The latest financial results published by two of the ‘big four’ US carriers indicate a positive outlook moving into 2023.
Delta Air Lines have reported a good set of results, with financial year adjusted revenues of $45.6 billion (just 2% below FY19) and operating profit of $3.6 billion (7.8% margin). This is positive, though still some way below the $6.6 billion (with a 14.2% margin) achieved in FY19.
Capacity was 15% below 2019 levels, with the load factor 2 points lower at 84%. Unit revenue (TRASM) was very strong at 15% above 2019 levels, but offset by unit costs (CASM) up to 18% higher. This was mainly due to higher fuel costs.
Net profit was $1.9 billion compared to $4.7 billion in FY19 reflecting the lower margin and a significantly higher net interest expense. Net debt was $22.3 billion more than double the $10.5 billion in December 2019. Delta paid down $4.5 billion of gross debt during 2022 and expects to deliver free cash flow of more than $2 billion in 2023 and further reduce debt.
Q4 (Oct-Dec) showed continuing momentum with and EBIT margin of 11.6%, very close to the 12.5% achieved in Q4 19. The company is guiding to Q1 23 revenue 14-17% higher than Q1 19 with an EBIT margin of 4%-6%. FY 2023 EBIT margin is expected to be 10%-12%, still a little below 2019 levels (14.2%).
United Airlines reported slightly weaker results than Delta, but also showed an improving overall trend. Financial year revenue was up by 3.9% on FY19 at $44.9 billion, with an operating profit of $2.3 billion (5.2% margin) compared to $4.3 billion (10% margin) in FY19. Capacity (ASM) was 13% below 2019 levels, with passenger load factor 83.4% just 0.6 points below 2019. Unit revenue (TRASM) was very strong, 19.5% higher than FY19 but this was offset by unit costs (CASM) 25.7% higher.
Net profit came in at just $737 million, compared to $3 billion in FY19 - reflecting the lower operating profit and a $900 million increase in net interest expense. Net debt was $20 billion with a net debt/EBITDA (adj.) of 4.0x, which is comfortable.
Q4 22 was strong with an 11.2% adj. EBIT margin, despite the operational disruption from extreme weather, higher than the 7.9% achieved in Q4 19. The company remains confident of its 9% pre-tax margin target for 2023.
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