Delta Air Traces (DAL) Q2 2024 Earnings Name Transcript

Delta Air Traces (DAL -3.99%)
Q2 2024 Earnings Name
Jul 11, 2024, 10:00 a.m. ET

Contents:

• Ready Remarks
• Questions and Solutions
• Name Individuals

Ready Remarks:

Operator

Good morning, everybody, and welcome to the Delta Air Traces June quarter 2024 monetary outcomes convention name. My title is Matthew, and I shall be your coordinator. At the moment, all contributors are on a listen-only mode till a question-and-answer session following the presentation. As a reminder, right now’s name is being recorded.

[Operator instructions] I’d now like to show the convention over to Julie Stewart, vice chairman of investor relations. Please go forward.

Julie Stewart — Vice President, Investor Relations and Company Improvement

Thanks, Matthew. Good morning, everybody, and thanks for becoming a member of us for our June quarter 2024 earnings name. Becoming a member of us from Atlanta right now are CEO, Ed Bastian; our president, Glen Hauenstein; and our CFO, Dan Janki. Ed will open the decision with an outline of Delta’s efficiency and technique.

Glen will present an replace on the income setting. And Dan will focus on prices and our stability sheet. After the ready remarks, we’ll take analyst questions. We ask that you simply please restrict your self to 1 query and a short follow-up in order that we are able to get to as lots of you as potential.

And after the analyst Q&A, we’ll transfer to our media questions. At the moment’s dialogue accommodates forward-looking statements that signify our beliefs or expectations about future occasions. All forward-looking statements contain dangers and uncertainties that would trigger the precise outcomes to vary materially from the forward-looking statements. A few of the components that will trigger such variations are described in Delta’s SEC filings.

We’ll additionally focus on non-GAAP monetary measures, and all outcomes exclude particular gadgets except in any other case famous. Yow will discover a reconciliation of our non-GAAP measures on the Investor Relations web page at ir.delta.com. And with that, I will flip the decision over to Ed.

Edward Herman Bastian — Chief Govt Officer and Director

Effectively, thanks, Julie, and good morning, everybody. We recognize you becoming a member of us right now. Earlier this morning, we reported our June quarter outcomes, posting pre-tax earnings of $2 billion, or $2.36 per share, on report quarterly income up 5.4% over final yr. These outcomes are the second highest quarterly earnings in our historical past.

We achieved a 15% working margin and generated $1.3 billion of free money throughout the quarter, bringing our first-half free money move to $2.7 billion. With robust money era, we proceed to progress our stability sheet again towards investment-grade metrics and introduced a 50% improve to our quarterly dividend. We delivered a return on invested capital of 13%, 5 factors above our value of capital and within the high half of the S&P 500. Delta’s management is more and more being acknowledged alongside a few of the world’s finest corporations.

Simply final month, Delta was ranked fourth within the Fortune 500 Return on Management by Fortune and IndiGo, simply behind NVIDIA and Microsoft. By way of the yr, our groups have delivered industry-leading operational efficiency month in and month out, with Delta main throughout all key metrics together with completion issue, on-time departures, and arrivals. This efficiency builds on our long-standing place as probably the most dependable airline within the U.S., and I would prefer to thank all 100,000 members of our crew for his or her distinctive work caring for our clients each day. They’re really the very best within the enterprise.

Recognizing the extraordinary talent and care of our individuals, Delta was named the 2024 International Airline of the 12 months by Air Transport World on the latest IATA annual assembly. And for the sixth yr in a row, The Factors Man ranked Delta as the very best U.S. airline. Delta was additionally just lately named the top-ranked service throughout all premium cabins in J.D.

Energy’s North American Airline Satisfaction Examine. Sharing our success with our individuals is core to our tradition, and we’re on the forefront on complete rewards for our workers. We offered a 5% pay elevate on the primary of June to eligible workers, and we’ve accrued greater than $640 million in revenue sharing by means of the primary half of the yr. I’m assured our revenue sharing payout subsequent February will proceed to steer the {industry} by a large margin.

Our individuals are the inspiration that permits Delta to ship elevated experiences to our clients. To additional differentiate our service excellence, we’re making high-return investments that make journey extra seamless and related, together with generational airport rebuilds, probably the most complete lounge community within the {industry}, expanded premium choices, and quick free WiFi on board. Just some weeks in the past, we opened our new Delta One Lounge in JFK, the primary of its sort. It gives a wide range of world-class facilities for our clients from effective eating to spa therapies.

And later this yr, we’ll open Delta One Lounges in Boston and Los Angeles and in Seattle early subsequent yr. We’re additionally enhancing current Delta Sky Golf equipment with the latest growth of the Miami and LaGuardia golf equipment. On board, we’ve upgraded service in our Delta Premium Choose cabin, and we’ll broaden this standard product to pick transcontinental flights this fall. We just lately launched probably the most complete refresh of the Fly Delta app within the final 5 years.

Updates to the app added new options and performance to save lots of clients time and handle their journey even when the sudden occurs. Because the launch, a report variety of clients have visited the app with self-service utilization in periods of disruption up 5 full factors, bettering the client expertise. And an increasing number of clients are becoming a member of our SkyMiles loyalty program and deepening engagement past flight with about 30% of our lively members carrying a Delta SkyMiles American Specific bank card of their pockets. New card acquisitions are skewing youthful, and the general portfolio continues to shift to a extra premium combine, positioning us nicely to attain our long-term remuneration objective of $10 billion.

Lastly, simply this week, we’re excited to announce an unique partnership with Riyadh Air, a brand new world service that may start service in Saudi Arabia subsequent yr. Riyadh Air would be the premier worldwide airline for Saudi Arabia, and this partnership will broaden connectivity and premium journey choices for each airways throughout North America, the Kingdom of Saudi Arabia and past. The settlement comes amid large-scale investments within the area which might be quickly remodeling the Kingdom of Saudi Arabia into a preferred vacation spot for leisure and enterprise journey with large alternative for progress. All of our continued investments throughout the journey ribbon strengthen Delta’s trusted model and construct on our long-term journey to raise the journey expertise and improve our monetary sturdiness.

Delta’s {industry} management has by no means been higher. And whereas demand for air journey stays robust with report TSA journey volumes up 7% from final yr’s ranges, home {industry} seat progress has accelerated by means of the summer time months, impacting yield efficiency in the primary cabin. Because the service of selection with a diversified income base, Delta is probably the most insulated from this dynamic. We’re delivering double-digit margins and powerful returns on this setting, with Delta anticipated to generate 50% of the {industry}’s profitability within the first half of the yr regardless of solely representing 20% of the market capability.

