Q1 2024 Delta Airlines Inc Earnings Call

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Matthew: Good morning, everyone and welcome to the Delta Air lines March quarter 2024 financial results Conference call. My name is Matthew and I'll be your coordinator.

Matthew: At this time all participants are in a listen only mode until we conduct a question and answer session. Following the presentation.

Matthew: As a reminder, today's call is being recorded.

Matthew: If you have any questions or comments during the presentation. You May press star one on your phone it to enter the question queue at any time.

Matthew: I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations. Please go ahead. Thank.

Julie Stewart: Thank you Matthew good morning, everyone and thanks for joining us for our March quarter 2024 earnings call.

Julie Stewart: Joining us from Atlanta today are CEO, Ed Bastian, our president Glen Hauenstein, and our CFO, Dan Janky, Ed will open the call with an overview of Delta's performance and strategy and Glenn will provide an update on the revenue environment Danville.

Julie Stewart: Dan will discuss cost and our balance sheet. After the prepared remarks, we will take analyst questions. We ask you to please limit yourself to one question and a brief follow up so we can get to as many of you as possible. After the analyst Q&A, we'll move to our media question.

<unk> 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.

Julie Stewart: Factors that may cause such differences are described in our SEC filings. We'll also discuss non-GAAP financial measures all results exclude special items unless otherwise noted you can find a reconciliation of our non-GAAP measures on the Investor Relations page at IR Delta Dot com and with that I will turn the call over to Ed well. Thank you Julie and good morning, everyone. We appreciate you joining us today.

Edward H. Bastian: Earlier. This morning, we reported our March quarter results, posting pretax earnings of $380 million or <unk> 45 per share a 20% improvement over last year on revenue that was 6% higher and a new record for first quarter.

Edward H. Bastian: Free cash flow was $1 $4 billion and we delivered a return on invested capital nearly 14%, putting delta's returns in the top half of the S&P 500.

Edward H. Bastian: We are delivering industry, leading operational reliability kind of widen the gap to our competition.

Edward H. Bastian: Last summer, we made forward leaning investments in the operation and since then our teams have delivered operational performance that is among the best in our history with mainline cancellations down 85% setting New records for completion factor in both the fourth quarter and the first quarter.

None: I'd like to sincerely. Thank Delta is 100000 people for your dedication professionalism and hard work in delivering these outstanding results.

None: In February we recognize the efforts of our people with one $4 billion in profit sharing more than the rest of the industry combined and continuing delta's long standing philosophy to reward industry, leading performance with industry leading compensation.

Matthew: Good morning, everyone, and welcome to the Delta Airlines March quarter 2024 financial results conference call. My name is Matthew, and I'll be your coordinator.

None: Reflecting our people first culture Forbes ranked delta the fifth best large employer in America.

Matthew: 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. If you have any questions or comments during the presentation, you may press star 1 on your phone to enter the question queue at any time. I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations. Please go ahead.

None: And Delta was recently named the 2024 global airline of the year by Air Transport World for our outstanding commitment to safety operational performance and premium customer service.

None: Well airline travel and transportation is what we do it's the experiences on Delta that set us apart as a leading consumer brand and wide Delta was recognized as number 11. Unfortunately list of the world's most admired companies.

Julie Stewart: Thank you, Matthew. Good morning, everyone. And thanks for joining us for our March quarter 2024 earnings call. Joining us from Atlanta today are CEO Ed Bastian, our President Glen Hauenstein, and our CFO Dan Janki. Ed will open the call with an overview of Delta's performance and strategy, and Glen will provide an update on the revenue environment. Dan will discuss costs and our balance sheet. After the prepared remarks, we'll take analyst questions. We ask you to please limit yourself to one question and a brief follow-up so we can get to as many of you as possible.

Julie Stewart: And after the analyst Q&A, we'll move to our media questions. 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 actual results to differ materially from the forward-looking ones. Some of the factors that may cause such differences are described in Delta's SEC filing.

Exciting customer facing enhancements are on the near horizon, including the opening of new Delta, one lounges, and JFK, Los Angeles and Boston. The continued introduction of modern and fuel efficient aircraft, new premium cabin service offerings upgrades to the fly Delta App and the international.

None: Spansion of fast free Wi Fi across our fleet.

The rollout of Wi Fi and Delta same continues to be a tremendous success.

Since launching last year customers have logged more than $45 million free streaming quality sessions on board and millions have joined the Sky miles program through this channel reckon.

Julie Stewart: We'll also discuss non-GAAP financial measures, and all results exclude special items unless otherwise... You can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com. And with that, I'll turn the call over to Ed. Well, thank you, Julie, and good morning, everyone.

None: Recognizing our investment to ensure the future of travel is connected we took the number two spot in the travel category a fast company's list of the most innovative companies the only airline to be recognized in the ranking.

Edward H. Bastian: We appreciate you joining us today. Earlier this morning, we reported our March quarter results, posting pre-tax earnings of $380 million, or 45 cents per share, a 20 percent improvement over last year on revenue that was 6% higher and a new record for the first quarter. Pre-cash flow was $1.4 billion, and we delivered a return on invested capital of nearly 14%, putting Delta's returns in the top half of the S&P 500. We are delivering industry-leading operational reliability and have widened the gap with our competition. Last summer, we made forward-leaning investments in the operation, and since then, our teams have delivered operational performance that is among the best in our history, with mainline cancellations down 85%, setting new records for completion factor in both the fourth quarter and the first quarter.

None: Loyalty to our brand has never been stronger.

None: We continue to set new records with our remuneration from American Express our most important commercial relationship and are well on our way to our long term target of $10 billion.

None: On February the first we announced enhanced and refresh benefits for our Delta Skymiles American Express cards, providing more direct value and the customer response has been very positive.

None: Turning to our outlook with strong first quarter performance and visibility into the strength of summer travel demand. We remain confident in our full year guidance for earnings of $60, 6% to $7 per share free.

None: Free cash flow of $3 billion to $4 billion and leverage of two five times. The three main guideposts that we shared with you in January.

Edward H. Bastian: I'd like to sincerely thank Delta's 100,000 people for your dedication, professionalism, and hard work in delivering these outstanding results. In February, we recognized the efforts of our people with $1.4 billion in profit-sharing, more than the rest of the industry combined, and continuing Delta's long-standing philosophy of putting people first. Reflecting our people-first culture, Forbes ranked Delta the fifth best large employer in America, and Delta was recently named the 2024 Global Airline of the Year by Air Transport World for our outstanding commitment to safety, operational performance, and premium customer service. Well, airline travel and transportation is what we do.

None: For the June quarter, we expect to deliver the highest quarterly revenue in our history of mid teens operating margin and earnings of $2 20 to $2 50.

None: Per share.

None: Our forecast for pre tax profit of approximately $2 billion is on par with 2019, and just shy of last year due to higher fuel prices.

None: Demand continues to be strong and we see a record spring and summer travel season, with our 11 highest sales days in our history all occurring this calendar year.

Spending on services recently surpassed goods for the first time in five years and there is further runway to return to their long term trends.

None: Delta's core consumers are in a healthy position and travel remains a top purchase priority <unk>.

Edward H. Bastian: It's the experiences on Delta that set us apart as a leading consumer brand and why Delta was recognized as number 11 on Fortune's list of the world's most admired companies. Exciting customer-facing enhancements are on the near horizon, including the opening of new Delta One lounges in JFK, Los Angeles, and Boston. The continued introduction of modern and fuel-efficient aircraft, new premium cabin service offerings, upgrades to the FlyDelta app, and the international expansion of fast, free Wi-Fi across our fleet. The rollout of Wi-Fi and Delta Sync continues to be a tremendous success. Since launching last year, customers have logged more than 45 million free streaming quality sessions on board, and millions have joined the SkyMiles program through this channel, recognizing our investment to ensure the future of travel is connected.

