Q4 2020 Delta Air Lines Inc Earnings Call

[music].

Please standby.

Good morning, everyone and welcome to the Delta Airlines December quarter, and full year 2020 financial results conference.

Hi, My name is Kathy and I will be your coordinator at this time all participants are in a listen only mode until we conduct a question and answer session. Following the presentation.

As a reminder, today's call is being recorded and now I would like to turn the conference over to Jill Greer, Vice President of Investor Relations. Please go ahead.

Thanks, Cathy good morning, everyone and thanks for joining us for December quarter, and full year 2020 earnings call joining us from Atlanta today are CEO, Ed Bastian, our president Glen Hauenstein, and our interim co CFO Gary trees, our entire leadership team is available for the Q and I'd session and we'll open the call with an overview of Delta is performance and strategy Glen will put.

Right and update on the revenue environment, and very little discussed cost liquidity and our balance sheet.

We've extended our call today to 90 minutes total to make sure we have plenty of time for questions for and it looks we ask for the please limit yourself to one question and a brief follow up so we can get used to as many of you as possible. After the analyst Q and I will move for immediate question afterwards and will provide some closing remarks.

Today's discussion contains forward looking statements that represent our beliefs or expectations about future events. All forward looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward looking statements. Some of the factors that may cause such differences are described and Delta SEC filings.

We'll also discuss non-GAAP financial measures and all results exclude special items unless otherwise noted you can find a reconciliation of our non-GAAP measures on the Investor Relations page and IR Dot Delta Dot com and was idle for and called assets.

Thanks, Joe Good morning, everyone.

This morning, we reported pre tax losses of $2.1 billion for the December quarter.

And non billion dollars for the full year capping the profit year and Delta system.

We just sitting on along with this recovery wouldn't follow which grew in line with demand Choppiness is cold and infections rose across the country and government and public health and tissue tissue travel advisories, our revenues of $3.5 billion for the fourth quarter, which was 30% of last year's levels.

And although we still have a tough winter ahead of US we are encouraged by the progress that's been made on the Bassi from and are confident that delta is positioned to successfully lead our industry into recovery as the year unfolds.

For 2020 was a challenging year, we delivered results for all of our stakeholders for employees, we prioritize protecting their health and safety and preserving our culture for.

For example throughout the past year, we have offered and continue to offer and extensive employee testing program and pay protection programs for for is diagnosed exposed for its high risk of COVID-19.

We have had remarkable volunteerism up to 40000 employees taking from paid these throughout the summer to protect jobs and preserve cash and in fact, we still have over 10000 employees in the month of January out and on paid Leach.

And we have made it through this year without for rowing any employees.

Our emphasis on taking care of our people is reflected in Delta is recognition. This week by glass door as one of the best places to work for the fifth year growth coming and seven overall on a list of 100 large companies the highest rank delta has ever received on.

Paul in the face of other pandemic really incredible work by our team.

For our customers will keep moving at the center of our recovery on health and safety efforts for being the only major you Whats. Your line that continues to go up from little seats to partnering with leading names with the Mayo clinic, Emory healthcare lysol improved growth and developing the delta care standard to launch and the industries.

First quarter tested transatlantic flights with no for into non arrival of all targeted and restoring consumer confidence and travel and reopening borders which will be an important driver of revenue growth.

For the future.

For our customers recognize the outstanding service. Our people provides for an all time high December net promoter score of 71 up 20 points year over year.

And by business travel news, mainly delta the top tier line per quarter travelers for the 10th year in a row and once again coming in first place on all 12 metrics that they measure in service.

That customer preference and loyalty is what underlies our revenue premium and has never been stronger.

And finally for our shareholders, we secured our liquidity position and risk SCALEGUARD cost structure.

We reduced liquidity risk for raising over $25 billion and capital says for pandemic began.

With approximately $17 billion of liquidity, our adjusted net debt. However, only increased $8 million year over year, and we don't expect that net debt will increase going forward.

We should swiftly removed cost from the business with three consecutive quarters of operating expenses declined by nearly 50% for more increasing the variable nature of our cost structure.

And from the December quarter, our all in unit costs were down 4.5% year over year, despite flown capacity being down 44%.

That is a remarkable achievement and credit to Paul Delta employees for making that happen.

And by keeping our costs under control, we leveraged the modest increase in net sales to reduce our average daily cash burn to $12 million a day for the December quarter half of what it was in the September quarter, and a decrease of 90% since the early days it depends on mix in late March.

Turning to 2021, we expect the March quarter to look similar to the December quarter with the March quarter revenues at 35% to 40% of March quarter, 2019 levels, and our cash burn for the quarter holding at $10 million to $15 million per day.

We expect that will be followed by an inflection point. This spring as vaccine distribution continues travel restrictions start to ease and consumer confidence begins to growth hopefully, resulting in cash burn, reaching breakeven or better by the second quarter.

And as the year progresses, we expect demand will start to accelerate as vaccinations become more widespread and the viruses and it contains state.

And customers gain greater confidence to make future travel commitments and should enable a sustained recovery to begin and the second half for 2021 with a return to profitability. This summer.

So as we work through this environment, we're focused on five things first as always we are committed to keeping our culture intact and our employees engaged the delta people are our most strategic assets.

On a tremendous job this year and together will lead our airline through the recovery.

Second we'll continue to prioritize the customer with a focus on health and safety and the maintenance of Delta of the industry's strongest network, thereby increasing royalty and preference for Brent.

Customers have shown they're willing to pay more for the quality of our network products and our service the gains we have achieved and customer satisfaction position us well to drive sustainable revenue growth in the future.

Third we will maintain our focus on innovation, which will enable our employees improve the customer experience and drive efficiency through the business.

And innovative thinking will power.

Our ability to tackle the challenges in front of us like our goal of achieving carbon neutrality and the next decade.

For will drive a competitive cost structure given the changes we've made over the last year. Our goal is to sustain our non fuel unit costs at or below 2019 levels by the December quarter of this year on roughly 75% of 2019 capacity levels displaying continued agility and managing our costs.

Yes.

And finally, we're committed to debt reduction and creating long term shareholder value, including continuing to protect our owners so that they can participate and future upside without dilution.

Goes for investors, while the near term demand path is murky industry fundamentals remain intact.

Following almost a year and subdued travel customers are beginning to exhibit behavior that is indicative for pent up demand shopping visits across Delta is the digital channels are significantly outpacing the passenger volumes for carrying in our most recent corporate survey, 40% of respondents expect for recovery by 22.

22.

Our partners at American Express, our office and the encouraging signs whether its cardholders holding onto their points in anticipation of redeeming them for air travel for a recent survey that suggested approximately 70% of respondents expect to take a trip and 2021 after not travelling in 2020.

Although it will take time customers wanted travelers and when they feel safe.

I feel they've had a year on year lines taken from them and they are starting to get ready to reclaim it.

Until then we're fortunate to have the support of the U.S. government, which recognizes the importance of the airline industry and we thank Congress and the administration for pass and the Cold and released the last month.

As a result for that Bill we anticipate receiving approximately $3 billion. In addition, and additional payroll support funds largely on terms similar to the initial cares and program.

These funds have been critical and saving thousands of industry jobs during an unprecedented level of demand decline.

And it's why the U.S. airline industry is in the best position to recover from the pandemic over any other international markets.

So while 2020 was a difficult year and challenges will continue and 2021 on the.

Encourage that's on the data that we're seeing and I'm proud of the foundation that we've built at Delta. This company is well positioned to emerge and a stronger competitive position from this crisis and will continue to lead our industry in the years ahead.