That mentioned, we’re inspired by the actions the {industry} has taken. Seat progress is decelerating, and there seems to be elevated deal with bettering monetary efficiency. Whereas our returns are robust, I am assured that we’ll see an much more constructive {industry} backdrop by means of the again half of the yr and into 2025. Turning to our outlook.

Journey stays a high buy precedence, and Delta’s core clients are in a wholesome place. The secular shift in shopper spend to prioritize experiences align completely to Delta’s technique and premium focus throughout our world community. Air journey demand is at report ranges with this previous Sunday marking Delta’s highest ever summer time income day. For the September quarter, we count on continued demand energy, a double-digit working margin, and a pre-tax revenue of roughly $1.5 billion.

Glen and Dan will present extra particulars on our third-quarter outlook. With robust first-half efficiency and good visibility into the second half, we stay assured in our full-year steering for earnings of $6 to $7 per share, free money move of $3 billion to $4 billion, and leverage of two.5 instances. In closing, as we strategy our one centesimal yr anniversary in 2025, Delta is in a stronger place than ever earlier than. Our industry-leading efficiency displays the energy of Delta’s differentiated model and returns-focused technique.

And with our clear prioritization of free money move and debt discount, Delta is exceptionally nicely positioned to ship important shareholder worth. We look ahead to sharing extra about our long-term strategic and monetary objectives at our upcoming investor day in New York this November. Thanks once more. And with that, let me hand it over to Glen for extra particulars on our business efficiency.

Glen William Hauenstein — President

Thanks, Ed, and good morning. I need to begin by thanking our workers for his or her onerous work and dedication. They’re the Delta distinction. Income for the June quarter elevated 5.4% yr over yr to a report $15.4 billion.

Whole unit income was down 2.6% in comparison with final yr, under our steering attributable to three dynamics. First, home {industry} seat progress accelerated into the summer time months past regular demand progress. This has impacted Essential Cabin unit income tendencies by means of the summer time. With scheduled seat progress decelerating into the autumn, June and July would be the low level with unit income tendencies anticipated to considerably enhance in August and past.

Second, we’re seeing a couple of $100 million affect on journey to Paris for the Olympics from June to August. Outdoors of this momentary occasion, summer time journey demand to Europe is robust and in line with our expectations. And lastly, as Ed famous, we ran an awesome operation with a excessive completion issue. Premium continued to outperform and differentiate our outcomes.

Premium income was up 10% over prior yr with optimistic unit income progress. We have now runway forward as we proceed including extra premium seats to our plane, bettering our retailing capabilities, and additional segmenting our merchandise. Loyalty has additionally outperformed with income up 8% as our SkyMiles member base continues to broaden. Spend progress in our co-brand card portfolio is anticipated to proceed outpacing the bank card {industry}.

American Specific remuneration for the quarter was 1.9 billion, up 9% yr over yr. Cargo income was 16% greater than the earlier yr, a major enchancment from the final 12 months, and we’re inspired by the tendencies we’re seeing. Numerous income streams generated 56% of complete income. These invaluable income streams, led by premium and loyalty, are persevering with greater progress in margins, underpinning Delta’s industry-leading monetary efficiency and rising our monetary sturdiness.

Home passenger income was up 5% over the prior yr, and worldwide passenger income grew 4% over final yr’s report June quarter. Because the enterprise service of selection, Delta benefited from double-digit quantity progress on this high-value section with broad demand and progress throughout all sectors. Trying ahead, demand for journey on Delta stays sturdy. Our core buyer base is wholesome and demand for premium merchandise continues to outperform the Essential Cabin.

We count on the robust progress in enterprise journey to proceed, with 90% of corporations in our latest company survey saying they intend to keep up or improve journey volumes within the again half of the yr. Worldwide demand is robust and continues to learn from demographic shifts, U.S. point-of-sale modifications, and an extension of the leisure journey season. As our worldwide community and core hubs strategy full restoration and we return to a extra regular cadence of retiring plane, Delta’s capability progress decelerates into the second half of the yr.

For the September quarter, we count on capability progress of 5% to six% and income progress of two% to 4%. Whole unit income is anticipated to sequentially enhance every month. In home, we count on an inflection to optimistic unit income progress within the month of September. We additionally count on transatlantic unit income tendencies to enhance into the autumn.

And in Latin America, we count on unit income tendencies to progressively enhance by means of the again half of the yr. Lastly, within the Pacific, we’re persevering with to revive our community and are more than happy with the early outcomes from our new service to Taipei and the success of our partnership with Korean Air. Pacific margins are sustaining at a meaningfully greater stage than pre-pandemic attributable to our multiyear restructuring driving sustainable profitability. For the complete yr, we count on to ship a sustained unit income premium, double-digit margins, and returns nicely in extra of our value of capital.

Our skill to ship these excellent outcomes whereas the {industry} works to reestablish equilibrium displays Delta’s rising differentiation and management. In closing, I need to congratulate the Delta crew for an impressive first half of 2024. We’re nicely positioned to proceed our momentum by means of the second half and for years to come back. And with that, I will flip it over to Dan to speak concerning the financials.

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

Thanks, Glen, and good morning to everybody. For the June quarter, we delivered pre-tax revenue of two billion on a 15% working margin. Earnings of $2.36 per share was according to our steering and according to 2019 regardless of gasoline costs that had been greater than 25% greater. Nonfuel CASM was up 0.6% yr over yr, greater than 1 level higher than steering, totally on stronger completion issue.

An amazing operation is the inspiration of a aggressive value construction, and within the June quarter, we delivered a 99.5% system completion issue, together with 13 cancel-free brand-perfect days. For the primary half, Delta has delivered 39 brand-perfect days, greater than all of final yr mixed. Gas costs averaged $2.64 per gallon for the quarter. This included a $0.06 profit from a refinery revenue of 60 million.

Gas effectivity was 1.1% higher than final yr, benefiting from the continued renewal of our fleet and working an awesome operation. Working money move within the first half was 4.9 billion, and after reinvesting 2.3 billion again into the enterprise, we generated free money move of $2.7 billion. Sturdy money era has supported debt compensation of two.1 billion yr up to now, together with 900 million of early repayments. Gross leverage ended the quarter at 2.8 instances.