None: Generation will shifts and evolving consumer preferences are driving secular growth in premium experiences and business travel demand has taken another meaningful step forward this year with growth accelerating into the mid teens over last year.

None: When you put this level of demand strength together with the industry's increased focus on improving financial returns. This may be the most constructive backdrop that I've seen in my airline career.

None: Our industry, leading performance continues to demonstrate the strength of Delta is differentiated brand and returns focused strategy.

None: With our disciplined approach to capital investment and focus on free cash flow Delta is exceptionally well positioned to further strengthen our balance sheet and deliver significant shareholder value.

None: In closing the momentum in the business continues to build we are focused on delivering excellent reliability elevating the customer experience and improving efficiency across the company to support growth in our earnings and cash flow.

Edward H. Bastian: We took the number two spot in the travel category, a fast company's list of the most innovative companies, the only airline to be recognized in the rank. Loyalty to our brand has never been stronger. We continue to set new records with our remuneration from American Express, our most important commercial relationship, and are well on our way to our long-term target of $10 billion. On February 1st, we announced enhanced and refreshed benefits for our Delta SkyMiles American Express cards, providing more direct value, and the customer response has been very positive.

None: I am excited for Delta's opportunities ahead, and we will talk more about that and provide new long term financial targets at our Investor Day, which we are scheduling for November 19th and 20th in New York City. Please put that on your calendar.

None: You again and with that let me hand, it over to Glenn for more details on our commercial performance.

Glenn: Thank you Ed and good morning, I want to start by thanking our employees for providing the best service and reliability in the industry to our customers every single day.

Edward H. Bastian: Turning to our outlook, with strong first-quarter performance and visibility into the strength of summer travel demand, we remain confident in our full-year guidance for earnings of $6 to $7 per share, free cash flow of three to four billion dollars, and leverage of two and a half times the three main guideposts that we shared with you in January. For the June quarter, we expect to deliver the highest quarterly revenue in our history with mid-teens operating margin and earnings of $2.20 to $2.50 per share. Our forecast for pre-tax profit of approximately $2 billion is on par with 2019 and just shy of last year due to higher fuel prices. Demand continues to be strong, and we see a record spring and summer travel season with our 11 highest sales days in our history all occurring this calendar year. Spending on services recently surpassed goods for the first time in five years, and there is further runway to return to their long-term trend. Delta's core consumers are in a healthy position, and travel remains a top purchase priority.

Glenn: 2024 is off to a great start and we're delivering on our commercial priorities to optimize our network grow higher margin revenue streams and invest in our future.

Glenn: Revenue for the March quarter increased 6% year over year to a record $12 6 billion on capacity growth of six 8%.

Glenn: This result is at the high end of our initial guidance with upside driven by industry, leading operational performance and strength in close in bookings.

Glenn: Since the start of the year, we've seen a 16 acceleration in business travel managed corporate travel sales grew 14% over the prior year with technology consumer services and financial services, leading that momentum.

Glenn: We delivered positive unit revenues in our two largest entities domestic and trans Atlantic, reflecting the continued optimization of our network.

Glenn: Total unit revenue growth improved three points sequentially to down 7%, including nearly a one point headwind from cargo in MRO.

Domestic revenue grew 5% with record March quarter unit revenues up 3% over the prior year.

Edward H. Bastian: Generational shifts and evolving consumer preferences are driving secular growth in premium experiences, and Business Travel Demand has taken another meaningful step forward this year, with growth accelerating into the mid-teens over last. When you put this level of demand strength together with the industry's increased focus on improving financial returns, this may be the most constructive backdrop that I've seen in my airline career. Our industry-leading performance continues to demonstrate the strength of Delta's differentiated brand and returns-focused strategy. With our disciplined approach to capital investment and focus on free cash flow, Delta is exceptionally well positioned to further strengthen its balance sheet and deliver significant shareholder value. In closing, the momentum in the business continues to build.

Glenn: More than seven point improvement from Q2, <unk> reflect strong demand trends improving industry backdrop.

Glenn: International revenues grew 12% on a unit revenue decline of 3% as unit revenue growth in the Trans Atlantic was muted by capacity investments from the continued rebuild of our Aladdin and Pacific franchises.

Glenn: Diverse high margin revenue streams generated 57% of total revenue differentiating delta and underpinning industry, leading financial performance.

Glenn: Premium revenue was up 10% over the prior year and we have runway ahead as we continue adding more premium seats to our aircraft.

Glenn: Proving our retailing capability and further segmenting our products.

Total loyalty revenue grew 12% on continued strength in the American Express co brand portfolio with record quarterly renew Mauritian of $1 7 billion.

Edward H. Bastian: We are focused on delivering excellent reliability, enhancing the customer experience, and improving efficiency across the company to support growth in our earnings and cash flow. I'm excited for Delta's opportunities ahead, and we'll talk more about that and provide new long-term financial targets at our investor day, which we are scheduling for November 19th and 20th in New York City. Please put that on your calendar. Thank you again.

Glenn: Following the refresh and co brand benefits, we saw a card applications reached new records as we are seeing the highest premium acquisition mix in our program's history.

Glenn: Turning to our outlook consumer demand is robust and premium trends remained strong.

Glen W. Hauenstein: And with that, let me hand it over to Glen for more details on our commercial performance. Thank you, Ed. And good morning.

Glenn: The outlook for corporate travel is positive 90% of companies in our recent survey intend to maintain or increase travel volumes in <unk>, putting us back on track to deliver record corporate revenues in the back half of this year.

Glen W. Hauenstein: I want to start by thanking our employees for providing the best service and reliability in the industry to our customers every single day. 2024 is off to a great start, and we're delivering on our commercial priorities to optimize our network, grow high-margin revenue streams, and invest in our future. Revenue for the March quarter increased 6% year over year to a record $12.6 billion on capacity growth of 6.8%.

Glenn: For the June quarter, we expect revenue growth of 5% to 7% on capacity growth of 6% to 7% with unit revenues flat to down two from last year's very strong performance.

Glenn: Similar to the March quarter, <unk> faces a headwind from the normalization of travel credits.

Glen W. Hauenstein: This result is at the high end of our initial guidance, with upside driven by industry-leading operational performance and strength in close-in bookkeeping. Since the start of the year, we've seen a sustained acceleration in business travel. Managed corporate travel sales grew 14% over the prior year, with technology, consumer services, and financial services leading that momentum.

Glenn: Domestically, we expect unit revenues to be flattish over prior year with growth focused on restoring our core hubs where departures in seats are not yet fully restored.

Glenn: The final stage of our core hub restoration will be the full return of regional flying pilot.

Glenn: Pilot hiring has stabilized increasingly capacity, we expect to fly over the summer.

Glenn: We expect progressive improvement through 2025, drawing driving higher asset utilization and improving our profitability.

Glen W. Hauenstein: We delivered positive unit revenues in our two largest entities, domestic and transatlantic, reflecting the continued optimization of our network. Total unit revenue growth improved three points sequentially to down 0.7%, including nearly a one point headwind from cargo and MRO. Domestic revenue grew 5%, with record March quarter unit revenues up 3% over the prior year. The more than seven point improvement from 4Q to 1Q reflects strong demand trends and an improving industry backdrop. International revenues grew 12% on a unit revenue decline of 3% as unit revenue growth in the transatlantic was muted by capacity investments from the continued rebuild of our Latin and Pacific franchises.