And with that I'll turn the call over to go on.

Thanks, Ed and good morning, everyone.

As Ed mentioned, we started the December quarter, seeing encouraging demand trends, but we're driving covert cases and travel advisories, we began to see some weakness around Thanksgiving and into December.

Despite the softness the peak periods continue to outperform non peak periods, and we've seen sequential improvement and total revenues, which recovered from being down 80% and the September quarter, two down 70% and the December quarter on Sellable capacity that was down 62%.

On January 3rd we had a $15 million ticket revenue day and carried more than 250000 customers. Both of these were the highest since the on sooner the pandemic.

And despite having meaningfully less inventory per sales given our middle seat block, we outperformed on passenger revenue generation in the first nine months for the year. This.

This is a testament to customers' willingness to pay a premium for the Delta difference.

Leisure markets and Sun destinations are the best performers and our network with our approach of targeting salable capacity to match from them.

Biasing restore and capacity to leisure markets.

As a result, roughly one third of our domestic capacity is currently deployed into leisure destinations.

Our coastal hubs for especially in New York and Boston are still some of the weakest areas and our network the demand on those hubs and the 20% to 25% recovered.

International demand remains weak and is limited to a central travel.

That said, we continue to work towards opening additional profit tested lines of travel with no quarantine on arrival similar to our Atlanta, and room, and Atlanta to Rome, and Atlanta, the Amsterdam and points.

This will be important and restoring confidence and long haul international travel as vaccine Rollouts continue.

Our premium seat strategy is holding up well for.

Domestic premium revenues performed in line remain calm and in the quarter.

A good outcome considering that we're continuing to operate largely a largely leisure driven environment with a higher proportion of premium soup copac due to our middle seat blocks.

As all of you are aware corporate demand continues to be depressed and was only 10% to 15% and restored for the quarter.

Corporate revenue was about three points higher than the September quarter was small and medium accounts, which make up half of our corporate revenues recovering five points faster and large corporates.

For the passenger revenue environment remains challenging and we're encouraged that efforts to diversify our revenue streams have paid off.

Our American Express remuneration and 2020 with nearly 3 billion.

Down on the 30% on a year over year basis.

Intact American express is share that spending on our coburn per portfolio has performed in line to slightly better than our overall for our portfolio spend in 2020.

In the December quarter, MRO revenue was down almost 30% relative to the same period last year, while cargo revenue was up 10% on a year over year basis.

This marks the first quarter of cargo revenue growth since the December 2018 quarter.

And our December quarter results reflect the challenges that depends on America's brought not just the delta between entire airline industry I am incredibly grateful for the efforts of the entire delta team and managing through the challenging year that we faced.

Now that we think about 2021, we see three distinct phases to the year and for each phase we have levers to help us react to the emerging demand environment.

And the first phase, we expect demand choppiness to continue the booking curve to remain more compressed and the results to be similar to the December quarter.

And responsible focused on making sure that our sellable capacity largely aligned with the emergence of emerging demand environment.

For example, our January and February domestic schedule seats will be down 3% to 6% versus the non holiday period and November.

That will result in our March quarter, Sellable capacity being approximately 55% lower relative to the same period and 2019 consistent with the expected 60% to 65% revenue decline.

We'll also continue to leverage our non ticket revenue streams like cargo loyalty and MRO that we believe should continue to outperform passenger revenues.

And the second phase vaccination distribution continues travel restrictions and advisories begin to ease and customer confidence begins to growth.

As that happens, we expect to see and extension of the booking curve, resulting in a cash led recovery with revenue recovery to Paul.

We anticipate this will happen in the spring and will result in us achieving our cash from breakeven target.

Thanks.

In response to the second phase our middle seats will be a very powerful tool for us when we can use to add capacity in a very cost efficient way generating a meaningful margin tailwind.

In the final phase vaccinations become more widespread and offices begin to reopen we expect that to occur in the second half of 21 and as a result interest and result in a sustained improvement in demand and yield which progression and cash generation has the booking curve normalizes.

For the recovery initially fueled by leisure demand Delta success will be driven by our superior connecting economics through our core hubs domestically and our partner hubs internationally.

We're 30 for new aircraft deliveries this year, and we'll also leverage higher gauge and more efficient aircraft that produce lower seed costs more premium seats and a better customer experience.

This will allow us to capitalize on our brand affinity and upsell opportunities, which are enabled by the elimination of change for you for us customers and the redemption of the credits.

It will take longer for corporate demand to return, but we are encouraged by the results on our recent corporate survey on.

Our corporate accounts are telling us that they largely anticipate returning to their offices and travel in the June and September quarters. They are also telling us by the end of 21 half or expecting to return to 50% to 100% a pretty cover domestic travel and.

And up to 50% of pre Cobra International travel.

To our corporate customers our commitment to you remains unchanged Delta is ready when you are.

We will be ready to serve our corporate customers by leveraging the strongest domestic and international networks growth.

Rebuilding focus cities and point to point volume based on customer needs and by capitalizing on our efforts to always put the customer experience at the center of what we do.

We're optimistic for the future having built the right foundation and focusing on what we can control.

We are confident in our ability to successfully navigate for post pandemic recovery.

And with that I will turn the call over to Gary.

Thanks, Glen and good morning, everyone. Let me touch on the fourth quarter and 2020, and then I'll turn to the outlook for costs and the balance sheet as we head into 21.

Our December quarter pre tax loss of 2.1 billion as about 500 million better than the September quarter, given the revenue improvement Glen just discussed combined with strong cost discipline.

We reduced cost by approximately 50% from 2019 levels for the third consecutive quarter more importantly, our costs were up just 6% from the third quarter on 30% capacity growth and three quarters and that increase came from higher fuel toll.

Total unit cost, including fuel was down for and a half per cent compared to 2019 on 44% lower flow on capacity on.

Our average daily cash from for the December quarter was 12 million half of the third quarter's 20 for.

And we closed the year with 16.7 billion and liquidity and adjusted net debt of $18.8 billion up about 8 billion versus year end 2019.

And as we look into the year ahead, improving demand fundamentals will underpin a transition of our financial focus from for protecting our liquidity.

For positioning the company for a return to profitability and free cash flow and.

Explain our approach to cost on our balance sheet as we make this transition.

Let's start with cough, we need to stay flexible and maintain our discipline in order to position the company for the return to profitability add bench and as we expect continued choppiness and demand in the early part of the year.

We've already taken structural steps to re size our business, our two largest cost drivers fleet and head count on both 15% to 20% smaller than they were and 2019 head.

Head count were reductions were difficult, but necessary decision. It was hard to see 18000 talented and dedicated co workers leaf, but it's a testament to the Delta culture that these reductions were achieved entirely through voluntary means.

We accelerated our fleet transformation by retiring aircraft with relatively short remaining lives and simplified our fleet by eliminating two entire families while increasing our gauge on.

On a run rate basis. These changes will drive more than 400 million and annualized cost assets.

As we add capacity and 21, we will drive higher utilization of our system and we have room to rebuild our network from current levels at low incremental costs, approximately 40% to 50% of our December quarter non fuel CASM.

Our goal is to produce and sustained non fuel unit costs below 2019 levels by the fourth quarter.

That cost focus will be a key driver of profitability later in the year when demand returns.

Looking to the March quarter, we're preparing for stronger demand by reactivating aircraft and restoring our people to full hours driving about 200 million and additional costs versus the December quarter on.

On March quarter, total operating expense will be 35% to 40% lower than March quarter, 19, with a total unit cost, including fuel down 5% to 10% on approximately 35% lower flow on capacity.