We stay on monitor to repay $4 billion of debt this yr and are dedicated to additional strengthening our stability sheet with a deal with returning to full funding grade. Delta is at present investment-grade rated at Moody’s and BB+ at each S&P and Fitch with all companies with a optimistic outlook. With robust outcomes and money move by means of the primary half, we introduced a 50% improve in our quarterly dividend. This places our annualized dividend yield at simply over 1%, according to the S&P 500.

Now, shifting to the September quarter steering. Mixed with our outlook for top-line progress, we count on an working margin of 11% to 13% with earnings of $1.70 to $2 per share. Gas costs are anticipated to be $2.60 to $2.80 per gallon, together with an roughly $0.05 contribution from the refinery. Refinery margins have normalized, and income are anticipated to be $60 million decrease in comparison with the third quarter of final yr.

Nonfuel unit prices are anticipated to be 1% to 2% greater than final yr on 5% to six% capability progress. With normalized progress and consistency in delivering an awesome operation, we’re making progress in driving effectivity and rising into our assets. On upkeep, the funding in fleet well being we made since final summer time are paying off, with upkeep cancellations within the first half down 77% over prior years. We proceed to count on full-year upkeep expense to be up 350 million over 2023 as we progress by means of elevated quantity of heavy airframe and engine checks and proceed to handle industrywide provide constraints.

Nearly all of this improve was within the first half of the yr, with second-half upkeep expense anticipated to be comparable on a year-over-year foundation. Whole nonfuel unit prices within the second half are anticipated to extend within the low single digits as we fund investments in our individuals and model and capability progress decelerates. For the yr, our fleet progress is anticipated to be lower than 2%, together with roughly 40 plane deliveries and 20 retirements. Our unencumbered asset base is anticipated to develop to 30 billion by year-end as we proceed to pay money for our new deliveries.

We stay assured in our full-year outlook of earnings of $6 to $7 per share and free money move of three billion to 4 billion with full-year capex anticipated to be 5 billion. With a continued deal with margin and returns to drive sustained money move era, Delta is nicely positioned to enhance our stability sheet to investment-grade metrics and ship shareholder worth. In closing, Delta’s industry-leading efficiency is a direct results of the onerous work of our workers. I need to thank the Delta individuals for persevering with to go above and past for our clients and one another day-after-day.

And with that, I will flip it again to Ed for a last comment.

Edward Herman Bastian — Chief Govt Officer and Director

Thanks, Dan. And earlier than we start the Q&A, I need to personally acknowledge and congratulate Helane Becker on a really achieved profession as an analyst protecting this {industry} for 4 a long time. Helane, I’ve a large amount of respect for you and for all of the work that you have carried out by means of the years. And whereas I do know you will be persevering with in an advisory function, we are going to miss working with you and need you all the very best.

Might the golf gods be good to you. Operator, please start the Q&A.

Questions & Solutions:

Operator

Actually. At the moment, we’ll be conducting a question-and-answer session. [Operator instructions] Your first query is coming from Conor Cunningham from Melius Analysis. Your line is reside.

Conor Cunningham — Analyst

Hello, everybody. Thanks. And yeah, congrats, Helane. Good luck on the golf sport.

By way of the touch upon September for the U.S. home market, are you able to simply assist bridge the hole there? My guess is that you simply’re fairly minimally booked for September. So, is it simply an {industry} provide getting higher? Simply given the discounting that is occurring proper now, it is just a bit onerous to wrap my head round. So, simply any ideas there could be useful.

Thanks.

Glen William Hauenstein — President

Certain, Conor. I would not say we’re minimally booked. We in all probability have a couple of third of September bookings domestically readily available, so we’ve a very good base. And the bottom we’ve is considerably higher than the bottom we had going into July and August at minus 60 days.

So, we see a significantly better base, after which, in fact, the core economics of the {industry}’s capability persevering with to come back down and going again right into a extra normalized enterprise season the place enterprise tends to tick up from August to September. So, I feel when you concentrate on considered one of our core strengths being enterprise, July and August, that is not ever been peak for enterprise. So, as we transfer again into the enterprise season, given the tendencies we have seen in enterprise demand, we expect that shall be one other uplift. So, actually assured about our September numbers and actually assured that not solely is home bettering considerably, however worldwide can be bettering dramatically.

Conor Cunningham — Analyst

Useful. After which perhaps greater image, the problem that we have been grappling with is rather like the general construction of the {industry} over the following couple of years. I get the concept the present state of {industry} margins want to vary outdoors of you and United. However are you able to simply give us — how assured are you that there’ll really be structural modifications going ahead? As a result of the pushback we get is that that is sort of simply the identical previous {industry} that simply continues to oversupply the market once in a while.

So, simply any ideas on the larger {industry} image there. Thanks.

Glen William Hauenstein — President

Effectively, I will touch upon the capability after which let Ed take the broader query. On capability, I do suppose, pay attention, that is an {industry} that is at all times difficult itself for a way a lot capability can it’s within the market. And I have been doing this for 40 years, and I’ve by no means seen the {industry} react so rapidly to an oversupply. So, we have actually solely been in an oversupply state of affairs for a few months right here, and the {industry} has already reacted.

And I feel that is very completely different than it was years in the past the place it will keep for extended durations of time. So, I am actually enthusiastic about how the {industry} is behaving at this level. And for the broader query, I will flip it again to Ed.

Edward Herman Bastian — Chief Govt Officer and Director

Yeah, Conor. To Glen’s level, the legislation of economics or physics, no matter you need to say, goes to should work. You can not, in the event you’re on the decrease finish of the {industry}’s meals chain, proceed to publish losses, significantly given the well being of the demand set we have all seen over these final couple of years. So, I do not know what type that may take, however I assure you, and also you’re already beginning to see, capability is normally the very first thing that you simply — lever you might have out there, however there shall be extra levers out there as nicely.

The well being of the {industry} broadly is in fairly good condition. Now, I acknowledge what I simply mentioned. The decrease half is struggling. However in the event you take a look at the place all of us must go as an {industry} is that we have to proceed to raised differentiate and supply worth to our clients.

Worth on this {industry} for a few years was outlined as having the bottom fare available in the market. That is modified. That is modified dramatically. The expertise economic system that we have seen that is taken maintain, that is pushed the excessive demand set that we’re seeing and proceed to see and even with the third-quarter income “disappointment” continues to be going to be a report set of revenues that we will see this quarter, I am satisfied throughout the {industry}, is rewarding these which might be offering actual worth, which means a greater high quality expertise, higher worth for cash when it comes to the product we’re providing, and reliability.