Glenn: In the Trans Atlantic we are looking forward to another strong summer with record revenues <unk> unit revenues are expected to be similar to that of last year as we locked record performance and benefit from the healthy demand for our premium cabins and improved corporate trends.

Glenn: In Latin America profitability remains solid unit revenues are expected to be down double digits due to pressure in shortfall leisure markets.

Glenn: These markets are expected to see healthy improvements in the second half of the year as supply and demand comes back into balance.

Glenn: Our flying into deep South America, we are very pleased with the results we are increasing capacity about 40% with minimal impact to unit revenues as we continue to deepen our ties with our JV partner a lot Tom.

Glen W. Hauenstein: Diverse high-margin revenue streams generated 57% of total revenue, differentiating Delta and underpinning industry-leading financial results. Premium revenue was up 10% from a prior year. And we have runway ahead as we continue adding more premium seats to our aircraft, improving our retailing capabilities, and further segmenting our product. Total loyalty revenue grew 12% on continued strength in the American Express co-brand portfolio with record quarterly remuneration of $1.7

Glenn: We expect Pacific unit revenues to be in line with the prior year on 30% growth in capacity driven by a strong demand for Korea, and Japan offsetting lower unit revenues in China.

Glenn: Profitability is expected to set a record as we continue to harvest the benefits of our multi year restructuring.

None: In closing I'm pleased with how we have started 2024.

None: Delta is continuing to lead on all fronts with industry, leading margins and returns highlighting the strength of our trusted brand and differentiated commercial strategy.

Glen W. Hauenstein: Following the refreshed co-brand benefits, we saw card applications reach new records as we are seeing the highest premium acquisition mix in our program. Turning to our outlook, consumer demand is robust, and premium trends remain strong. The outlook for corporate travel is positive.

None: And with that I'd like to turn it over to Dan to talk about the financials, great. Thank you Glenn and good morning to everyone for the March quarter, we delivered pretax income of $380 million.

Daniel Janki: An improvement of $163 million over last year earned.

Earnings of <unk> 45 per share was at the upper end of our guidance is great operational performance and strong demand more than offset higher than expected fuel prices.

Glen W. Hauenstein: 90% of companies in our recent survey intend to maintain or increase travel volumes in 2Q, putting us back on track to deliver record corporate revenues in the back half of this. For the June quarter, we expect revenue growth of 5% to 7%, on capacity growth of 6% to 7%, with unit revenues flat to down two from last year's very strong performance. Similar to the March quarter, 2Q faces a headwind from the normalization of travel credit. Domestically, we expect unit revenues to be flattish over the prior year with growth focused on restoring our core hubs, where departures and seats are not yet fully restored. The final stage of our core hub restoration will be the full return of regional flights. Pilot hiring has stabilized, increasing the capacity we expect to fly over the summer.

Daniel Janki: Operational excellence is central to Delta's brand promise and I couldnt be prouder of how our teams are delivering record reliability for our customers.

Daniel Janki: A strong completion factor drove a one point of higher capacity and non fuel unit cost favorability.

Daniel Janki: Non fuel CASM was one 5% above last year.

Daniel Janki: And ahead of guidance.

Daniel Janki: Fuel prices averaged $2 76 per gallon, 16% higher than the midpoint of our guidance range.

Daniel Janki: The the refinery provided a <unk> <unk> benefit generating a profit of $49 million.

Daniel Janki: This was down $173 million from last year and more normalized refining margins.

Glen W. Hauenstein: We expect progressive improvement through 2025, driving higher asset utilization and improving our profitability. In the transatlantic, we are looking forward to another strong summer with record revenues. 2Q unit revenues are expected to be similar to the last year as we lock in record performance and benefit from the healthy demand for our premium cabins and improved corporate trends. In Latin America, profitability remains solid. Unit revenues are expected to be down double digits due to the pressure and decline in leisure markets.

Daniel Janki: Fuel efficiency was one 9% better than last year.

Daniel Janki: Benefiting from the continued renewal of our fleet and running a strong operation.

Daniel Janki: Operating margin of five 1% was a half point higher year over year.

Daniel Janki: Our pre tax margin improved over a point.

Daniel Janki: Benefiting from reduced interest pension expense and higher earnings from our equity investments.

Daniel Janki: We generated free cash flow of $1 4 billion. This was after paying $1 4 billion and profit sharing to our employees and investing $1 1 billion into the business.

Daniel Janki: These markets are expected to see healthy improvements in the second half of the year as supply and demand come back into balance. Our flying into deep South America, we are very pleased with the results. We are increasing capacity by about 40% with minimal impact on unit revenues as we continue to deepen our ties with our JV partner, Latame. We expect Pacific unit revenues to be in line with the prior year on 30% growth in capacity, driven by strong demand for Korea and Japan, offsetting lower unit revenues in China. Profitability is expected to set a record as we continue to harvest the benefits of our multi-year restructuring. Overall, I'm pleased with how we have started 2024. Delta is continuing to lead on all fronts, with industry-leading margins and returns highlighting the strength of our trusted brand and differentiated commercial strategy. And with that, I'd like to turn it over to Dan to talk about the financials. Great. Thank you, Glen, and good morning to everyone. For the March quarter, we delivered pre-tax income of $380 million, an improvement of $163 million over last year.

Daniel Janki: Debt reduction remains a top priority our leverage ratio improved to two nine times during the quarter, we repaid $700 million of debt, including $400 million of scheduled maturities and $300 million of additional debt initiatives.

Daniel Janki: We expect to repay at least $4 billion of debt this year and continue to be opportunistic and accelerating debt reduction.

Daniel Janki: We are currently investment grade rated at Moody's.

Daniel Janki: And double B plus at both S&P and Fitch with all agencies now on positive outlook following updates from Fitch and Moody's during the quarter.

Daniel Janki: Moving to the June quarter guidance combined with our outlook for topline growth, we expect an operating margin of 14% to 15% with earnings of $2 20 to $2 50 per share.

Daniel Janki: Earnings of 45 cents per share was at the upper end of our guidance as great operational performance and strong demand more than offset higher than expected fuel prices. Operational excellence is central to Delta's brand promise, and I couldn't be prouder of how our teams are delivering record reliability for our customers. A strong completion factor drove a one point of higher capacity and non-fuel unit cost favorability. Non-fuel chasm was 1.5% above last year and ahead of guidance. Fuel prices averaged $2.76 per gallon, $0.16 higher than the midpoint of our guidance range.

Daniel Janki: Fuel prices are expected to be $2 70 to $2 90 per gallon, including a <unk> <unk> contribution from the refinery.

Daniel Janki: At the midpoint of this range our all in fuel price is expected to be over 10% higher than last year.

Daniel Janki: Non fuel unit costs are expected to be approximately 2% higher than last year consistent with our full year outlook of low single digit.

Daniel Janki: Growth is normalizing and we've entered a period of optimization with a focus on restoring our most profitable core hubs and delivering efficiency gains across the enterprise.

Daniel Janki: The investments we made in fleet health and reliability in the second half of 2023 are paying off.

Daniel Janki: Supporting industry, leading operational performance.

Daniel Janki: As we discussed with you in January.

Daniel Janki: The refinery provided a $0.05 benefit, generating a profit of $49 million. This was down $173 million from last year on more normalized refining margins. Fuel efficiency was 1.9% better than last year, benefiting from the continued renewal of our fleet and running a strong operation. Operating margin of 5.1% was a half point higher year over year. Our pre-tax margin improved over a point, benefiting from reduced interest, pension expense, and higher earnings from our equity investment. We generated free cash flow of $1.4 billion.