Let's move now to capital the balance sheet and liquidity.

As we begin the year conditions are similar to where we exited 2020, a modest uplift and net sales should offset the cost investments, we're making on the quarter and as a result, we expect average daily cash burn between 10, and 15 million similar to the December quarter.

With further improvements and net sales as customers gain confidence, we expect our cash burn to cease this spring.

With that goal and site, we're turning our focus to how we will balance reinvesting in the business, while reducing our debt levels.

Given our expectations for cash flow and 21 and proceeds from the PSP extension.

We expect our current adjusted net debt levels to be the high watermark for that important metric.

For the full year, we are expecting two and a half million and gross capex significant reduction from the four to 5 billion that we're spending pre coated.

We have 1.3 billion of aircraft purchase commitments for 30 for new deliveries this year, which we have the option to fully finance and about 1 billion and non aircraft Capex.

Including retirements, we expect our fleet count at the end of 2021 will be 15% smaller than at year end 19. The total fleet declining from about 13 50 to about 1100 and 30.

And equal priority is to work on our balance sheet by reducing our liquidity and paying down debt we.

We have approximately $1.8 billion of debt maturities and 21, and 2.1 billion and 22.

Our debt has an average interest rate of 4.6%, which will drive approximately 350 million and quarterly interest expense. However, we will begin reducing those expenses by paying down debt this year.

We do not have mandatory pension contributions until 2025 under airline relief, but we expect to make at least 500 million and voluntary contributions this year.

In terms of a quarter and outlook with about 3 billion and PSP support expected from the government and March March quarter, We project ending the period with $18 billion to $19 billion and liquidity and adjusted net debt of approximately 18 billion.

Let me close by saying that the Delta difference has never been more important and I'd like to thank the delta team for delivering for each other and for our customers and that the industry's most challenging environment ever because of your dedication we will emerge from the crisis stronger and more resilient than ever.

With that turn the call back over to Jill to begin accumulating thanks, Gary Cathy we are ready for questions from the and if you could give the instructions on how to get into cash.

Yes me and ladies and gentlemen to ask a question that is star one on your telephone keypad. Please note that if you're on a speaker phone to pick up your handset or de press. Your mute function you two other sales resources and that is star line to ask a question and we'll go first to Savi Syth, let's.

Okay and and James.

Hi, good morning, everyone and and.

Kind of curious apps and that kind of vaccine me and I have you seen and changing but can behavior and and also I know the testing requirements kind of any positive and longer term for opening on international demand, but are you seeing no travelers, perhaps shifting from on and two more debt and domestic from EMS and designations from international.

Sadly we share the vaccine deployments still is very early and we haven't really seen seen much interest in the formal change behaviors, we hear a lot and it goes away, but it's also one of the weakest travel period for the year in the and the current month that we're in.

We have not seen the booking curve and start to expand we certainly hope to see that as we get through.

For the quarter and vaccines continue to become more credit loss.

And.

And I'd be curious just and.

Follow up on on to make and the changing dynamic and I was wondering if you have any preliminary thoughts on how and maybe that America, and jetblue partnership might impact kind of and northeast and position.

We're not going to comment on on our competitors or speculate and we you know US well you know we have competition and the competition makes you better.

Hi, I appreciate it thank you.

Next we'll go to Jamie Baker from JP Morgan.

Hey, Good morning, everybody first question for Glen.

And the follow up on suppose on Tom's question from normal times, what percentage of international revenue is made up of trips.

Last fewer than for five days I'm, asking because I would think a trip and that duration would be particularly jeopardized by the need to land and almost immediately take a total return so that you could come home.

Got it.

Well.

I think thats for the.

And then on how for customers are traveling channel even on a longer than traveled on longer the story is.

So I think growth we are seeing is a very good response from the closer in Caribbean.

Caribbean and Mexico resorts were hotels are now going to be offering that as part of the package and so while there may be some choppiness is there has been through this whole environment or.

He started up and those testing procedures, we think in the per.

The short order here that.

Customers will adapt and to the extent that travel does shift from short haul international back to domestic will be ready to move for airframes back too.

Jamie I'd like to add to Glenn's comments, you know, we're still working obviously with the CDC, we endorse and support for testing requirements.

Requirements they put in place for a new feature is.

The inclusion of rapid testing into the mix. So it doesn't necessarily mean only has to be a PCR test and.

With with the this growth advantage and test and the quality advantage and testing that's out there and the supplies and that places that really could get these some of these test on within and 10 minute.

Interval.

Shortly before the return.

Excellent. Thank you for that gentlemen, and a question for Gary how are you thinking about the optimal level of liquidity to carry and the future sort.

Sort of a post pandemic question and if you Havent reached that conclusion, yet is that because it's just not a priority right now or do you simply need to wait and see how the recovery plays out before we turn to that decision.

Jamie I think what I would say is and so.

Obviously less than today, we need some time, we have I think some work in front of us to think through where we ultimately want that to be but I think the important point is we're getting started and I think you see some of that.

During the quarter, we prepaid a.

Our term loan that was matured in April for about $3 billion. We mentioned during the script that we do plan to make a pension contribution which as you know we consider part of our financial obligations.

So we are getting started we don't and more specifics that we are getting started.

And we're very focused on that $350 million number of debt.

And described.

And using the liquidity that we have where it makes sense to drive that down.

And just a fine point on on PSP simple, yes, or no question and have the term has been achieved and if so are they the same as the first trend. Thanks.

Yes, Jamie its Peter car and the terms are identical DSP work and we've already and the agreements for the government.

Thank you everybody take care.

And Jim.

Our next question will come from Hunter Keay of Wolfe Research.

Good morning.

And about a year ago, we talked on this call about intentionally running for load factors and it's happening in a weird way for that you're getting paid for it and your NPS scores or as you mentioned and an all time high so.

On blocking middle seats is obviously, a tactical sort of speed and when you on block them and you don't have to sell them. So I guess the question is longer term how are you thinking about running less for airplanes as an opportunity to differentiate yourself for that premium traveler.

Oh, yes onto it is an interesting year powerful say that we've not made a decision beyond the end of March relative to.

Our one to.

On block and middle seats.

And we have some time and of course continue to look at that I think it's going to be very much.

Driven by customer demand.

Customer input.

The confidence customers have and those seats, but no question about it we are generating a meaningful premium due to that decision I wonder if I could have just a quick follow up on that is there I guess or two waves as we discussed last year to do that one and by creating more premium seats.

And the other is by running lower load factors as we go through this fleet transition for premium seats as a percentage of our total sales continue to rise and I think thats our primary.

Weighted to satisfy that for demand for premium customers is to continue to provide them with a higher level of quality.

Got it. Thank you Glen and then on 80000 early on it's all.

All right can you achieve 2019 capacity without backfilling any of those positions.

And could you speak louder, we industry and question so to your question on it.

All right and sorry about that get pretty radical the 18000 early assets. The question is like how much and can you achieve 2018 capacity levels for that Backfilling, the majority or the entirety of those positions.

We can achieve.

2019 levels for though close to 20% of other people no question about it there, but there is that we don't need to backfill it entirely either so yes.

There's a there's a middle ground that.

Okay, and then just one more quick for instance, and 90 minutes just to follow up on Jamie's follow up have you. Peter have you negotiated the tedium strike prices for the warrants attached PSP too.

We have and it's $39 and some change.

Thank you.

And now we will go to and you can't line of Bank of America.

Hi, good morning, everyone.