Couple that with the upper value of entry, greater than we have ever seen, whether or not it is labor, whether or not it is the constraints within the setting, the infrastructure, OEM, engine provide, that is turning into an {industry} that’s going to be needing to return its value of capital or it won’t be — people who do not won’t be given the chance to proceed to run the enterprise fashions they’ve. So, I notice I am speaking my very own e book. And I recognize that there is a variety of different work that others must elevate. Hear, we’re driving 50% of the general {industry} profitability right here at Delta.

There’s solely a lot extra we are able to do on our personal. And as issues get higher, Delta is simply going to be a beneficiary.

Conor Cunningham — Analyst

Nice. Thanks.

Operator

Thanks. Your subsequent query is coming from Savi Syth from Raymond James. Your line is reside.

Savi Syth — Analyst

Hey, good morning, everybody. Simply — I feel sort of the Boeing challenges are nicely understood, however the replace from Airbus a number of weeks in the past was stunning. I ponder in the event you might discuss the way you’re managing by means of the provision chain points. And any early ideas on the way you’re considering issues evolve in 2025 when it comes to simply managing the operation but additionally when it comes to sort of planning for progress?

Edward Herman Bastian — Chief Govt Officer and Director

Savi, that is Ed. I will take that. Airbus, like Boeing, continues to have sure supply challenges, clearly nowhere near the challenges that Boeing has skilled. And as considered one of Airbus’ largest and finest clients, Delta, once more, is insulated considerably from that.

We will take largely the supply schedule that we anticipated for the yr. Sure, some might slip, however you are speaking about slip, which means when it comes to weeks and months, not years of delay. And so long as we’ve, as we do have, fairly good discover of the place the delays in supply are coming, we’ll be simply effective. In 2025, I do not anticipate us having any issues with the plane that we will want for the capability we would prefer to fly.

Savi Syth — Analyst

And I am guessing then on an operational standpoint, perhaps not anticipating any enhancements both, simply having simply additional buffers will proceed?

Edward Herman Bastian — Chief Govt Officer and Director

Effectively, we’ve a big fleet, and our upkeep capabilities proceed to enhance. The problem we face on the upkeep entrance are typically extra elements provide than anything in addition to all these new engine platforms which might be on the market from the GTF to the LEAP to the Trent stabilizing, however they proceed to get higher. And I feel the alternatives for us, as issues stabilize and as elements develop into extra out there and as new plane proceed to ship, shall be for us to renew the retirement of our older fleet, which we indicated we’re already beginning to do and which is able to create much more half availability again to our upkeep crew.

Savi Syth — Analyst

That is useful. Thanks. And if I’d, Glen, ask about on the LATAM facet, you talked about sort of inspired about what you are seeing there. I used to be sort of curious on the unit income strain.

Is that also coming from quick haul with lengthy haul nonetheless largely flattish even regardless of the expansion? And the place are you anticipating the advance as you undergo?

Glen William Hauenstein — President

Truly, long-haul south has inflected to optimistic and it is remaining solidly optimistic all through the third quarter right here, so we’re fairly enthusiastic about these outcomes. And sure, nonetheless not lapping the discount in capability within the leisure short-haul portfolio. However that’s in play, and it appears that the {industry} goes to be way more disciplined when it comes to capability ranges this winter versus final winter. So, we’re taking a look at actually optimistic momentum of that shifting ahead and that persevering with.

Savi Syth — Analyst

I recognize it. Thanks.

Operator

Thanks. Your subsequent query is coming from Jamie Baker from JPMorgan. Your line is reside.

Jamie Baker — Analyst

Good morning, all people. So, Glen, this idea of unbundling the entrance cabin is one which I have been enthusiastic about, partially as a result of unbundling and segmenting the rear cabin has been so successful for Delta and some others. I need to watch out about asking about future pricing on that. However I am curious what the professionals and cons are when it comes to presumably taking place this path? Or is one value for all how we should always proceed to consider the D One cabin?

Glen William Hauenstein — President

I feel you are going to have to come back to investor day to listen to extra about that. We have talked conceptually about that. I feel we’ll be supplying you with extra particulars as we go, however we’re not prepared to speak concerning the particulars of these plans shifting ahead. I feel the investor day this yr ought to be very thrilling.

Jamie Baker — Analyst

I am assured I’ll work it into my schedule. After which perhaps for Ed or for Glen, however at a excessive stage, it appears that evidently these airways which might be at present underneath duress are kind of starting to lean into premium, and perhaps premium is simply too robust of a time period, however a few of the extra punitive ancillary prices, change charges are disappearing. There’s an choice of an empty center seat. Southwest has mentioned they’re taking a look at some kind of enhancement to their product.

I am simply curious if that is one thing you and the crew take into consideration. The traditional knowledge is that premium spoils belong to Delta. However what we’re seeing right now is that Delta shouldn’t be fully remoted from low-end overcapacity. I am simply considering down the street if we might discover Delta is not as remoted from, let’s name it, pseudo-premium overcapacity.

Any ideas there? Thanks prematurely.

Edward Herman Bastian — Chief Govt Officer and Director

Effectively, Jamie, that is a very good query. It is actually one thing that all of us take a look at. Premium is extra than simply placing extra seats — excuse me, extra room in seats. And it is the general expertise, proper? And sure, I feel all of these experiments that we hear about a few of the lower-fare airways or the low cost airways are contemplating, you may’t blame them.

I’d — if I used to be them, contemplate a few of these as nicely. However premium can be primarily based on a basis of general reliability and repair, at the beginning, and that is what we’ve targeted on and specialised and carried out higher over the past 15 years after which the airline, we proceed to get higher. In reality, the operations we have run this yr are the very best within the {industry} throughout each measure, each month, month in and month out. That provides you then freedom to really ship true premium expertise as in comparison with considerably perhaps extra superficial expertise.

And that, to me, is what we’re finest at. That is why enterprise vacationers select Delta. That is why we’ve the alternatives internationally that we do. That is why American Specific, the highest bank card supplier on the earth, in my view, chooses Delta as their unique companion.

So, I feel there’s room for extra. And I’d — the {industry} must proceed to seek out higher methods by which to handle the upper prices that they’re going through. Keep in mind, the associated fee to serve has gone up for everyone however particularly for the discounters. And the one manner you may cowl that’s offering a greater expertise.