Daniel Janki: These investments are expected to continue through 2024.

Daniel Janki: As we complete and elevated volume of heavy airframe and engine checks, while managing through industry wide supply chain constraints.

Daniel Janki: The intensity of hiring and training has moderated.

Daniel Janki: The teams have good momentum and delivering on our efficiency goals for the year.

This will help fund the investment in our people and our operations and the customer experience that support our revenue premium.

Daniel Janki: In closing, we continue to be confident in our full year outlook of earnings.

Daniel Janki: Six to $7 per share.

Daniel Janki: And free cash flow of $3 to $4 billion.

Daniel Janki: Our industry, leading operational and financial performance as a result of the hard work and dedication of the Delta people.

Daniel Janki: This was after paying $1.4 billion in profit sharing to our employees and investing $1.1 billion into the business. Debt reduction remains a top priority. Our leverage ratio improved to 2.9 times. During the quarter, we repaid $700 million of debt, including $400 million of scheduled maturities and $300 million of additional debt initiatives.

None: I'd like to thank each of them for what they do every day.

None: With that turn it back to Julie for Q&A.

Julie Stewart: Dan Matthew can you please remind the analysts how to queue up for questions first.

Julie Stewart: First analyst question from Duane <unk>.

Julie Stewart: Certainly and at this time, we'll be conducting a question and answer session. If you have any questions or comments. Please press star one on your phone at this time, we do ask that we're posing your question. Please pickup your handset if youre listening on speaker phone to provide optimum sound quality we.

Daniel Janki: We expect to repay at least $4 billion of debt this year and continue to be opportunistic in accelerating debt reduction. We are currently investment grade rated at Moody's and Double B Plus at both S&P and Fitch, with all agencies now on a positive outlook following updates from Fitch and Moody's during the quarter. Moving to the June quarter guidance, combined with our outlook for top line growth, we expect an operating margin of 14 to 15% with earnings of $2.20 to $2.50 per share. Fuel prices are expected to be $2.70 to $2.90 per gallon, including a $0.10 contribution from the refinery.

Julie Stewart: We do ask that all Q&A participants please limit to one question and one follow up question and then reenter the queue.

Julie Stewart: Once again, if you have any questions or comments. Please press star one on your phone.

Julie Stewart: First question is coming from Duane <unk> from Evercore ISI. Your line is live.

Duane: Hey, good morning, Thank you.

Duane: Just on the improved cost execution.

Duane: You just touched on it in the script, there, Dan, but but can you speak to maintenance expense.

Duane: The outlook relative to your expectations.

Duane: The tone sounds like you are turning a corner on maintenance and how do you think about that line into the second half and perhaps into next year.

Daniel Janki: At the midpoint of this range, our all-in fuel price is expected to be over 10% higher than last year, and non-fuel unit costs are expected to be approximately 2% higher than last year, consistent with our full year outlook of a low single digit. Growth is normalized, and we've entered a period of optimization with a focus on restoring our most profitable core hubs and Delivering Efficiency Gains Across the Enterprise. The investments we made in fleet health and reliability in the second half of 2023 are paying off. Supporting Industry-Leading Operational Performance, As we discussed with you in January, these investments are expected to continue through 2024, as we complete an elevated volume of heavy airframe and engine checks while managing through industry-wide supply chain constraints. However, the intensity of hiring and training has moderated.

Dan: Well maintenance is Duane. Thank you maintenance is on plan is performing as we expected as we talked to you at the beginning part of the year maintenance, we expect it to be up year over year $350 million.

Dan: We expect that for the full year. The first quarter was on plan and the team is executing well and.

Dan: Those investments as I mentioned that we made in plate health will continue as we go through this year.

Dan: Proactive visits along touching the aircraft you are seeing the impact of cancellations from a maintenance perspective year over year were down 80% sequentially. They improved 30%. So team is doing a good job they're on plan and as expected.

Dan: Duane if I could add onto that.

Duane: Want to congratulate the tech ops team John Motor is leadership over there in terms of helping to make that turn.

Duane: We are seeing a renewed set of confidence back in the team it's been a tough few years on the rebuild.

Daniel Janki: These teams have good momentum in delivering on our efficiency goals for the year. This will help fund the investment in our people, in our operations, and the customer experience that supports our revenue growth. In closing, we continue to be confident in our full-year outlook of earnings of $6 to $7 per share and free cash flow of $3 to $4 billion. Our industry-leading operational financial performance is a result of the hard work and dedication of the Delta employees, and I'd like to thank each of them for what they do every day. With that, I turn it back to Julie for Q&A.

Duane: Too early to declare victory, we know the supply chain continues to have a tremendous amount of constraint in it but I'm confident that we're on a good journey good path here.

None: I appreciate those thoughts and then maybe more of a conceptual one for my follow up on corporate and the continued recovery in corporate you're pointing to I assume that's generally close in.

None: And I Wonder if you could comment on if youre seeing a decrease in average trip length. So maybe more trips, but fewer days on the road per trip and any commentary on on those trends.

None: I'd just say, we're seeing both we're seeing some shorter and we're seeing some longer where people are blending the leisure trip with a business trip. So.

Julie Stewart: Thanks, Dan. Matthew, can you please remind the analysts how to queue up for questions and go to the first analyst question from Duane Pfennigwerth? Certainly. At this time, we'll be conducting a question and answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while asking your question, you pick up your handset if you're listening on speakerphone to provide optimum sound quality. We do ask that all Q&A participants please limit themselves to one question and one follow-up question, then re-enter the queue.

None: And generally they're purchasing a little bit further out than that and I think that's related to not having change fees any longer. So we've seen some changes in the booking curve, but really encouraged by what we see in terms of corporate bookings as we look forward through this quarter and as we look forward into the next couple of quarters.

None: Thank you very much.

None: Thank you. Your next question is coming from Mike Lindenberg from Deutsche Bank. Your line is live.

Matthew: Once again, if you have any questions or comments, please press star 1 on your phone. Your first question is coming from Duane Pfennigwerth from Evercore ISI. Your line is live. Hey, good morning.

Michael John Linenberg: Hey, good morning, everyone. Glenn I, just want to get back to you talked about the normalization of travel credits and how that still represents a bit of a headwind can you quantify what that what that impact is on GMT RASM.

Duane Thomas Pfennigwerth: Thank you. Just on the improved cost execution, you just tucked it in the script there, Dan, but can you speak to maintenance expense and the outlook relative to your expectations? The tone sounds like you're turning a corner on maintenance. And how do you think about that line in the second half and perhaps into next year?

None: I think we said in our previous that we faced headwinds.

None: A couple of points and I think we're not going to go into the details of that but.

None: That's generally what we've disclosed in the past okay.

None: Okay, Great and then just my second question.

None: Ed can you just give us an update on the status.

Daniel Janki: Well, maintenance is on plan and performing as we expect it. As we talked to you at the beginning part of the year, maintenance, we expect it to be up year over year by 350 million. We expect that for the full year. The first quarter was on plan, and the team is executing well. And those investments, as I mentioned, that we made in fleet health will continue as we go through this year. Those proactive visits along with touching the aircraft, you're seeing the impact. Cancellations from a maintenance perspective year over year were down 80%.

None: I guess in the appeal process with the Doj on Aeromexico, how does that play out or I should say what is the timeline of that.