Glenn for.

First question for you, probably a little tough to answer but just curious about how you are thinking about the kind of the trade off between yields and load factor as you move from kind of a different phases of the recovery that you that you talk to the as and BS as travel restrictions on the what do you see the need for me stimulate more demand the price.

Okay. So you think there's enough pent up demand and the network that load factors and the big driver just just curious how you're thinking about that.

I think we are taking a.

Yield by US as we go into the peak summer.

Hoping that demand exceeds supply and if that doesn't materialize. We can make those adjustments later, but we have anticipated that there will be a nice recovery in demand as we get towards the summer and we've taken a conservative approach I hope that answers your question.

And certainly comes from the net debt.

And then and I know.

Gary gave.

Some information about Capex this year, but it's how are you thinking about that over the next few years, especially in light with your balance sheet.

To de lever here and what do you need to see in order to feel more comfortable and placing new aircraft orders. Thank you.

For Andrew I think we're a little early yet in terms of thinking about for the long term Capex picture on us thinking, though we remove 5 billion of aircraft capex alone or with their Airbus out over over the next several years.

For the degree to which we.

And you don't want to take positions and new physicians coming up we'll we'll continue to evaluate that based on demand for right now I feel pretty comfortable with where we sit.

Thank you.

And now we'll go to Brandon Oglenski of Barclays.

Hey, good morning, everyone and thanks for taking my question.

Gary you talk about some of the structural things that you take on the cost structure ex that the recycled and target by the and every year.

And since you made a comment about incrementally like 40 to 50 per se and probably a fourth quarter CASM.

The variables that I hear that right.

Yes Sue.

Randy and let me for me a start with the first question the structural costs and the two biggest ones and our business are really.

You know head count and fleet as we mentioned the fleet really determines an awful lot of the on the infrastructure that we need from a from a cost standpoint.

We expect to get leverage out of all of our costs associated with assets. You know, we look about a third of our cost structure on a monthly basis is fixed so.

So as we grow more and we'll obviously get leverage there and we have pockets of opportunity.

And weekly have pockets of opportunity and in terms of better utilization of just the overall system.

You know when I when I think about what we're doing here and this gets to your second question.

There are kind of two big things that I talk about where that we all talk about internally as we think about this effort that we're embarking on the first.

His baseline aggressively and it's really really have a laser focus on what's in the cost structure and now.

And what makes sense and you see that in the 50% reductions that we've been posting on now for several quarters. The second thing, we say is leveraged and build and that's really where the incremental.

Process Com, that's about being very thoughtful about debt are leveraging the system and as we start to rebuild.

No I think in terms of your second question incremental cost. It's a you know it's pretty simple we were thinking about and it's just change and costs divided by change and ask them.

And we wanted to give some guide post that to the leverage that we do expect going forward.

For the.

Excuse me, 40% to 50% of December capacity comes in.

I'll just note if you take a look at the second half of 2020.

It was quite a bit better than that and that.

It was why emphasize that comment in the prepared remarks about how we scaled the system, particularly in the fourth quarter.

Well. Thank you Sir I think those are my sales.

Our next question will come from Randy Schenker of Morgan Stanley.

Thanks, Good morning, everyone on a couple of questions on business travel.

You said that a small and mid size corporate and start coming back first are you surprised by that and and it is is that good news or bad news for when the big other guys come back when the world opens up.

Ravi and were not surprised by that these are.

Small business owners, who need to get out for their customers who have to work hard every single day to keep their sales and their business moving and we do see a meaningful.

He continued improvement in small business travel and some that we can measures on others that we can't say because they're not under under contracts with us for what we know that she's been an important part of overall business travel but.

But I do want to talk about the overall corporate travel results as you probably know we extensively survey on corporate customers on large corporate customers on a on a quarterly basis. In addition to interest.

And with them on a weekly basis as to their thoughts on the return of travel and the most recent survey that we conducted which just ended a couple of weeks ago.

Indicated that 40% of other our big corporate customers expect they will be fully back to 2019 levels by 2022.

And another 11% said that they expect to be fully backed by 2023, So thats a little over 50% of the other customers and these are the people everyone speculating on having a business relative to the customers and make those decisions.

7%.

Said, we'll never be back to 2019 levels on the 7% and.

And on 42% said they weren't sure needed more time to figure it out so with all the dialogue and speculation around but thats. The business travel just looking at that survey, it's very interesting.

If you take the 51% that said they will be fully backed by 23, the majority of which is and 22.

And then you consider the second quadrant, and 50%, who says will never return or they're not sure. The return and even if you assume and only 50% of air travel returns that gets you 75% of the way back no later than 23, and I think that's a that's a very pessimistic view on business travel.

So what we've been talking about corporate travel business travel returning I felt optimistic when I saw those results. We know it's going to be different going forward and I've said, many times and could be 10% to 20% lower over over a period as its substituted and complementary.

They'll be different types of travelers different reasons for people traveling but I think business travel and Scott as a very very.

A strong opportunity to return over the next two years, and we're going to be well positioned to carry.

That is great color on the bond side of business travel. Thank you for that if I can just follow up on a question on the supply side. Clearly you guys are leaders from a corporate travel standpoint, but you have seen some of your a and.

And we'll see competitors start to and maybe try and make from inroads assets traffic comes back. So maybe you can get to it can you give us more color on kind of how you maintain that leadership and how you see the competitive environment looking like for business travelers and that does come back.

Oh I think for the Delta difference is never been more pronounced and it is right now and if you look at our share of corporate travel that is traveling we have experienced the highest levels and our history.

So demand for our products and services is incredibly high for people, who want to it and I think that's where our challenge remains is to continue to provide industry leading.

Products and services that are our corporate travelers and want and need and that's been what we've been doing over the past several years and while we'll continue to do as we get to the end of this pandemic and.

And I think thats going to be what differentiates us and clearly there's always people who would like to take that travel away from you because it is somewhat on a highest yielding travel in the system, but I think that's our goal and our mission is to stay ahead of that and provide it to a Paul people want to fly Delta and as opposed to very push which is how do we.

And lower fares and try and enable for sides for the bottom line.

Very good thank you.

[noise] and now our next question comes from Catherine O'brien and Goldman Sachs.

And where are you on things and so much for the time.

And so my first question is actually about your comment earlier and that see a cash recovery before and revenue currently and and just try and square that with the 65% and their Intel and Boucek Yep I and any early perspective bookings are coming in for later on in your are these major new bookings.

Or maybe there is a higher percentage and does that change that our corporate and you expect that early part of it probably be easier would just love some color on our comment. Thank you.

Yes.

Katy from some of that came through a little garbled, but let me say this I think the distinction is really about timing.

You know in the in the early in the in the spring and what we expect.

And venture that a few times, we think as confidence starts to build.

What you'll see is that people will start booking for further out in the booking curve and so on.

You will have a build and our air traffic liability that helps us cross cash breakeven.

Earlier in the spring PNM breakeven.

It is something that will take a little bit more that's when you know our revenue is going to be covering our expenses and that is something that we expect.

Will lag a little bit behind the build and bookings and we'll be there by the summer as we've mentioned.

And maybe just a little bit on the on our redemptions for the T. credit losses, we are running and the low to mid teens right now on terms with total revenues.

For the credits coming back and when you expect that to.

To stay below 20, as we move through this next and.

Ex period here and there and that number is and pretty consistent throughout the entire year. So we have a pretty good sense for with ups and other growth.

Okay, and they started and can you like cumulative and are now.

Yes.