Jamie Baker — Analyst

That is nice, Ed. Thanks very a lot for that response. Take care. See you at investor day.

Operator

Thanks. Your subsequent query is coming from Tom Fitzgerald from TD. Your line is reside.

Thomas Fitzgerald — TD Cowen — Analyst

Hello, everybody. Thanks very a lot for the time. So, sticking with the premium cabin for just a little bit, would you thoughts simply unpacking a few of the tendencies within the first half and outlook within the second half, simply among the many completely different buckets like D One, Premium Choose, home top notch and Consolation+, paid load components, reserving? Anything notable you’d name out? Thanks.

Glen William Hauenstein — President

That is rather a lot. I feel what we’re very enthusiastic about this yr is that is the primary yr that we’ve Ubiquiti in Delta Premium Choose. And that program has exceeded our inside expectations with load components within the mid- to excessive 80s and fare constructions which might be greater than 2x what coach fares are. So, actually nice margins there, nice margins persevering with in D One, home first main the pack in home {industry}. We’re actually excited to begin rolling out DPS within the transcon this fall with all of our JFK-LA.

For these of you who comply with this {industry}, the most important income market within the nation is JFK-LA, and having a full suite of merchandise in that market, we expect, shall be very accretive. And we’re out promoting it now, and September, October, advances already look very robust there. So, I feel persevering with that elevation, the margins proceed to be actually in sequence with the very best merchandise persevering with to have the best margins and the Essential Cabin coach having the bottom margins.

Thomas Fitzgerald — TD Cowen — Analyst

That is actually useful. Thanks for that shade. After which simply rapidly, if I’ll, one for Dan. How ought to we consider — and it is a subject for the entire {industry}, I feel, however simply how are you and the crew enthusiastic about the PSP loans resetting to a variable charge? I feel it is SOFR plus 2 in 2025 and 2026 and simply within the context of the broader deleveraging story.

Thanks once more for the time.

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

Sure. As you already know, we proceed to deal with deleveraging. We have made a variety of progress since October of ’20, $24 billion of debt. So, deleveraging will proceed to be on the forefront.

When you concentrate on these specific tranches, our first one does not come due. It is April of second quarter of subsequent yr. After which we’ve one other tranche in first quarter and second quarter of 2026. We’ll take a look at market situations at that time limit.

The place we’re on short-term charges versus long-term charges and whether or not that might be long-term a part of the capital construction, it makes extra sense to place in different varieties of debt and refi that out. And people shall be issues that we’ll in all probability discuss extra about intimately as we get nearer, particularly at investor day, however as we get to the top of the yr and the start of subsequent yr.

Operator

Thanks. Your subsequent query is coming from Mike Linenberg from Deutsche Financial institution. Your line is reside.

Mike Linenberg — Deutsche Financial institution — Analyst

Hey, good morning, everybody. I suppose it is a query to Dan and even the crew. It is at all times very useful once you guys name out the place your air visitors legal responsibility is and the way a lot it is up no less than since year-end. I kind of suppose we’re at some extent within the yr the place over the following few weeks, that is going to shift the opposite manner.

And I feel it should be a bit extra pronounced for a few of those that perhaps have a extra seasonal Northern Hemisphere-type route community. After I take into consideration, perhaps Glen, you discuss concerning the extension of like transatlantic and likewise the energy that you simply’re seeing to deep South America and the way that is going to enhance within the again a part of the yr mixed with company, how ought to we take into consideration your swings in your air visitors legal responsibility? I imply, previously, it was once a a lot greater hit to money. And I nonetheless suppose for some carriers, it should be a little bit of a wake-up name as we get into the again half of the yr. However I feel for you guys, like how ought to we give it some thought and perhaps a few of the measures that you have carried out to kind of mitigate that? Thanks.

And I’ve a follow-up.

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

By way of the primary half, it’s up. You may see that it is up $2.4 billion. It is up a number of hundred million {dollars} over final yr, the place it helps our income forecast for third quarter. As you get into the again half of the yr, actually, the elongation of the tidal season helps because it pertains to stability that as you undergo third quarter and into fourth quarter.

And in addition the truth that company continues to outgrow shopper, that can be bringing it again into what I would say is a extra normalized curve because it pertains to historic perspective. While you take a look at it yr over yr, you continue to bought the oddity of final yr, you had a number of years of journey reduce. So, that is the primary yr that it is a lot cleaner as we undergo and create a greater base as you concentrate on it for ’24 and ’25 and begin to consider it.

Mike Linenberg — Deutsche Financial institution — Analyst

Nice. After which simply my second query. I feel, Ed or Glen, you talked about capability cuts being one of many first levers that we’ll see from different carriers. As we take into consideration the place they in the reduction of and perhaps sure airports particularly, is there a possibility perhaps so that you can choose up further gate house in a few of your greater airports? I kind of consider a few of the cutbacks coming again probably in Atlanta, Orlando, alternatives the place issues are tight, you will get further actual property.

Any ideas on that? Thanks.

Edward Herman Bastian — Chief Govt Officer and Director

Thanks, Mike. Hear, all I can say on that’s we’re at all times inquisitive about serving underserved communities.

Mike Linenberg — Deutsche Financial institution — Analyst

OK, superb.

Operator

Thanks. Your subsequent query is coming from Scott Group from Wolfe Analysis. Your line is reside.

Scott Group — Wolfe Analysis — Analyst

Hey, thanks. Good morning. So, we have talked rather a lot about simply the general {industry} capability outlook, however I need to try to get just a little little bit of Delta shade, proper? So, your capability was up 8% within the second quarter, you are saying 5% to six% within the third quarter. I suppose any shade you may share in your capability plans getting into 2025 simply to assist get the {industry} provide demand extra in stability? Do you anticipate attending to a GDP or sub-GDP-type capability progress? Or do you suppose — as you propose for Delta particularly, do you suppose you keep above GDP?

Glen William Hauenstein — President

I feel we’re not going to offer capability progress for 2025 at this level. We have a variety of runway left on this yr. I’d level out one factor that I feel is admittedly necessary that we ought to only word is that the distinction between seats and ASMs. And plenty of of you’re employed your fashions on ASMs.

