise, you can take credit. that's the way it works, Kev

and since your profit sharing could easily be 20% of your salary, RA is most definitely sharing the success.

 

[topDawg]

Agreed, though I think people are giving RA far too much credit for all of this. Other people are doing much more of the heavy lifting (to say nothing of all of us rank and file employees)...

While i do agree with your point, 
I believe it does start at the top. I have been here with bean counter CEOs (Leo) and CEOs who are just stupid (Ron) and they had a lot of good people working under them but when the leader is a stupid, the group tends to be stupid. 
 
But there is no question that we have some great VPs, some great middle managers.....and the best front line employees if I do say so myself...... that has this thing running great. I personally can't say enough about the guys running TechOps. Don, Jack and some of the others are doing a great job. Hopefully, the ACS side starts to become more like us and be able to say the same things in coming years. 
 
I will also say that we have more work to do, and that starts with Richard and Ed. I believe we still outsource a lot of work that we shouldn't and if some of that work came back in-house the numbers would just get even better. On my side that is happening slowly but surely so hopefully over the next two-three years we see more work come back in house. 
IMHO Delta should bring in at least 15 or so ramp stations that are so large but DGSed. 

 

[topDawg]

Nobody including RA is saying that the frontline isn't making it happen.

but every organization that is successful is so because of strong leaders. RA isn't the only one but he managed to pull it all together.

and when you are the leader of a successful enterprise, you can take credit. that's the way it works, Kev

and since your profit sharing could easily be 20% of your salary, RA is most definitely sharing the success.

that has a lot to do with not being an idiot like some people in the industry and around here. 
 
pissed off employees don't give great operations results. 

 

[FWAAA]

and again, those fuel hedge losses on an annual basis still amount to just a couple percent of annual revenue.

<snip>

so, yes, DL blew it on fuel hedge losses but they have more than offset those losses with increased revenue and also have yen hedges and a profitable refinery.

No, the announced fuel hedging losses for 2015 total five percent of 2014 total revenue.

$1.1 billion in the first quarter, plus $650 million in the second quarter plus $300 million in the second half of 2015 totals $2.05 billion, about three times the total Venezuela currency losses at AA, and just over 5% of Delta's 2014 total revenue. Not "just a couple percent of annual revenue" as you mistakenly posted.

No, DL will not "have more than offset" those hedging losses with increased revenues, foreign currency hedges and the refinery. Those strategies will mitigate the fuel hedging losses, but will not "more than offset" those losses.

 

[WorldTraveler]

that is absolutely right.

CO figured it out.

but profit sharing costs money... lots of it.

DL has to figure out how to get other costs down and efficiency up in order to pay that kind of profit sharing.

Many union agreements simply do not provide the company with the flexibility to maximize efficiency so there is no way the employees can be paid as much.

and then you have decisions like DL would rather pay its employees more rather than spend money at Airbus and Boeing.
DL's execs emphasized again that they will maintain DL's balance sheet strength relative to the industry but won't be too tight to cost the business where it needs to invest.
Given that DL is planning to pay for its new aircraft deliveries for the next quarter with cash generated by the operation, DL employees will benefit from newer technology, lower cost aircraft but won't be saddled with the debt payments that DL's competitors will have for their much more aggressive refleeting strategies.

It's also noteworthy that UA seems to be moving towards DL's side with used aircraft and keeping some aircraft like their 767s around longer than were originally planned.

 

[WorldTraveler]

No, the announced fuel hedging losses for 2015 total five percent of 2014 total revenue.

$1.1 billion in the first quarter, plus $650 million in the second quarter plus $300 million in the second half of 2015 totals $2.05 billion, about three times the total Venezuela currency losses at AA, and just over 5% of Delta's 2014 total revenue. Not "just a couple percent of annual revenue" as you mistakenly posted.

No, DL will not "have more than offset" those hedging losses with increased revenues, foreign currency hedges and the refinery. Those strategies will mitigate the fuel hedging losses, but will not "more than offset" those losses.

yes, DL will most definitely have offset the hedging losses, mostly thru increased revenue.

and the hedge losses cover more than just one year.... DL is settling hedges that would have gone into the 2nd half of 2015..

DO you have any idea how much a 3% increase in revenues for a $40 billion a company is? DL's operating revenues for the quarter increased by 5%.

Do you also know what a 2% RASM decrease is with no increase in capacity will do to revenues? AA said its RASM would be down 1-3% for the March quarter while system RPMs were down 1.4%.

and you also fail to factor in that AA is not only not growing its revenues but is being hit by the same currency weakness that DL has chosen to offset thru more domestic capacity - something that AA and UA have not done with AA expected to take the biggest hit on currency related revenue declines.