None: And any any milestones we should look forward with respect to that.

None: Mike its Peter Carter. Thanks for the question that was a tentative order and I think as you know our strong view as the Dod really struck out on that one they are typically a great partner.

Peter W. Carter: But this was an example of regulatory overreach, which is why we've challenged it.

Peter W. Carter: Bad for consumers, it's bad for competition, it's bad for for the local economies that those flights it served.

Daniel Janki: sequentially, they improved 30%. So, the team's doing a good job. They're on plan, and as expected. Duane, if I could add on to that, I want to congratulate the tech ops team, John Lauder, on his leadership over there in terms of helping to make that turn. We are seeing a renewed sense of confidence back in the team. It's been a tough few years on the rebuild, too early to declare victory. We know the supply chain continues to have a tremendous amount of constraints in it.

Peter W. Carter: We are currently engaged with the administration.

Glen W. Hauenstein: But I'm confident that we're on a good journey, a good path here. I appreciate those thoughts. And then maybe more of a conceptual one from my follow-up on corporate and the continued recovery and corporate you're pointing to, I assume that's generally close to where we are. And I wonder if you could comment on whether you're seeing a decrease in average trip length, so maybe more trips, but fewer days on the road per trip. Any commentary on those trends? No, I just say we're seeing both, we're seeing some shorter, and we're seeing some longer where people are blending the leisure trip with the business trip.

Peter W. Carter: And discussing I'll say less punitive solutions then the tentative order that was proposed.

Peter W. Carter: And I would say.

Peter W. Carter: We've had hundreds of our I'll say.

Peter W. Carter: Allies with respect to the connection between Mexico and America weigh in in support of this joint venture. So we think this is going to take some time before the Dod.

Peter W. Carter: Issues, a final order a number of months, but we're cautiously optimistic that they're going to come up with a better solution.

None: Great. Thanks, Thanks for that Peter Thank you.

None: Thank you. Your next question is coming from Scott Group from Wolfe Research. Your line is live.

Glen W. Hauenstein: So, generally, they're purchasing a little bit further out than they used to. And I think that's related to not having change fees anymore. So we've seen some changes in the booking curve, but we are really encouraged by what we see in terms of corporate bookings as we look forward through this quarter. And as we look forward to, Thank you very much. Thank you. Your next question is coming from Mike Linenberg from Deutsche Bank. Your line is live. Oh, yeah. Hey, good morning, everyone. Glen, I just want to get back.

Scott H. Group: Hey, Thanks, good morning.

Glenn when I think about the original guide for the year of three months ago, I think it was sort of flat RASM for the year.

Scott H. Group: So we're down slightly in Q1 midpoint of guide for Q2 down slightly so whats the whats your visibility to second half RASM inflection I guess ultimately at this point do you see more upside or downside risk to that flat RASM in maybe just with that like the travel credit headwind does that bigger or <unk>.

Scott H. Group: Smaller than second half.

None: I think it's pretty first on the travel credit hedge ranges consistent through the year.

Michael John Linenberg: You talked about the normalization of travel credits and how that still represents a bit of a headwind. What can you quantify what that impact is on June Q RASM? I think, you know, we said in a previous that we faced headwinds and up to a couple of points, and I think we're not going to go into the details of that. That's generally what we've disclosed. Okay, great. And then just my second question to Ed: Ed, can you just give us an update on the status of the, I guess it's an appeal process with the DOT on Aeromexico? How does that play out?

None: What I would say is that we're ahead of our internal plan to get to flattish for the year and the comps get easier as we move through the year and if you look at the back half of guidance as well as what people have loaded in their schedules. It looks like industry capacity is reaching a peak in <unk>. So I think we see a great setup for the back half of this year.

None: On plan or ahead of plans for where we sit right now.

None: Okay, and then I just wanted to follow up just on RASM, a little bit. So if you just kind of.

None: Last year, you are absolute RASM in the second quarter.

None: Matt meaningfully outperformed seasonality and then you underperformed in Q3 right. If you look this year, you're guiding again to really outperform like pre pandemic seasonality I'm wondering do you think that there is a seasonal shift from Q3 into Q2 relative to what we used to see.

None: Is that helping Q2 does it potentially hurt Q3, I'm just curious your thoughts on that.

I have thoughts some very.

None: Yes, it has changed and it's related to schools coming back in the South in particular earlier and earlier into August.

Edward H. Bastian: Or should I say, what is the timeline for that? And are we looking forward to any milestones with respect to that? Thanks. We are currently engaged with the administration and discussing, I'll say, less punitive solutions than the tentative order that was proposed.

None: As a matter of fact here I believe schools.

None: Georgia go back the first week of August now.

None: So that has materially changed I think over the years, making the second quarter stronger than making the third quarter a bit weaker but I.

None: I think we are.

None: As we think about how we plan that now we're incorporating that into our capacity plans moving forward.

None: Okay.

None: Alright, Thank you guys.

None: Thank you. Your next question is coming from Ravi Shanker from Morgan Stanley.

Edward H. Bastian: And I would say, you know, we've had hundreds of our, I'll say, allies with respect to the connection between Mexico and America weigh in and support. So we think this is going to take some time before the DOT issues a final order, a number of months, but we're cautiously optimistic that they're going to come up with a, Great, thanks for that, Peter. Thank you. Thank you. Your next question is coming from Scott Grube from Wolf Research. Your line is live. Hey, thanks. Good morning.

Ravi Shanker: Your line is live.

Ravi Shanker: Thanks morning, everyone.

It looks like your leverage is getting to be in a pretty good place.

Ravi Shanker: Do you think you can start flexing the balance sheet for other use of cash capex cash at arent kind of over the next 12 months.

None: Well thanks Ravi.

None: We're not we're not in a position yet to.

Scott H. Group: So, Glen, when I think about the original guide for the year three months ago, I think it was sort of flat RASM for the year. So we're down slightly in Q1, and the midpoint of the guide for Q2 is down slightly. So what's your visibility to the second half RASM inflection?

None: To make any any comments or any decisions around that we still have more debt than we're comfortable with and that continues to be the first call on cash to continue to take.

None: Risks.

None: Table.

None: I was looking at some numbers.

None: If you look at our targets at the end of this year and you factor in that we actually have eliminated the pension pension obligation, which we had.

None: At the end of 2019.

Glen W. Hauenstein: I guess ultimately, you know, at this point, do you see more upside or downside risk to that flat RASM? And maybe just with that, like the travel credit headwind, is that bigger or smaller in the second half? No, I think it's pretty first on the travel credit headwind is consistent through the year. But what I would say is that we're ahead of our internal plan to get to flattish for the year. And the comps get easier as we move through the year. And if you look at the back half of guidance, as well as what people have loaded into their schedules, it looks like industry capacity is reaching a peak in 2Q. So I think we see a great setup for the back half of this year, and we're on plan or ahead of plan for where we sit. Okay, and then I just want to follow up on RASM a little bit. So if you just, you know, last year, your absolute RASM in the second quarter just meaningfully outperformed seasonality, and then you underperformed in Q3, right?

None: We're actually pretty close to the leverage ratio we were at at the end of 2019 entering the pandemic. So we have made a lot of progress.

None: That said.

None: We will be talking a bit about that at our investor day in November and but the first call will be and will be for some time to pay down the debt.

None: Got it that's helpful and maybe as a follow up and a little bit of a.

None: No one's a detail question here kind of obviously with the Paris Olympics kind of being a pretty big catalyst for transatlantic travel.

None: In the summer.