Others work on seats. And I’d suppose once you’re trying inside an entity, it is actually the seat depend that’s most necessary as a result of we do not promote ASMs, we promote seats. And when you concentrate on our capability progress, though it was eight, we solely grew our seats at about 5 or much less. So, there is a stage-length distinction.

And our stage size is definitely just a little bit longer than we had within the plan as a result of we noticed some alternatives on a few of the longer-haul flying as individuals restructure by means of the yr. So, I would name it again to let’s not discuss ASMs. Let’s discuss seats inside theater. So, I feel that is a significantly better illustration of what the {industry} is going through and one we must all key in on as we transfer ahead and making an attempt to determine the place the {industry} goes.

So, too early for ’25 when it comes to capability. That shall be clearly over the again half of the yr, we’ll reveal extra about that. However secondly, strive to consider seats as our measure domestically is what we’re making an attempt to promote.

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

And the factor I would add on to that, Glen, is that 80% of that home capability progress goes into our core hubs. And to Glen’s level, necessary level on seats, as we get into the again half of this yr and fourth quarter is the primary time we’ll have our core hubs restored to ranges that they had been from a seat perspective versus 2019.

Glen William Hauenstein — President

Nonetheless versus ’19, we’re the least restored when it comes to seats.

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

Sure.

Scott Group — Wolfe Analysis — Analyst

OK. After which, Dan, I simply need to — once I take into consideration the information, proper, if I simply take the midpoint of the Q3 information after which the midpoint of the full-year information, it mainly implies fourth-quarter earnings, simply absolute earnings, fairly comparable with the third quarter, and that is fairly atypical, proper? It is normally — we normally see a step-down. Any shade on how to consider that dynamic this yr is perhaps completely different?

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

Sure. Effectively, fourth quarter final yr was the one quarter we had been down yr over yr. You additionally had very excessive gasoline within the fourth quarter final yr at $3. The present — we’ll should see the place that performs out, however the present ahead of that’s a lot decrease, so that you get that profit.

And I feel it is also close to the elements that Glen’s talked about is the inflection in unit income as you exit September shifting optimistic and the elongated journey season and that robust worldwide demand.

Scott Group — Wolfe Analysis — Analyst

Thanks, guys. Recognize the time.

Operator

Thanks. Your subsequent query is coming from Sheila Kahyaoglu from Jefferies. Your line is reside.

Sheila Kahyaoglu — Jefferies — Analyst

Good morning, and thanks, guys. Possibly simply taking the final two questions and placing it collectively, your This autumn information is a bit broad. And the way do you concentrate on the {industry} capability points? Does it get higher? Does it get extra rational, or does it worsen in ’25 if Boeing will get the supply cadence again?

Edward Herman Bastian — Chief Govt Officer and Director

Sheila, hello. That is Ed. I simply need to be clear. We’ve not given specific This autumn information.

So, I recognize your fashions driving us there. We nonetheless have our full-year information with a reasonably wide selection as you famous in there. It’s possible you’ll recall final yr right now, when issues had been actually beginning to look promising, we upped our full-year information, and we bought punished a number of months later because the gasoline gods labored towards us. So, we’re assured we’ll find yourself in a very good level throughout the full-year vary.

However I do not actually need to get into making an attempt to determine what This autumn is.

Sheila Kahyaoglu — Jefferies — Analyst

Are you able to perhaps touch upon how you concentrate on Boeing’s supply cadence bettering subsequent yr and the way that impacts the {industry}?

Edward Herman Bastian — Chief Govt Officer and Director

Effectively, as I discussed, we’re assured in our Airbus supply stream. We have now no Boeing plane coming over the following handful of years, I anticipate. I feel it should take a while earlier than Boeing will get their cadence again. I do know they’re slowly beginning to enhance.

And we’ll see.

Sheila Kahyaoglu — Jefferies — Analyst

OK, thanks.

Operator

Thanks. Your subsequent query is coming from Duane Pfennigwerth from Evercore ISI. Your line is reside.

Duane Pfennigwerth — Evercore ISI — Analyst

Hey, thanks. Good morning. Only a follow-up on company journey into September and past. Are you able to remind us what the headwind was within the fourth quarter of final yr from strikes within the auto and leisure industries?

Glen William Hauenstein — President

So, in the event you recall, sure, we had been heading into the writers’ strike proper about this time final yr, and we had been within the auto within the — actually in October time-frame at its peak. So, that was a — I imagine, we expect that is about $100 million when it comes to a headwind for us or a tailwind this yr as we come into the fourth quarter.

Duane Pfennigwerth — Evercore ISI — Analyst

Thanks. And, Glen, perhaps simply to stay with you. Are you able to discuss just a little bit about your outlook for transatlantic in 3Q general, perhaps general and ex Paris? Any bookings commentary you can level to publish the Olympics? Recognize you taking the questions.

Glen William Hauenstein — President

Sure. Effectively, ex Paris, we had been optimistic. And so, for these of you who comply with my wager with Ed, I misplaced my wager as a result of Paris was just a little bit greater than we thought. So, really [Inaudible]

Duane Pfennigwerth — Evercore ISI — Analyst

I did not need to remind you of it on the decision, however I am glad you introduced it up.

Glen William Hauenstein — President

That was an costly miss for me, so good for the worker care fund although. And so, as we take a look at previous the Olympics, we see a really sturdy fall demand for transatlantic. And we’re too early to say that it is inflected to optimistic but as a result of we’ve — nevertheless it might very nicely inflect to optimistic. I’d be disillusioned if it did not, however that is a private opinion, not an official information.

Duane Pfennigwerth — Evercore ISI — Analyst

Thanks.

Operator

Thanks. Your subsequent query is coming from Brandon Oglenski from Barclays. Your line is reside.

Brandon Oglenski — Barclays — Analyst

Hey, good morning, everybody. And thanks for taking my query. Ed or Glen, if I can come again to Scott’s first query, enthusiastic about issues you may management, particularly as margins aren’t at your goal but — Ed, I do know you talked rather a lot about {industry} capability coming down into the fourth quarter. However perhaps past your personal capability within the seats dialogue, what are different levers you guys are pulling behind the scenes right here to assist drive enchancment?

Edward Herman Bastian — Chief Govt Officer and Director

Effectively, I feel there’s fairly a bit. Clearly, because the demand set that we see in our particular buyer base continues to look wholesome, we will proceed investing there. We have a reasonably sturdy set of latest choices coming in within the premium house. WiFi goes to be free and quick and totally out there, and largely totally out there on the transatlantic by the top of the summer time, which is a giant deal for us.