Great and if and and I know you guys have one and but for this out and hearing it relates people can share gains that makes sense and we have made.

Anyone on the cost structure and of course, they tend to and that could create a lot of paying for the and midstream and I don't want to claim over that but you know outside and speeding up you see simplification and have you found other operating and cap rates and more efficient craps and you have coming here and making plans and the customer facing side on and once it came about.

On the opportunities and the Indian point average price and thank you very much.

We have Katie I'm I'm not sure we're going to get into some of the specifics I will say that the the from simplification has been.

And it's something actually that we think is in our run rate.

Today, you're seeing some of the benefit and the fourth quarter.

But it is something that we'll have a much bigger impact as we move to to reschedule the network through 2021.

I went up when I when I mentioned, the concept of leveraging and build.

And maybe one of the reasons why on.

Yeah.

[noise] thinking through it just adds on thinking through it is there are a lot of things that you know we want to think about doing differently.

One of the unique opportunities for you always want to make something good out of what has transpired and it does give us an opportunity to start fresh one of the reasons I think we are showing the kind of leverage as we rebuild is because we have a clean sheet of paper and in some sense to start from.

Yeah, I like the other Gary's comments I think is remarkable for work for team has done on the cost side to get out in the fourth quarter to the point, where are all and unit costs or 4.5% lower quarter over quarter Despite higher.

Having over 40% less capacity to work with this speaks to the ingenuity and other team we thinking as we as we speak what the what the not just the current environment for future environment is and these are not costs that were deferring out into the future, we're making real changes a real time here and.

And it touches every part of our business. So you know it's for one of the its demand is below we are we've been all over cost the entire year and the team has done a really really good good work here.

Yes, definitely and profit that they're able to thought earlier well. Thank you all for the time. Thank.

Thank you.

Our next question will come from and to Wayne and whose rates at Evercore ISI.

Hey, thanks.

Good morning.

You covered this and pieces and I'm kind of follow on to a couple of other analysts but.

You know one of the things that Delta has been talking about during this crisis with which makes a lot of sense is.

You know getting to 2019 CASM on a capacity footprint that smaller so I wonder if you'd.

Kind of quantify how much smaller footprint on can and delta still deliver 2019 CASM.

And is the thinking more of the logic.

And the focus really more on CASM recovery and margin recovery before necessarily capacity recovery.

Oh boy and I'll take that this and they're all interrelated you need to put the revenue and the capacity out there and line of demand and my other CASM ex.

Strategy and and but there there's only connected to the to the the ability to drive costs down one other things that we have.

And then a leader for many many years.

Really the last decade is on our up gauging strategy domestically, particularly and that will continue to be important as we as we move forward and while we talk about simple flying to fleets.

We've taken some big steps in that direction, we're also going to be advancing the up gauging of the other domestic fleet at the same time, so debt to assess a big contributor will continue to be a contributor with both driving down cost as well as improving the customer experience and and revenue and including premium revenue.

Opportunities.

We said and I said in my remarks, and with our goal is to get that.

2019, a unit cost bye bye.

By the end of this year on roughly 75%.

2019 capacity levels, and and has a pretty good marker.

We hope occupies levels higher on the opposite so the demand environment is driving that but that's going to be driven by them and not by cost.

That's very helpful. And then maybe just broad brush stroke strokes, you gave us a 75%.

By year end the is that is and how we should be thinking about your view of exit rate and and how are you thinking again it can change, but how are you thinking about the summer.

As a percentage of 2019.

No we're not we're not using that as a guide for capacity levels for using that for our own internal calculations on to where we need to get on our cost structure down it won't be 75% and maybe higher maybe lower I don't know, there's a long way to go you know between here and there and we'll keep you posted as we go.

Okay and then just just last one made for maybe a question from a from a different era, but.

Could you walk us through Paul.

On the comps on revenue monthly because it it seems like your guidance.

For its well you know January February.

Similar to kind of for Q levels, but but March it seems like there's a wide range of outcomes.

On March and and obviously the comps fall off materially middle of March. So I don't know if you have the day to handy, but.

You know how much easier is March and April relative to kind of Gen fab.

Duane we're not going back to to give and monthly monthly revenue guidance, so some sort and to have to pass.

Fair enough the comps do get easier thanks for taking the question.

Balance will give even if it will be easier.

And now we will go on T. like chess and Dan and I asked before.

Thanks, and good morning.

And you talked about a guess at the corporate travel environment. It in a scenario where corporate traffic is impaired 15% to 20% what does that mean for your AWS earnings power and and why shouldn't we be concern and that I guess that the fleet strategy is adding more premium seats into a decline.

And premium market.

So I wouldn't draw the conclusion that the corporate travel is impaired at all and so like I said that I think we may see lower corporate travel.

But I also think it'll be changed or potentially different mix. So I don't think we should be for either ringing alarm bells relative to the future of corporate travel all indications are its corporate travel is ready to start coming back and we'll come back pretty aggressively beginning.

Beginning on the second half of this year, we are square smaller line or was.

For 200 for your claims today.

We've already right sized for business to be smaller which will help.

Protect the premium revenue sources and the margins of the business.

And well that's why we're you know we spent a lot of time on this call talking about our cost performance. That's that's a that's going to be the key to make sure that we protect and margins in an environment, where corporate travel will be down for the for the foreseeable future Navy as per moved down by a little bit lower amount for them I'm not ready to declare that CLIA for that can I add something to that.

It is that I think when you think about our premium products and services. You also on I think that these are not on.

Only filled by corporate travelers as a matter of fact only less than a third of those seats are actually filled by the corporate travelers and two thirds or for non corporates and.

And I think it's our ability to provide the right products and services for the for non core parts as well with the right. So of opportunities. So that we can match their preferences to our products and services and I think that's really been one of the great hallmarks of the transformation has to say this is really available to everybody at reasonable prices.

And that's been our one of our key success and lightning.

Got it that makes sense.

And it's my understanding and owners of your Skymiles debt are getting access to quarterly updated financial disclosures for Skymiles similar to those you provided when you marketed the transaction. It's my understanding that equity investors are not so my question for you is how is that fair how do you expect your equity investors to make and.

Fully informed decision on your staff and they're not being provided with update and disclosures for and for what you guys have crews and is your most valuable assets. Thank you.

Hi, Joe other Gary take on because it's closer to the financial disclosures, but I will say well see a relative program is a very important assets and most important asset or other people Gary.

Yeah, Joe we too we are providing some disclosures to and you.

You know to those debt holders as you described.

You know look I think we agree with you know some of the sentiment that you have expressed over time, we see the value there I think Glen did a good job growth.

Articulating how well on it.

It is holding up we've been on a path to provide more information there I think you'll have to.

Be a little forgiving leads and if you've had a lot on our mind and I think you can expect us to to continue down that path for the reason for the very same reason that I think you've been asking for asking about it because we do see the value there.

Thank you.

And now we will go to and Greg Konrad of Jefferies.

Good morning, and thank you.

Just to follow up on on some of the past questions I mean, and I guess and in terms of the competitive environment. Your yields have held up relatively well you know and lay down two or 3% on a relatively short booking curve will reduce corporate travel and how do you think about that potential trajectory for yield to view the booking curve normal.

Rises and some of the corporate travel advertising and is there opportunity to kind of be above where you were and 2019.

I think there's always opportunity to be above where we were and 29 key and that's clearly our goal and the you know and if it could be or short term goal. It couldn't be better I think it's more medium to a long term goal, but our I think we are going to come out with a higher preference than we've ever had and net higher preference it will drive a higher demand so.