None: Are we thinking of that potentially bringing on some noise towards end of Q3 or is that something that you would caution us in terms of modeling cadence where it is seasonality.

Glen W. Hauenstein: If you look this year, you're guiding again to really outperform pre-pandemic seasonality. I'm wondering, do you think that there's a seasonal shift from Q3 into Q2 relative to what we used to see? And is that helping Q2? Does it potentially hurt Q3?

None: Well generally the Olympics are not good for airline revenues and this year I think is no exception to that so while we see a very favorable backdrop for Europe in its totality. There are some challenges for Paris is generally business travel ceases to and from the local markets.

Glen W. Hauenstein: I'm just curious about your thoughts on that. I have thoughts, some very positive, and yes, it has changed, and it's related to schools coming back in the south, in particular earlier and earlier into August. Fact here, I believe schools in Georgia go back the first week of August.

None: Olympics approach, so I wouldn't say that that's going to be a windfall, it's actually going to be a bit of a headwind for us in the numbers we've shared with you.

None: That said, we are very excited as sponsor of team USA for the Paris Olympics, and we'll get through it.

None: Very helpful. Thanks, Thanks, guys.

None: Thank you. Your next question is coming from Helane Becker from TD Cowen Your line is live.

Glen W. Hauenstein: So that has materially changed, I think, over the years, making the second quarter stronger and making the third quarter a bit. I think we're, as we think about how we plan that now, incorporating that into our capacity. All right.

Helane Renee Becker: Thanks, very much operator, hi team.

Helane Renee Becker: I just have two questions in the first quarter you are landing fee seemed a little bit higher than I would normally expect to see for first quarter is that maybe you can explain that.

Glen W. Hauenstein: Thank you, guys. Thank you. Your next question is coming from Ravi Shankar from Morgan Stanley. Your line is live.

Helane Renee Becker: Rather than me, suggesting when it could be.

Helane Renee Becker: Then for my follow up question.

One of the issues that American express card holders half of which I am one is acceptance rate, especially in Europe, and I'm wondering if you're starting to see an improvement in that.

Ravi Shanker: Thanks everyone. So, it looks like your leverage is getting to be in a pretty good place. When do you think you can start, you know, flexing the balance sheet for other uses of cash, kind of, you know, CapEx, cash return, kind of, over the next 12 months? Well, thanks, Ravi.

None: In that area as well thank you.

None: Yes.

None: On landing fees when you look at it year over year, Yes, Theyre up volume one two related to the cut in as it relates to our generational redevelopment projects youre picking up some of that expense and then I'd say the third item the airports across the country in 2022, and 2023 benefitted from cares Act.

Daniel Janki: We're not We're not in a position yet to make any comments or any decisions around that we still have more debt than we're comfortable with. And that continues to be the first call on cash to continue to take risk off the table. Interesting. I was looking at some numbers for this call.

Daniel Janki: If you look at our target for the end of this year and factor in that we actually have eliminated the pension obligation we had at the end of 2019, we're actually pretty close to the leverage ratio we were at at the end of 2019, when the pandemic started. So we have made a lot of progress. That said, we'll be talking a bit about that at our investor day in November. But the first call will be, and will be for some time, to pay down the debt.

None: And as those have now gone away they are adjusting their rates and you're seeing that come through.

None: Okay, that's very helpful.

None: And American Express global acceptance rates, we worked very hard years back with American express on improving the domestic acceptance rates and right now they're at all time highs in terms of the number of merchants that you can use American express that domestically and they are also doing that internationally, so particularly <unk>.

None: He says that were strong and we work with them on prioritizing those places that Americans like to go for vacations.

None: Okay, well that's very helpful. Thank you guys.

Daniel Janki: Got it, that's helpful. And maybe as a follow-up and a little bit of a nuanced, detailed question here, kind of, obviously, with the Paris Olympics kind of being a pretty big catalyst for transatlantic travel in the summer, kind of, are we thinking of that potentially bringing on some noise towards the end of 2Q, early 3Q, kind of, is that something that you would caution us in terms of modeling cadence Well, generally, the Olympics are not good for airline revenues, and this year, I think, is no exception to that.

None: Thank you. Your next question is coming from Andrew <unk> from Bank of America. Your line is live.

Andrew: Hey, good morning, everyone.

Andrew: So Glenn I had a question with just with regards to your capacity how are you thinking about the cadence as we move into the back half of the year, obviously with the first half capacity up north of six <unk> schedules are still sort of above your 3% to 5% original guide how should we think about <unk>.

Glen W. Hauenstein: So while we see a very favorable backdrop for Europe in its totality, there are some challenges for Paris as business travel ceases to and from the local markets as the Olympics approach. So I wouldn't say that that's going to be a windfall; it's actually going to be a bit of a headwind for us. That said, we are very excited as sponsors of Team USA for the Paris Olympics, and we'll get through it.

Andrew: Your growth as we move through the back of the year because it would imply based on <unk> schedules that <unk> would be down kind of find that hard to believe but just any thoughts there would be helpful. Thank you.

I think we're going to first of all thanks for our operating teams who have given us such exceptional completion factors.

Andrew: That accounted for even higher than we had planned for so I would say if those continue which I imagine they will our hopes very well that we would be at the higher the 3% to 5% and I think it's a bit early to say, but.

Glen W. Hauenstein: Thanks, guys. Thank you. Your next question is coming from Helane Becker from TD Cowan. Your line is live. Thanks very much, Operator. So, hi, team. I just have two questions.

Andrew: Think that we will be right at that five depending on how the completion factor comes in.

Helane Renee Becker: In the first quarter, your landing fee seemed a little bit higher than I would normally expect to see for our first quarter. Is that, maybe you can explain that, rather than me suggesting what it could be? And then for my follow-up question, you know, one of the issues that American Express cardholders have, of which I am one, is the acceptance rate, especially in Europe. And I'm wondering if you're starting to see an improvement in that area as well. Thank you. Yeah, online on landing fees.

None: That's helpful. Thank you and then.

None: I think in your prepared remarks, you spoke to MRI MRO headwinds and the ancillary revenue line.

None: The quarter, what is driving that I, just would have thought given everyone's elevated maintenance expense it would've been a little bit more of a tailwind.

None: Any thoughts there thank you.

None: Yes, I'd say two things one is as it relates to our third party activity. It's just we're always we're constrained by what the industry is constrained by which is material and the ability to to generate data output and as we've talked about our tech ops team John and the team are focused on the Delta fleet.

Daniel Janki: When you look at it year over year, yes, they're up. Volume one, related to the cut in as it relates to our generational redevelopment projects, you're picking up some of that expense. And then I would say the third item: airports across the country will benefit from CARES in 2022 and 2023. And as those have now gone away, they're adjusting their rates, and you're seeing that come through. Okay, that's very helpful. And on American Express Global Acceptance Rates, we worked very hard years ago with American Express on improving the domestic acceptance rates, and right now, they're at all-time highs in terms of the number of merchants that you can use American Express at domestically, and they are also doing that internationally, so particularly in places that were strong, and we worked with them on prioritizing those places that Americans like to go for vacations.

None: <unk> fleet, so, but I'd say the constraint continues to be material and turnaround times associated with it.

None: Understood. Thank you.

None: Thank you. Your next question is coming from Jamie Baker from Jpmorgan. Your line is live.

Jamie Nathaniel Baker: Thanks, Good morning, everybody a couple for Glenn first on the topic of RASM premiums.

Jamie Nathaniel Baker: Pre Covid you were running about a 20% domestic premium to the industry.