On the associated fee facet, we had actually good value efficiency within the first half of the yr. I anticipate that we will proceed to carry that. I notice the third-quarter information’s a contact bigger than what we noticed in Q2, however we will work onerous to get that again down. I feel we have all talked concerning the alternative this yr on the associated fee entrance to proceed to develop into our bigger headcount.

We’re not there but. We nonetheless have extra progress alternatives to get there. So, I feel throughout the board, Brandon, we’ve alternatives. And we’re actually not sitting again ready for the {industry} to repair itself.

If that was the case, we would not be delivering the excellent stage of profitability that we’re. However we hope that, that is going to be one other tailwind for Delta.

Brandon Oglenski — Barclays — Analyst

I recognize that response. And perhaps, Dan, as a follow-up, are you able to discuss head depend tendencies into subsequent yr and in the event you’re seeing efficiencies as you restore your core hubs?

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

Sure, we’re. And simply this yr alone, we may have head depend that may develop — our assets will develop just below 2% whereas we’re rising the community at mid-single digits. And I feel — and that is been the case even versus trailing 12 months, we’re up solely 3% on our assets versus the expansion that we have demonstrated. And I feel that — and delivered.

So, I feel that’s sort of the forefront of us, the step right here, first few steps right here of us rising again into these assets and people capabilities. And it is simply not individuals, proper? It is the plane and the utilization of the plane. It is rising into the airports and the funding that we made. Glen at all times jogs my memory, the costliest day is the primary day that you simply open it.

So, it is throughout the board.

Edward Herman Bastian — Chief Govt Officer and Director

And one different factor, Brandon. That is Ed once more. Do not lose sight of the free money we’re throwing off. This yr, we’ll throw off between $3 billion and $4 billion.

I am assured in that information which we gave firstly of the yr, I count on no less than is sweet subsequent yr once more. The compounded impact of all that money will proceed to delever the stability sheet is as soon as once more going to distinguish Delta inside this {industry}.

Brandon Oglenski — Barclays — Analyst

Thanks, each.

Edward Herman Bastian — Chief Govt Officer and Director

Thanks.

Operator

Thanks. Your subsequent query is coming from Ravi Shanker from Morgan Stanley. Your line is reside.

Ravi Shanker — Morgan Stanley — Analyst

Thanks. Good morning, everybody. I simply need to comply with up — a few follow-ups right here. One is on the worldwide commentary.

You guys mentioned a few instances that worldwide is trying fairly robust by means of the autumn. Is that simply spillover, like from the air pocket for the Olympics sort of spreading to different durations? Are you seeing an acceleration there in any specific geographies? For those who can unpack that, that might be nice.

Glen William Hauenstein — President

I feel typically, we see the season extending as an entire group of individuals, whether or not or not it is retirees, whether or not or not it is individuals with double incomes and with out youngsters, who do not have the varsity considerations. It is really a greater time to go to Europe in September and October than it’s probably in July and August when the climate is so scorching and every little thing is so packed. So, we’re actually seeing an extension into September and October and actually into by means of November that European demand throughout the board is remaining robust. So, that is very thrilling for us.

The identical factor is going on within the leisure markets within the Pacific. Curiously sufficient, Japan has became a U.S. point-of-sale leisure market with the yen hitting at 160. So, we’ve actually report numbers of U.S.

vacationers heading to Japan, which is such an awesome vacation spot. And once more, that has a really robust fall season. So, actually taking a look at U.S. origin, high-end leisure extending the season by means of October and into November.

Ravi Shanker — Morgan Stanley — Analyst

Understood. That is nice shade. And perhaps a follow-up on the earlier dialogue on the premiumization of the {industry}. Sort of because the lower-cost carriers push towards premium, I simply needed to sort of make clear your feedback.

Are you saying that there is extra alternative for you guys to sort of push up sort of as the underside comes up? And sort of do you might have a way of how excessive you may go? Or, I imply, there’s additionally some concern that as others premiumize, there’s going to be extra competitors for a hard and fast set of premium demand. How do you see that enjoying out?

Edward Herman Bastian — Chief Govt Officer and Director

Effectively, I feel it is each. We have now and we proceed to have alternatives to develop premium. Premium’s rising double digit for us, and we do not see that slowing down. So, Delta, by itself proper, continues to develop there.

And what is going to occur is, as others, in the event that they do select to proceed to improve their merchandise, it should drive them to additionally improve their value factors, which is able to assist our Essential Cabin revenues as nicely.

Glen William Hauenstein — President

That was the purpose, I feel, we should always proceed to bolster is once you take away income streams, it’s a must to substitute them with different income streams. And so, because the ULCCs look to make their product extra worth, they’ve to extend their base fares simply to stay fixed when it comes to income. And I feel that’s perhaps a missed level right here is that that is really good for the {industry}.

Ravi Shanker — Morgan Stanley — Analyst

Very useful. Thanks.

Julie Stewart — Vice President, Investor Relations and Company Improvement

We’ll now go to the ultimate analyst Q&A.

Operator

Actually. Your subsequent query is coming from Andrew Didora from Financial institution of America. Your line is reside.

Andrew Didora — Financial institution of America Merrill Lynch — Analyst

Hey, good morning, everybody. Thanks for squeezing me in right here. Dan, useful commentary on the two% fleet progress this yr. And I do know you are not ready to offer the 2025 capability progress now, however are you able to perhaps assist us take into consideration the 2025 fleet or seat progress primarily based on sort of the place you see deliveries and anticipated retirements over the following 18 months?

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

Yeah. I feel you — as we’re taking about 40 deliveries this yr, as I discussed, give or take, one or two and the way it falls out, on common, once you look ahead into subsequent yr, it is round 50. We’re proper in that 40 to 50 vary related to that, and you are going to proceed to see a gentle drumbeat of retirements, in all probability within the mid-20s as we undergo 2025. We’ll finalize that as we get by means of our last plan and tweak that regards to what it’s, nevertheless it’s older fleets, proper, the 75s, beginning to see a few of the 76s and the 320s.

And as we have all talked about, these — as we have been making an attempt to develop, we have not been in a position to retire it, what we’re used to. That is the primary time we’re really meaningfully retiring plane over the past two to 3 years. And that then advantages us, proper, as a result of that then is a fabric stream again into our tech ops operation, upkeep operations that may use that materials and enhance effectivity, which they have been so good at by means of the years once you take a look at the final decade.