Which should enable us to to work on yields as we come out for the back end of this so I think it goes back to how other people react to the pandemic and how to Delta is brand come through to us and I think from all the research we've done from all the data that we see that our brand has never been stronger and demand for our products and services has never been stronger.

On a relative basis and they're planning on capitalizing on that on the back end of this.

Thank you and then just one quick follow up just cleanup question I mean, how should we think about refinery sales for the year any change versus what you saw on Q4.

Why don't you are you referring to the third party sales is that what you're asking yeah, sorry third party.

Yes.

The phenomenon and you're seeing and the third party sales is.

And you know anything we produce and do not exchange for jet fuel, we sell to third parties on.

Obviously with our jet consumption being weighed down we've had a lot more of those sales to third parties.

So that is going to likely trend with you know, how we rebuild our network and and how much jet fuel, we're consuming and do think it's important to point out.

That those sales have no margin and if you look and some of the reconciliations in the back of the release.

We'll see that those are offset dollar by dollar for dollar rather on the cost side. So they're all wrapped into the economics of the refinery, but you should expect those to start trending down as our consumption and picks back up and more exchange and more for on a use.

Thank you.

And next we will go to Mike Bloomberg and like Japan.

Hey, good morning, everyone Hey on.

Hey, and I just want to go back on the you know the mandatory current cash for international rivals are you aware of any potential carve out senior like for those 20 for 48 hours and round trips and if you would have on vaccine can be actually it and would you be precluded from actually having to provide net.

Cash non interest.

Hey, Mike is that you know, we're still working through the the guidance from the CDC, Okay solving for.

We have.

Mentioned I personally excited and number of conversations doctorate feel on this.

As we've mentioned the needs to consider some waivers in a unusual circumstances, where for example covered.

Touching resources are not available.

If there are problems on relatively short term as you mentioned and travel. So we're working through the on the implementation details I think it's absolutely the right thing to do for the long term for our industry, but it's kind of it's going to create some some short term hiccups.

Okay, Great and then just a question to Glen and and possibly Peter Carter I know day.

And you had certain deferred on chip and the American and I'm, what I'm more interested and it looks like as part of that transaction. It does look like that there's going to be a slot and nice divestiture and that would obviously be on at airports that are near and Dear to Delta are those slots that from what you now are they are they slot set on.

The new entrants can bid on or other slots net all carriers can debt on and if that's the case and that's something that would interest delta. Thank you. Thank you.

So.

And he is he has not made it clear what the rules on par with respect to those slots for that I think.

But just to say that we are deserving VCA without question because of our market position.

And.

Very good yeah yeah.

And now we will go to David for any other Bernstein.

Hey, good morning, I'm. So a entered Derek did you talk to how I'd be moved for these next two phases, how on one discretionary costs and they come back and then I'm wondering if on.

There's going to be a need for to prime the pump a little bit on the cost side and prepare for what should be a pretty pretty.

For February Affectations, Paul.

Well there there will be some David we expect you know for example to have for reactivation expenses around maintenance and aircraft.

Yeah, you know through through the remainder of the year. So we expect that pace to continue.

And I'm not sure I quite heard of the non within discretionary or non discretionary expense and watch it were assets.

Yeah, I imagine you guys have been curtailed a lot of discretionary expense, whether its marketing or actually development or system to work or training programs or have you I'm. Just wondering if there's if there's going to be and need to step up that spending on their head air from recovery here and the and interviews from us.

Well I eat and prefer to think of it and not to pick it up for recovery, but I you know, we will have and need to.

To revisit some of the things that we've done.

You know for you if you take a look David at a what we're pointing to in terms of incremental costs that we lever as we leverage the network.

It does look different than what we saw on the second half of 2020 and one of the reasons as you know, we do expect to have pressure and pockets.

I have to be really mindful and balance some of those needs with the realities of the business because we are determined here.

To turn the.

To turn a profit equation around and see the premiums for leases with Black Inc. This year.

Hey, David This has on the family let me expound on that just a bit we are or whether it's maintenance expenses, we've got our our staffing levels and back to where we need to be starting first of this year, we for stewards of pay and turns or some of the the as it did take us to voluntary pay cuts that that are.

And poised took last year, so there's a meaningful step up already and the numbers is good for you for the cash burn in the first quarter to get ready for the recovery. So I'm very comfortable with where we sit up in fact, if we wanted to continue to run the same cost structure and for go you know some of those Ics.

Spencer if you see our cash burn coming down you know you have relatively meaningful levels and in the first quarter as well, but we maintain the same level of cash burn to get ready for the for the spring.

That's helpful from and then maybe just as a follow up you noted in the release the amount of Capex that's come out of the budget over the next couple of years I'm wondering if there's been a discussion at the board level about goalposts or guidepost for profitability and before we go back to renewing the fleet and artists.

And David again, I think that questions a little premature Ah, yes, we talk about that topic with the board. We also have made any determinations quite yet on the goal. We have is the board is very much. What we said to you is that we get to our goal is to get to a cash breakeven and position for the second quarter and a return to.

Profitability and.

Starting in the third quarter.

Alright rank the yield on the pace of that of that recovery over the next couple of years, obviously, we used to source and looked at it yet.

Okay. Thanks.

I think we're going to have time for one more question for me and if you can see that.

And that question will come from and channel Seattle of Credit Suisse.

Hey, good morning, everyone and thanks for the time and Glen just a quick clarification question regarding your annual corporate travel survey, 140% of responded and say fully recovered by 2022 and they will find it and their business is being fully recovered by 2022 other corporate travel budget.

And we were covered by that or do they feel one other thing.

Their corporate travel being backed by that.

Got it okay understood that's helpful and and.

And my second question, just it's clear that you're not seeing anyone and nation and the booking curve yet at this stage, but so what about quick sort of looks you know just stopping short of actual bookings, but is there any data like that that you're tracking analytics on a website or something like that and provide the basis and for your recovery out like me on Q1, and and sort of saying that you have a good shot a piano break even.

Q3, or do you just hopeful that that's going to be the case is there are there any analytics that you can share with us and then maybe give you a better.

Indication. Thank you for the time, perhaps.

Absolutely corporate looks are actually doing quite well, we're 40% on.

For for quarter over quarter, where we were last quarter in terms of looks and look to book is very low. So people are looking for aspiring for travel and they're just not ready to commit yet and I think that's what really gives us that a sense that there will be on which people feel comfortable were going to travel and that work will turn into a quick turn into a booking.

And so we are monitoring that very very carefully and.

We're looking forward to the opportunity to serve these customers as they come back.

Thanks for that color.

And that's going to wrap up the analyst portion of the call I will turn it over to can they start chief marketing and Communications officer.

Well good morning, everybody I want to thank all other members of the media who gathered on the call today. Your interest in Delta is not only appreciate it it's never been greater and we're very pleased today to provide you with an expanded period of time.

Ted could make sure that we address your questions I'd also like to thank Ed and and Glen and and members of the Delta leadership Committee all of whom are on this call for their involvement as we turn the page on 2020 and and optimistically look at 2021. So cathie. If you could please review the instructions and mentioned to everyone how day.

On a go about asking a question.

Certainly and again, ladies and gentlemen, and that is star one on your telephone keypad and she'd like to ask a question and then as a reminder, if you're on a speakerphone. Please pick up and has had on the pricing assumptions for that signal to reach our system and again that is star line to ask a question and we'll pass on line African and need to take now.

And we'll go first and.

She is Allison and tighter.

On the Wall Street Journal.

And.