Jamie Nathaniel Baker: We're roughly flat on international you and I spoke on one of the earnings calls as to what that what the path to achieving an international RASM premium might look like can we revisit that topic, whereas belt currently both domestic and international and where do you see that heading from.

Jamie Nathaniel Baker: Here in the post Covid World.

None: Well. Thanks for the question Jami I think right now we believe we are running international RASM premiums that are primarily been driven by higher load factors on the fleet, but as the complete continues to evolve and we continue to put more premium seats and the mix. We believe that is one of the key drivers for us to continue.

Glen W. Hauenstein: Okay, well, that's very helpful. Thanks, you guys. Thank you. Your next question is coming from Andrew Didora from Bank of America. Your line is live. Hey, good morning, everyone.

Andrew George Didora: So Glen had a question about your capacity, you know, how are you thinking about the cadence as we move into the back half of the year? Obviously, with the first half capacity up north of six, three Q schedules are still sort of above your three to five percent, you know, original guide. How should we think about your growth as we move through the back half of the year? Because it would imply based on three Q schedules that four Q Thank you. I think we're going to, first of all, thank our operating teams who have given us such exceptional completion factors that accounted for even higher than we had planned for. So I'd say if those trends continue, which I imagine they will or hope they will, we will be at the high of the three to five percent. And I think it's a bit early to say, but I think that we will be right at that five, depending on how the completion factor comes in.

None: To accelerate our relative performance to our industry peers. So I think we're on a journey there and I think we are now generating premiums.

None: Consistently and hopefully we can accelerate those over the next several years as we execute on our plans to differentiate delta.

None: And as a follow up Glenn on premium so premium revenue was up 10% in the quarter main cabin was up 4%.

Glenn: What can you tell us about the constitution of that.

Glenn: 4% for example, what's the trend with basic economy, what percent of main cabin passengers are.

Glenn: Skymiles members compared to the premium cabins that sort of thing I'm, just trying to understand where the 4% is coming from are those new customers are you taking share from discounters.

Glen W. Hauenstein: That's helpful, thank you. And then, in your prepared remarks, you spoke to MRO headwinds in the ancillary revenue line for the quarter. What is driving that?

Glenn: That sort of thing I.

Glenn: I think in quarter, we ran a record domestic load factor in the first quarter.

So what I believe.

Glenn: Drove that was the incremental traffic that we took over historical levels.

Glenn: We're pretty excited about doing that in the first quarter as you know the first quarter is the most challenging in terms of loads and for us to come through that quarter, where the premiums that we took I think it really is a testament to the strength of our brand.

Glenn: And of course, as we get through the year there'll be less and less discounted seats available as we get towards peak, but generally where most open in <unk>.

None: Okay very helpful. Thank you everyone.

None: Thank you. Your next question is coming from Brandon <unk> from Barclays. Your line is live.

Glen W. Hauenstein: I just would have thought given, you know, everyone's elevated maintenance expense, it would have been a little bit more of a tailwind. Any thoughts there? Thank you.

Brandon: Hey, good morning, and thanks for taking the question. So Glenn I guess I wanted to come back to domestic growth. This summer because it looks like youre jumping up to six or 7% from about 2% in the first quarter in the context around this I think investors were a little bit concerned that that growth could lead to lower RASM, but obviously, you're guiding to flat. So can you take a little bit deeper on <unk>.

Glen W. Hauenstein: One is, as it relates to our third-party activity, it's just we're always constrained by what the industry is constrained by, which is material and the ability to generate that output. And as we've talked about, our tech ops team, John and the team are focused on the Delta fleet. So, but I'd say the constraint continues to be material and turnaround times associated with it. Understandable. Thank you. Thank you. Your next question is coming from Jamie Baker from J.P. Morgan. Your line is live. Thanks. Good morning, everybody. A couple for Glen.

Brandon: Our domestic network priorities, and maybe a little bit more on regional expansion.

Brandon: I think there.

Glenn: What we've said in the past and I would like to go back to as we kind of coming out of Covid, we had to allocate the resources that we had available and those resources went to our once in a lifetime opportunities to take leading positions in places like Boston and Los Angeles at the expense of rebuilding our core hubs and we're still not done building our core.

Jamie Nathaniel Baker: First on the topic of RASM premiums. Pre-COVID, you were running what, a 20% domestic premium to the industry, and I think you were roughly flat on international. You and I spoke on one of the earnings calls as to what that, you know, what the path to achieving an international RASM premium might look like. Can we revisit that topic?

Glen W. Hauenstein: You know, where is Delta currently, both domestic and international? And where do you see it heading from here in the post-COVID world? Well, thanks for the question, Jamie. I think right now we believe we are running international routes and premiums that are primarily driven by higher load factors on the fleet. But as the fleet continues to evolve, and we continue to put more premium seats in the mix, we believe that is one of the key drivers for us to continue to accelerate our relative performance to our industry peers. So I think we're on a journey there, and I think we are now generating premium revenue consistently, and hopefully, we can accelerate that over the next several years as we execute on our plans to differentiate Delta. And as a follow-up, Glen, on premium, so premium revenue is up 10% in the quarter; main cabin revenue was up 4%. What can you tell us about the composition of that 4%?

Glenn: Hubs and so our ability now to go back into put seats back into our core where our cost structure as most advantaged and where our profitability is highest is where we're focused for the rest of this year.

Glenn: And seat growth is about.

None: <unk>, yes.

None: Okay.

None: Okay I appreciate that and then Glenn.

None: Glenn on the Latin differentiation I think you were talking separately about short haul and long haul can you unpack that a little bit more for us.

Glen W. Hauenstein: You know, for example, what's the trend with basic economy? What percent of main cabin passengers are SkyMiles members compared to the premium cabins, you know, that sort of thing. I'm just, I'm just trying to understand where the 4% is coming from. Are those new customers? Are you taking share from discounters, you know, that sort of thing? Thanks. I think in the quarter, we ran a record domestic load factor, so I believe it. Drove That was the incremental traffic that we took over historically. So I'm pretty excited about doing that in the first quarter.

Glenn: Well, we're really pleased with our South America performance as I said in the prepared remarks, our capacity is up.

Glenn: The 30% to 40% range and we're doing that with minimal degradation of our unit revenue. So.

Really off to a great start with what Tom and I think we haven't really great future.

Working with them to continue to evolve as the leading carrier between the United States and South America, and our joint venture So put that aside and then say the particularly leisure destinations. There was an oversupply in the first quarter I think in first quarter of 'twenty three the industry saw a historically high return.

Glenn: And so when there are historically high returns everybody wants to do more of it we did considerably more of it the industry did considerably more of it and listen it was quite profitable for us, but at the expense of unit revenues and so as we move through next year I'd say, there's going to be probably a moderation of capacity as there always is.

Glen W. Hauenstein: As you know, the first quarter is the most challenging in terms of loads, and for us to come through that quarter with the premiums that we took, I think, really is a testament to the strength of our brand. And, of course, as we get through the year, there'll be less and less discounted seats available as you get towards peak times, but generally, you know, we're most open in one queue. Okay, very helpful.

Glenn: Those things happen as well as <unk>.

Glenn: As your comps as we get to next year. So looking forward to actually next year's comps in Latin America.

None: Okay. Thank you.

None: Thank you. Your next question is coming from Connor Cunningham from Melius Research Your line is live.

Jamie Nathaniel Baker: Thank you, everyone. Thank you. Your next question is coming from Brandon Oglenski from Barclays. Your line is live.

Conor T. Cunningham: Hi, everyone. Thank you.

