Delta Airlines 2015 Annual Report Download - page 30

TableofContents
ITEM7.MANAGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS
FinancialHighlights-2015Comparedto2014
Ourpre-taxincomefor2015was$7.2billion,representinga$6.1billionincreasecomparedtotheprioryearpredominantlyasaresultoflowerfuelpricesand
strongnon-fuelcostcontrols.Pre-taxincome,adjustedforspecialitems(anon-GAAPfinancialmeasure)increased$1.3billion,or29.3%,to$5.9billion.Special
itemsin2015wereprimarilyrelatedtofuelhedgeMTMadjustmentsandsettlements,whichtotaled$1.3billion.
Revenue.Ouroperatingrevenueincreased$342millioncomparedtotheprioryearprimarilyresultingfromourBrandedFaresinitiativeandouragreementwith
AmericanExpress.Passengerrevenueperavailableseatmile("PRASM")decreased3.3%on3.0%highercapacity.ThedecreaseinPRASMwaslargelydrivenby
competitivepressureinthecurrentlowfuelpriceenvironmentandtheimpactofU.S.dollarstrengthonticketssoldininternationalmarkets,whichare
predominantlypricedinlocalcurrency.
OperatingExpense.Totaloperatingexpensedecreased$5.3billionfrom2014drivenbylowerfuelprices,partiallyoffsetbyfuelhedgelosses,highersalaries
andrelatedcostsandprofitsharing.During2015,Brentcrudeoilaveraged$52perbarrelandclosedtheyearbelow$40perbarrel,whichissignificantlylower
thantheaverageof$99perbarrelduring2014.Salariesandrelatedcostswerehigherasaresultofincreasesinpilotandflightattendantblockhoursduetohigher
capacityandpayrateincreasesimplementedin2015.
Ourconsolidatedoperatingcostperavailableseatmile("CASM")for2015decreased16.3%to13.33centsfrom15.92centsin2014,ona3.0%increasein
capacity,primarilyduetolowerfuelprices.Non-fuelunitcosts("CASM-Ex,"anon-GAAPfinancialmeasure)wereflatin2015comparedto2014at9.17cents
duetostrongnon-fuelcostcontrolsandthestrengthoftheU.S.dollar.Our2015unitcostperformancewasin-linewithourgoaloflimitingnon-fuelunitcost
growthtobelow2%annually.
Thenon-GAAPfinancialmeasuresforpre-taxincome,adjustedforspecialitemsandCASM-Exusedinthissectionandreturnoninvestedcapital("ROIC")
andadjustednetdebt,usedinthesectionbelow,aredefinedandreconciledin"SupplementalInformation"below.
CompanyInitiatives
Runningareliable,customer-focusedairlinehasproducedahigherROIC(anon-GAAPfinancialmeasure),whichincreasedfrom20.7%in2014to28.3%in
2015.Thisimprovedfinancialperformancehasallowedustoimproveourbalancesheetbyreducingadjustednetdebt(anon-GAAPfinancialmeasure)to$6.7
billion,increasefundingofourdefinedbenefitpensionplansandincreasetheamountofcapitalreturnedtoourshareholders.Wearefocusedondelivering
additionalvalueforshareholdersinthefuturethroughrevenuegrowth,costproductivityandprudentdeploymentofcashflows.
Driving Revenue Growth
OperationalReliability
Akeydriverofourrevenuegrowthishighercustomersatisfactionresultingfromstrongoperationalreliability.Wehavesignificantlyinvestedinourbusiness
since2010toimproveouroperationalperformance,whichconsistentlyranksfirstamongthemajorU.S.carriers.During2015,weoperated161dayswithzero
mainlinecanceledflights,a69%improvementoverour2014performance.Inaddition,ourreportedcompletionfactorof99.6%andon-timearrivalrateof85.9%
placesusatthetopamongthemajorglobalU.S.carriers.Thisoperationalexcellenceresultedinafourpointincreaseinourdomesticnetpromoterscorecompared
to2014.Accordingly,ourcorporateticketvolumeincreased4%in2015,reflectingourreliableserviceandhigh-qualityproduct.
GlobalStrategy
Weareexpandingourglobalnetwork.Underthisstrategy,wearestrengtheningourpresenceinmajoranddevelopingmarketsaroundtheworldinaneffortto
increaseanddiversifyournetworkintohighrevenueandhighgrowthmarkets.Thegrowthofourglobalpresencewillenablecustomerstoseamlesslyconnectto
moreplaceswhileenjoyingaconsistent,high-qualitytravelexperience.WearedeployingthisstrategythroughinvestmentsinEurope,AsiaandLatinAmerica.
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