And I was wondering if you could talk a little bit about moving from an operational and she sees around the holidays, and Thanksgiving and Christmas and White looking back and Steve We're having a very positive that's a bad and and you know what if any changes you've made to prevent the same sort of thing from happening again.

Sure Alley, we.

Certainly had a much better Christmas holidays, and the other Thanksgiving break other and other factors going on on in the a and the staffing levels of the company with all the changes that we had implemented and you couple that with with Covance and some of the exposures and to everyone seems to be.

Yes, and no fly.

Capability, as well and our staff and which came in and we learn from that for Thanksgiving, we made certain but some pretty.

Yes, and changes in December in terms of getting the schedule fine tuned to add to it to anticipate that and we were really really good shape and then we got hit with a massive storm and many assets on the 23rd of December, which which cost us and probably a couple of hundred cancels incremental.

Cancels over that of the next couple of day timeframe, which would show what's concerning but on for unavoidable. Unfortunately for the most important thing and all that is one day the delta people and I know there were some bloggers.

Bloggers out there wondering whether the delta pilots weren't doing everything they can to delta pilots were amazed and through that both holiday periods, and showing up and and getting getting the place going and giving up their holidays and there are there.

Their time away.

And is to help the company outside and nothing to do with pilot staffing at all.

Is the.

The other thing was the.

Number of customers, who may have been canceled line, but it's higher than we've been expecting the vast majority of the people that to their destination within hours of their lives and I said for the time. So the team did a very very good job and and that issue was pretty much older with by the 26 27.

And that really manifest itself and the record net promoter score we had and the December time period. So.

I've mentioned, despite the fact that we had to cancel some flights our average weight and this was not very late versus the original itinerary and our customers are over the holiday period, we are quite satisfied posting record high net promoter scores.

And just a follow up and is.

Is there anything you can share what about what you're seeing in terms and you know crew member and actually because point and I know that the pilots and said they saw from big increases and covenants actions you know in a late fall and just wondering if you're still seeing that or if that's sort of been brought under control.

Well ill via word for a microcosm of the other country and as the pandemic has accelerated over the course for the last few months share to accelerate across all on employers as well, but no our team's doing road other net seeing it spread within the company I Wonder I won't it's on portraits and community.

And as were the where people are getting sick. So I'd say every every work category of other companies experiencing an increase and exposures as we've all its and over the last couple of months.

Thank you.

And now we will go to chase he sees came out for <unk>.

Hi, good morning.

I'm wondering if you think well see coping 18 testing and being required for domestic flight.

Tracey I don't think so.

Okay and.

Hi, just to follow up with itself and questions. I said, we expect to see and deal with selling assets here for a 737 net corridor.

From a we were not going to speculate on that.

Okay. Thank you.

All right.

And now we'll go to clean air where should be a financial times.

Hi, and they've got since then.

Going its own nest and people, who are not able to fly and the airline and I was just wondering if the company had any visibility into other more names like the attitude that set our own no silence based on assets capital attacks.

Okay.

So are you yet and.

For the last part was little Garbled is your question. Please.

Good are we adding increased numbers too or no for this based on federal information.

I was asking whether it and was asking whether delta knows it's names are being added to the federal and their filings based on the capital attacks.

We certainly know that the T. assai is looking very carefully at the as those that were.

In the Capitol building, the writers and we.

We are working closely with them and I do anticipate that for US is here say.

Yeah.

Is able to identify individuals who have people attitude and no closets no question Doug.

Thank you.

And next we have Leslie just says a CNBC.

Hi, good morning, everybody on the E.

You mentioned that there was a lot of pent up demand and also supporting and point for the frequent Flyer program and it's a lot of people try to redeem and why is that something that you're expecting based on certain state and other things and then I'll say that you know the recovery second half and here where are you seeing demand and are those sort of outdoor and especially.

This and things that May save a show illustrate then and other whereas at the net.

Inc.

Well clearly leisure destinations are at the forefront other recovery right now and I think it doesn't matter, whether or not it's a beach or a mountain view, that's where people are headed at this point and the recovery.

And then your second question was.

I was wondering Oh wait so and the other airport and yeah, what happens every day.

And we're seeing I think they will change from the game and we are we are happy and really have but our and different whether or not people, who are booking are using points or whether or not they're using a actual dollars or whether you're easy credit. What we are anticipating is a they're all of those will increase and we have plenty of capacity.

For the two out to meet that demand as we had for the.

Second half of 21, so we're hoping that all of the above happens yeah.

Hey.

From talking to American Express are good partners. There, it's clear that people place great value on their on their loyalty points with delta and like to see the values growth overtime and so while they fit into that and then like we've recently seen reductions down for points because you know.

Flying levels are down, but they haven't stopped the spending on the card on co brand card is as good if not better.

Better than almost any other products and current Amex has so it has great appeal and we expect its not going to be a out to be a run on the bank type situation that you are referring to.

Okay, and he took a job and word they and their ability and things like that day rate up. So if there is absolutely well.

So looking forward to that day.

Thank you.

[noise] and now we will go to a day they can't he says he did price.

Hi, real quick question on unless I missed it I had not for an update and a while on the number of people you have banned for not wearing face masks sort of current figure on that and any changes and cabin policies.

I think that number is north of 800 at this point David.

Okay, Okay for again.

And then how many of those are since last week Dino.

A number not a huge number but the number.

Yeah.

And now our question will come from and Kelly on many of which I see Atlanta Channel Constitution.

Hi, there and I'm going to ask about on profit sharing and with no profit sharing and the next month from 2020 results I was wondering on what impact do you think that may have on employees and satisfaction and also wondering if there's if you think there is a possibility and profit sharing a year from now.

Well I think everyone is aware of why there is non profit sharing and it and this year and I can tell you employee satisfaction debt, a very very high level I mentioned during the script Kelly that.

And we just were awarded this the seventh best employer by glass for glass doors and entirely.

Employee Dread and acknowledgment the company doesn't have any any input or any insight into that that's it's purely by employees talking about their employers. So if that gives you a sense for the sense and that the sentiment is very strong the volunteerism with the you know tens of thousands of people that have taken on pay leaves of assets.

It's over the year indicates that we've been mindful of the fact that there won't be a profit sharing payout and for providing added services and assistance around financial health and financial well being and and credit counseling and and other services to employees and they need it we're going to be ramping we have been ramping up and talking about it we're going to.

We continue to talk about it.

On a day on an ongoing basis going forward with other people, providing that support and relative to the next year's profit sharing I certainly hope will be a we'll be paying and it's hard to speculate and allergy to just on a couple of weeks into the year, but.

I'm hopeful that we'll be paying it.

Great I also heard from mentioned during the call so far about and value on connecting economics, but also the importance and point to point and some for cities I was wondering if.

If you expect how you'd expect Atlanta Hobbs role to be different going for it in terms of size and where their role in your networks.

Well clearly the size of Atlanta is relative to the size of demand and the United States as the world's largest hub.

It is a microcosm loved and global Arrow on demand. So we expected to recover as a as a and B Airlines and continues to recover the two things and I would say is and there were going to continue to work on average gauge, which I think is or something that's really important and there will be more details about the bigger or for.

Things were better products and services and so I think you'll see no departures get back to 2019 levels at some point and the future, but before that you'll probably see the enplanements start to rise dramatically and and use and really the gauge lever as much as the departure level. This is as you know on most valuable asset here.

And Atlanta, and we're very proud to to be a part of the Atlantic community and and it has led US and are you building on network so far.

Hi, Thank you so much.

Our next question will come from Ted beat Us for it.