Andrew Didora — Financial institution of America Merrill Lynch — Analyst

Obtained it. That is really very useful. And simply as my follow-up, Ed, I do know you talked about on the final name that you simply really feel such as you nonetheless have extra debt than you are snug with. Is there any framework you may define when it comes to simply give us a way of how you concentrate on the correct stage of debt that will get you to a way more snug place? Thanks.

Edward Herman Bastian — Chief Govt Officer and Director

Andrew, I feel that is an ideal query for November. We’ll reply that at the moment.

Andrew Didora — Financial institution of America Merrill Lynch — Analyst

Nice. Thanks.

Julie Stewart — Vice President, Investor Relations and Company Improvement

That may wrap up the analyst portion of the decision. I will now flip it over to Tim Mapes to begin the media questions.

Tim Mapes — Senior Vice President, Chief Communications Officer

Thanks, Julie. Matthew, in the event you do not thoughts, as we transition from the analysts to the members of the media, in the event you might please repeat simply the directions for moving into the decision queue, please.

Operator

Actually. At the moment, we’ll be conducting a Q&A session for media questions. [Operator instructions] Please maintain whereas we ballot for questions. Thanks.

Your first query is coming from Leslie Josephs from CNBC. Your line is reside.

Leslie Josephs — CNBC — Airline Reporter

HI, good morning, all people. Simply a few questions. For premium economic system, are you seeing most vacationers purchase that on the onset or the outset of their reserving or are they doing buy-ups after? And is that also probably the most worthwhile a part of the cabin? After which on WiFi, when do you count on all the mainline fleet to have the quick and free WiFi for SkyMiles members? Thanks.

Edward Herman Bastian — Chief Govt Officer and Director

You need to take the primary one?

Glen William Hauenstein — President

So, the query was on Delta Premium Choose?

Leslie Josephs — CNBC — Airline Reporter

Sure.

Glen William Hauenstein — President

Premium economic system. We’re simply Premium Choose.

Leslie Josephs — CNBC — Airline Reporter

Sure.

Glen William Hauenstein — President

So, that’s principally being purchased, like all of our merchandise, at preliminary buy. And as you already know, we designed that to be versatile so individuals might do it publish buy. They usually might do it with a number of types of cost, together with miles, as they improve for individuals whose corporations won’t permit them to purchase in these, that they may use their miles to improve into these. However nonetheless, over 80% come at preliminary reserving.

Leslie Josephs — CNBC — Airline Reporter

And is it nonetheless probably the most worthwhile cabin?

Glen William Hauenstein — President

Delta Premium Choose, I feel when it comes to profitability, it’s the third most worthwhile, proper? Our Delta One is probably the most worthwhile. It actually goes down, home first after which Delta Premium Choose. So, actually when it comes to the hierarchy, the extra premium the product, the upper the margin.

Leslie Josephs — CNBC — Airline Reporter

OK. Delta One, top notch home, after which Delta Premium Choose on all routes?

Edward Herman Bastian — Chief Govt Officer and Director

And, Leslie, on the WiFi query, we’re persevering with to roll it out, making good progress. The main target proper for the time being is getting our worldwide fleet geared up. We’ll have largely the transatlantic fairly nicely totally up and working by the top of the summer time over the following couple of months. And our remaining focus after that’s getting the regionals in addition to our — any remaining home plane, which is principally the 717 fleet, up and working over the following 12 to 18 months.

So, we’re getting there. Actually, on a passenger depend stage, we’re nicely over 50% nowadays.

Leslie Josephs — CNBC — Airline Reporter

Thanks.

Operator

Thanks. [Operator instructions] Your subsequent query is coming from Mary Schlangenstein from Bloomberg Information. Your line is reside.

Mary Schlangenstein — Bloomberg — Airline Reporter

Hello, thanks. I needed to see in the event you might simply give us just a little bit extra element on the Japan state of affairs that you simply talked about. Is that simply primarily leisure, or what’s your online business journey trying like between the U.S. and Japan as nicely?

Glen William Hauenstein — President

The U.S. and Japan enterprise is sort of robust. It has been for the reason that finish of the pandemic. And what we have seen is known as a new Japan as a vacation spot market.

I feel when the yen was 83, it was very troublesome to have the ability to afford to go see Japan and all the nice issues that Japan has to supply. With the yen at 160, it is a very completely different world for U.S. vacationers, and so they appear to be taking nice benefit of that.

Mary Schlangenstein — Bloomberg — Airline Reporter

And what about on the enterprise facet?

Glen William Hauenstein — President

Enterprise continues to stay robust.

Mary Schlangenstein — Bloomberg — Airline Reporter

OK. And the opposite query I had was you all have not talked for a while concerning the refinery and whether or not you are still in any kind of discussions to develop a partnership or promote the refinery. Are you able to give us an replace on that?

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

We’re not. The refinery has been working very nicely. The crew is doing an awesome job, a key a part of Delta.

Mary Schlangenstein — Bloomberg — Airline Reporter

Nice. Thanks.

Tim Mapes — Senior Vice President, Chief Communications Officer

Thanks, Mary. With that, Matthew, we’re proper on the hour. We’ll conclude the decision.

Operator

[Operator signoff]

Length: 0 minutes

Name contributors:

Julie Stewart — Vice President, Investor Relations and Company Improvement

Edward Herman Bastian — Chief Govt Officer and Director

Glen William Hauenstein — President

Daniel Charles Janki — Govt Vice President, Chief Monetary Officer

Ed Bastian — Chief Govt Officer and Director

Conor Cunningham — Analyst

Glen Hauenstein — President

Savi Syth — Analyst

Jamie Baker — Analyst

Thomas Fitzgerald — TD Cowen — Analyst

Dan Janki — Govt Vice President, Chief Monetary Officer

Mike Linenberg — Deutsche Financial institution — Analyst

Scott Group — Wolfe Analysis — Analyst

Sheila Kahyaoglu — Jefferies — Analyst

Duane Pfennigwerth — Evercore ISI — Analyst

Brandon Oglenski — Barclays — Analyst

Ravi Shanker — Morgan Stanley — Analyst

Andrew Didora — Financial institution of America Merrill Lynch — Analyst

Tim Mapes — Senior Vice President, Chief Communications Officer

Leslie Josephs — CNBC — Airline Reporter

Mary Schlangenstein — Bloomberg — Airline Reporter

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