Delta Airlines 1Q15 Earnings Call Notes

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We run the best operation in the industry

“We continue to run by far the industry’s best operation. In the March quarter we delivered 98.6 completion factor that had a lot of tough weather days in it but we did have 25 days with zero mainline cancellations.

Our mainline on-time rate improved 3.1 points to 83.4%. This operational performance is contributing to solid increases in customer satisfaction, we have achieved all time highs in our Net Promoter scores and our customer complain rate has decreased by 23% so far this year.”

Business is performing well, while strong dollar is creating a headwind

“Looking forward the business on the whole is performing quite well, while the strong dollar is creating a $600 million headwind for our international revenues, it is also a factor in keeping fuel prices down which will contribute over $2 billion in gross savings year-on-year in 2015.”

Corporate travel managers optimistic about travel

“Our recent survey shows corporate travel managers continue to be optimistic about the remainder of the year with roughly 85% of respondents anticipating they will maintain or increase spending over the balance of this year.”

Toughest revenue environment is asia, driven by forex

“We face our toughest revenue environment in the Pacific where unit revenues declined 9% with roughly seven points of the decline driven by foreign exchange’

Softer demand trends in Brazil Russia, Middle East and Africa

In addition to currency, we’re also continuing to experience softer demand trends in certain markets including Brazil, Russia, the Middle East and Africa. ”

Supply is outstripping demand in China

“Yes Mike we are seeing good flows, but candidly the industry capacity between China and the U.S. I think the number in Q1 was about 20% of an increase. So either the supply is certainly outstripping demand but demand is strong and our early indications on our — the new flight we were launching between LA and Shanghai are very positive. So we’re not the predominant player in China at this point, so we’re still building strength as we go.”

Better to assume a high oil price than a low one

” our long term philosophy and this is how we’ve always run the airline is to assume a high fuel price, and to assume a much higher fuel price than the forward curve.

And that does a lot of good things for you. I mean we put it this way, having tried different ways to budget airlines over a really long period of time the only rational way that we found is to assume a high fuel price over the long term, because you are never disappointed when its lower. But if you assume – if you assume a low fuel price then the fuel price ends up being high then you are put in a situation where you’ve got to go tear apart the company in order to get your cost down.”

Net promoter score is the best measure of brand performance

“Well, our net promoter score is, we believe, the best measure of brand performance and it’s across multiple consumer industries, not just the airline industry. And we’ve seen a very tight correlation between improvements in our unit revenue performance and outperformance that’s directly attributable to customer satisfaction and net promoter score.”