Yes. Thank you for taking the questions I had a question for Glen.

First one right and when you said earlier Delta is ready when you are talking about when you come back are you talking about in terms of capacity or something else.

I think that when customers are what are wanting to fly on delta will be ready for that and no I know you're on.

I know you for a long time and I know you remember that slogan soils harkening back to a little bit of history, there with Delta.

So you're just saying you'll be ready, though you'll have that capacity suited for what you anticipate customers for one.

Correct.

And secondly, we've been talking a lot about the middle seats being empty and being up you said a powerful tool how are you measuring what the value. How can you tell that these are so valuable to their to your customers.

Revenue premiums have never been higher and so customers are valuing the delta difference and.

And I think that's how we're looking at that is when you look at our revenue production versus our competitors says despite having the least amount of selling on capacity our revenues and I've kept pace. So I think you know we're sitting there not only the higher share of corporate demand, we've ever had and although albeit on depressed levels, but on a real differentiator for anyone customers their share.

Moving to one quite also for something like this.

And you think that's due to middle seats being and these longer than other other Scott I think it from entire Delta difference clearly that's a piece of it.

But and then or whether or not it's the delta care standard whether or not as the delta people, which are really only a part of that but for a this is one component of ensuring that delta seen us for brand you want to associate with it.

All right. Thank you and I appreciate it.

And now we'll go to dawn gilbertson of USA today.

Hi, Good morning, I also had a question on your middle C. policy and and Glen I know you. Both said no decision has been made yet, but Glen your comment about and almost.

And the second sales at the middle seats will be a very powerful tool sounds to me at least like you are certainly moving toward and locking down on it.

That's a fair assumption for me can you talk to us about the timing on his decision. When one goes you decide whether they are blocked the on March 30 day.

Thanks, Don just from Don and this is as you know I would not say, that's a fair assumption and what we've said is that when the demand.

Returns, which is that next inflection point on.

That will inform our decision around.

What's the deal with the middle sales. So we've not made any any decisions or two on block and post post March though.

But you can you give us a sense of on your when really meant that the sales ended that's pretty standard I know the booking curve as you know for sure but.

Kind of optimistic about some oh, what do you make that decision and then next month and actually a weak for a couple of months and can you give us any sense on that please.

Although we continue to monitor on a regular basis, it's not imminent.

We have we have some other some bit of time that it's going to be informed by customer sensitive demand.

You know we have in addition, and this is what a lot of other just Olympics on our on other claims and confidence and travel relative to Colgate and that's simple formula. So yeah. It's it's not on a clue Oh poor line and result, there's a lot for has to go and so that we know that it's been a inc.

Okay and not be on me, but one of the important regions like Delta has been able to earn and continue to earn and even higher revenue premium during this past year than we historically had and so we want to be very very careful as to how we make that decision.

Thank you very much.

And now we will go to Kiss Edward restaurant.

Hi, Yes, and I was wondering if you could talk a little bit about the changes going on competitive environment or American Jetblue Alliance, the North East and then how that how you intend to respond to that.

No I think we're very confident in our products and services and we compete for all against both those carriers individually and I'm sure, we'll compete very well against them together so.

We have a we have a lot of confidence and our products and services in the northeast.

Okay and then there's also been from expansion and some of your focus cities of Raleigh Bear on Austin and Delta plan to to return there and see if there as well.

<unk> focus cities will be an important part of our Oh portfolio and moving forward and and we continue to work on.

On making sure that we have the right capacity and those cities other demand returns and so we're looking forward to demand continuing to return and and all of our focus for these.

Thank you.

And now we will go to Robert So could travel weekly.

Oh, Thanks for taking my call.

Simple question.

You see a C.D.C. given any indication I know that day for a Paul for.

So one and class day and there on your want to test things, we put in place, but for and exchange a rollback of travel ban on any indication of that.

Good day and that coming.

I didn't hear your your question I'm, sorry was was a big vertical could you repeat that we're having a hard time and some are communications this month.

Can you hear me a little better now.

Yeah.

Okay. So the question is any indication for sense from from the federal government and we do see that with.

With this blanket testing requirements for that there could be a rollback of of travel bans.

Which is something that yeah. They are all lines have called for.

And and also follow the other one other question if there's any sense that vaccines ultimately could be.

Included in the mix if you're vaccinated.

There really is testing requirements or could be and either or.

We're still working with the city to see on the specific testing strategy and and deployment or other.

This is something that we feel are delta indoors and or industry are similarly endorses.

We would like to see the travel restrictions lifted once the testing protocols are in place and that will be a decision by the new administration.

Is my understanding when they are when they take office and so but I think by having their testing protocols in place and then gives confidence to the regulatory authorities to search for lift for vans, which is why we endorse the testing that testing strategy.

Your question relative to vaccines, yes, obviously wants.

Vaccines are.

At scale, we would hope that that a vaccination evidence would we would oh, Rick is the supplant or the need to show a test result.

But of course, we're still work and would be authorities on that.

Okay. Thanks.

Happy we have time for one final question for the group. Please.

Certainly and that will come from and Dave If I make a business insider and.

[noise] paired on how are your thanks for the question.

I was just wondering what the phase and the three phase and the Glen and earlier.

You know what that timing in mind and before it was probably that you've gotten from your corporate travel and adult and still expecting.

Recovery to 20 machine revenue and travel levels and want me to work for the industry with the and I think it was 2023 or 2020 for add on and eighth grade is pretty.

Previously for testing or and got moved up pretty well.

And again I'm sorry, it was hard to hear the question, let me take a shot at it.

Good day, the information we shared on the call about corporate travel is this sentiment for getting from our own and customers. As you. As you are aware, we are the largest carrier with corporate travel amongst the other amongst the U.S. carriers. So I think we have it's probably some of the debt insights as we sort of why ATA or any other good day.

You know I don't know how they can come up with 2023 to 2020 for looks like but wouldn't place too much confidence and that well what are what our corporate travelers and corporate travel managers are telling us is that 50% expect it to be fully backed by 2023 and the other 50%.

Is largely on certain but we expect a meaningful amount of of of that traveled to the current as well.

Thanks, So there's no dose and have a forecast for them, but with her and to 20 minutes from trouble level.

For the numbers were comparing our 20 to 20 and I can travel volume just.

[laughter].

Thank you David with that we'll turn it over to Ed to make some final comments again. Thank you everybody for your time this one and [noise].

Well thanks, Tim just in closing I think you can all appreciate the 2020 was a difficult year, but we're on a a recovery path or we see that the start of it are beginning to crystallize here, particularly with the vaccine development and it's.

You've heard earlier.

From Glen and Gary I'm confident that we've got the foundation in place to return Delta is a revenue growth profitability and free cash flow generation and we're.

We're committed to keeping our culture intact, and our employees engaged and we'll continue to listen to our customers and put them first in order to further enhance their experience on delta increase their loyalty and drive affinity towards our brand.

We're very focused on innovation, which is allowing us not only to enhance the customer experience and drive efficiency, but also to attack the big challenges that still lie ahead for us will remain very focused on cost performance, we talked a lot about that during the call to ensure that the leisure led demand environment that that emerge as well.

Are you able to respond to it.

And finally, we're committed to reducing debt and strengthening our balance sheet and creating long term shareholder value.

And allowing our owners to participate and future upside without dilution, we have the very best employees in the industry and we're ready to say the strategy for it which gives me optimism confidence and our ability to thrive and emerge as the industry leader. So thanks again for joining us today and we look forward to speaking with you soon.

And that concludes today's conference we thank you for your participation today.

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