So, when you decide to do both sides of the equation - costs and revenues for all carriers, then it will be clear to you that DL is indeed offsetting the losses... and that is precisely why DL's revenues and profits grew.

 

[Kev3188]

While i do agree with your point, 
I believe it does start at the top. I have been here with bean counter CEOs (Leo) and CEOs who are just stupid (Ron) and they had a lot of good people working under them but when the leader is a stupid, the group tends to be stupid.

I hear ya, but remember this is my 2nd time having him driving the truck...

To be honest it seems like he's more interested in being the 2nd coming of CE Woolman than anything else.


 

Hopefully, the ACS side starts to become more like us and be able to say the same things in coming years.

We should be so lucky.
 

I will also say that we have more work to do, and that starts with Richard and Ed. I believe we still outsource a lot of work that we shouldn't and if some of that work came back in-house the numbers would just get even better. On my side that is happening slowly but surely so hopefully over the next two-three years we see more work come back in house. 
IMHO Delta should bring in at least 15 or so ramp stations that are so large but DGSed.

Can't argue with any of that...
 
 

that has a lot to do with not being an idiot like some people in the industry and around here. 
 
pissed off employees don't give great operations results.

Yep.

 

[WorldTraveler]

and since RA has been in command twice where you are an employee, it is absolutely striking the difference in strategy he used at NW and what he is using at DL.

I'll let you tee up a couple of comparisons starting with product, network, finances, and, of course, employees.

 

[topDawg]

that is absolutely right.

CO figured it out.

but profit sharing costs money... lots of it.

DL has to figure out how to get other costs down and efficiency up in order to pay that kind of profit sharing.

ugh, typical wall street types. 
As Anderson has pointed out many times you have two options
profitsharing
or
pay raises. 
This isn't 2005 anymore. You can't just "take" from employees just because. During BK a lot of people still busted their asses because we knew the trouble the company was is. 
You wont get that if you are making 6 billion a year with 20%+ margins and decide to take profitsharing away. That is a Leo Mullen move, remember how many people loved him? (zero) 
 
 
People like Jamie Baker are trying as hard as they can to make Delta's labor relations like that at United and American and the simple reason is stupidity. They are bean counters period. Spend a dollar the save a nickle kind of people that have done nothing but put this industry into losses.  
 
 
So yes, PS costs money, but so do the raises and other benifits Delta would have to give out to take PS away. That is the main reason why, as much as Wall street begs, it aint happening. 

Many union agreements simply do not provide the company with the flexibility to maximize efficiency so there is no way the employees can be paid as much.

horse ****.
American isn't giving its employees PS for two reasons, 
Parker is trying to show everyone who daddy is
The unions are falling for it. 
 
third reason, the our turd government won't give the unions any help. 
 
AA could give its employees PS tomorrow, and I bet they would make huge gains in operation numbers like Delta has, the difference is the type of management. Parker is a bean counter who could careless about labor relations, till he needs to make cuts. 
 
Unions can become very flexible. You have to treat them right, just look at Delta and DALPA. 

 

[topDawg]

and since RA has been in command twice where you are an employee, it is absolutely striking the difference in strategy he used at NW and what he is using at DL.

I'll let you tee up a couple of comparisons starting with product, network, finances, and, of course, employees.

thats simple, he was to busy trying to show the unions who had a bigger......I'll let you figure the rest out. 
 
RA has, IMO, grown up more than anything. 

 

[topDawg]

I hear ya, but remember this is my 2nd time having him driving the truck...

To be honest it seems like he's more interested in being the 2nd coming of CE Woolman than anything else.


 

We should be so lucky.
 

Can't argue with any of that...
 
 

Yep.

lol well that will never happen but he can try... 

 

[FWAAA]

yes, DL will most definitely have offset the hedging losses, mostly thru increased revenue.

Only if that revenue carries a profit margin of 100%.

and the hedge losses cover more than just one year.... DL is settling hedges that would have gone into the 2nd half of 2015..

Categorically false, LIAR.

The total hedge losses are all for 2015 - a single year.

The $2.05 billion figure is comprised of the first quarter settled losses of $1.1 billion (taken directly from today's press release) plus the anticipated $650 million for the second quarter mentioned by Paul Jacobson in the conference call plus Jacobson's discussion of an additional $300 million for the second half of 2015. The $2.05 billion of total anticipated hedge losses cover one year - 2015 - despite your dishonest denial.

Even when the news is good, like DL's first quarter earnings report, you fail to write about it factually.