Conor T. Cunningham: If we play back the performance in the U S domestic market in <unk>, It was pretty pretty fantastic when you started off saying.

Brandon Robert Oglenski: Hey, good morning, and thanks for taking the question. So Glen, I guess I wanted to come back to domestic growth this summer, because it looks like you're jumping up to six or 7% from about 2% in the first quarter. And the context around this, I think investors were a little bit concerned that that growth could lead to lower RASMs, but obviously, you're guiding to flat. So can you dig a little bit deeper on your domestic network priorities and maybe a little bit more on regional expansion? I think there What we've said in the past, and I'd like to go back to, is that coming out of COVID, we had to allocate the resources that we had available, and those resources went to our once-in-a-lifetime opportunities to take leading positions in places like Boston and Los Angeles at the expense of rebuilding our core hubs.

Conor T. Cunningham: Just expecting to.

Conor T. Cunningham: Positive in March that you saw some improvement quarter than an outcome of plus 3% you know you've highlighted corporate momentum in premium, but I think there is a disparity in just your hub performance can you just talk about coastal coastal gateways for core hub rebuild and how things are playing out there.

None: So in general Thank you.

None: Well I think we're very pleased with our coastal gateways and really they are moving at a pretty tight band right now with more capacity going to our core hubs and our core hubs generally having a higher unit revenue base in our coastal gateways that should have a positive inflection on total revenues.

Glen W. Hauenstein: And we're still not done building our core hubs. And so our ability now to go back and to put seats back into our core, where our cost structure is most advantageous, and where our profitability is highest, is where we're focused for the rest of this year. Transcription by Transcription Outsourcing, LLC. Okay, I appreciate that. And then going on with the Latin differentiation, I think you were talking separately about short haul and long haul. Can you unpack that a little bit more for us?

None: That gets accelerated in the second and third quarters.

None: Again, we had probably a little bit more in Boston than we had planned on because there were some opportunities there for us to move airplanes.

None: But.

None: But generally we're really pleased with where we sit today in.

None: The back half of this year should play out for us.

None: Okay and then.

None: It seems like there is a potential for regulatory oversight to potentially pick up here.

None: You have conversations with.

Glen W. Hauenstein: Well, we are really pleased with our South America performance. As I said in my prepared remarks, our capacity is up in the 30 to 40% range. And we're doing that with minimal degradation of our unit revenues. So we're really off to a great start with Latam. And I think we have a really great future, working with them to continue to evolve as the leading carrier. The United States and South America and our, So put that aside and then say the, particularly leisure destinations, there was an oversupply in the first quarter.

None: What are some changes that they're talking to you about just given the operating environment and maybe what are what are you asking them in general.

None: It seems like it could be a wildcard to potential growth maybe medium to long term. So just just any thoughts there would be helpful. Thank you.

Peter W. Carter: This is Peter.

Peter W. Carter: So just.

Peter W. Carter: I'd say fundamentally with the FAA working very closely with them around staffing models because as you know there is an air traffic control shortage and we're also engaged in Washington trying to help solve some of those I'll say more structural challenges around infrastructure.

Glen W. Hauenstein: I think in the first quarter of 23, the industry saw historically higher returns. And so when there are historically high returns, everybody wants to do more of it. We did considerably more of it. The industry did considerably more of it, too. And listen, it was quite profitable for us, but at the expense of unit revenues. And so as we move through next year, I'd say there's probably going to be a moderation of capacity, as there always is when those things happen, as well as easier counts as we get to next year. So I'm actually looking forward to next year's census in Latin America.

Peter W. Carter: You probably have seen that the industry has made a request.

Peter W. Carter: The FAA to extend the New York.

Peter W. Carter: Slot waiver another season.

Peter W. Carter: And.

Peter W. Carter: That's what I would call responsible partnership with our with our regulator in light of the staffing challenges they've had so.

Peter W. Carter: Great relationship deep partnership with them.

None: Okay. Thank you.

None: Thank you. Your next question is coming from <unk> from Raymond James Your line is live.

Conor T. Cunningham: Okay, thank you. Thank you. Your next question is coming from Conor Cunningham from Mellius Research. Your line is live. Hi, everyone.

Unknown Attendee: Hey, good morning, just a follow up to Jamie's question on the on the premium revenue just kind of curious if you could share how much of that 10% is coming from volume versus yield.

Glen W. Hauenstein: Thank you. Just if we play back the performance in the US domestic market in one cue, you know, it was pretty, pretty fantastic when you started off saying, you know, just expecting to see positive in March, and you saw some improvement quarter than an outcome of plus 3%. You know, you've highlighted corporate momentum and premium, but I think there's a disparity in just your hub performance. Can you just talk about, you know, coastal gateways versus core hub rebuild and how things are playing out there? Just in general.

None: I think you mentioned continuing to grow.

None: The premium offering.

None: Curious what the trend might be.

None: Right I would say right now the premium is probably 50 50 split between traffic and yield.

None: That's helpful and then.

None: In terms of the volume growth and offering how should we think about that well I think we've said that if you look at the longer term trends that we really haven't been adding coach seats into the domestic arena over the past 10 years and so all of our growth has been in the premium products and services and I think on Investor day, we're going to.

Glen W. Hauenstein: Thank you. Well, I think we're very pleased with our coastal gateways. And really, they're moving in a pretty tight band right now with more capacity going to our core hubs. And our core hubs generally having a higher unit revenue base than our coastal gateways, that should have a positive inflection on total revenues. And I think that will get accelerated in the second and third quarters.

None: Talk a little bit more about where we see that going but I think we see a long runway for that in the coming years creative product placement in cabin all the way if you look at our fleet deliveries through 2030.

None: Helpful and if I might on another follow up just on the domestic capacity growth with building back that hub is that then.

None: The capacity comes a lot in this kind of regional type markets or should I think of it as well.

Conor T. Cunningham: Again, we had probably a little bit more in Boston than we had planned on because there were some opportunities there for us to move airplanes in. But generally, really pleased with where we sit today and how the back half of this year should play out. And then, you know, it seems like there's a potential for regulatory oversight to potentially pick up here. You know, when you have conversations with the FDA, what are some changes that they're talking to you about, just given the operating environment? And maybe what are you asking them in general?

None: The kind of growth in regional then shifts some of those aircraft onto Kevin.

None: Are there bigger markets that you could use those aircraft.

None: I think a little of both.

None: We've been very short on our regionals, we still have probably.

None: East 50, regionals, either not flying or underutilized.

None: Probably almost 100 when you include the Underutilization, so thats a lot of seats and a lot of departures that we need in our hubs. We're missing a lot of the core feed from the regional feed in the local affinity. So right now some of that's being done by mainline and those planes Curt gravitate out, but mostly we'll be adding.

Peter W. Carter: It just seems like it could be a wildcard for potential growth, you know, maybe medium to long term. So just any thoughts that would be helpful. Thank you. Hey, Conor. This is Peter.

None: Frequencies backend that historically have been there from theater markets into our core hubs.

None: Okay. Thank you.

None: Thank you. Your next question is coming from David Vernon from Bernstein. Your line is live.

David Scott Vernon: Maybe just following up on that on that point about there Glenn as you think about.

David Scott Vernon: <unk> in the regional utilization is there also some room for improving utilization to prior pre COVID-19 levels on the narrow body fleet as well or is this primarily just a regional issue.

Peter W. Carter: So just, I'd say fundamentally, with the FAA, we're working very closely with them around staffing models. Because, as you know, there is an air traffic control shortage. And we're also engaged in Washington trying to help solve some of those, I'll say more structural challenges around infrastructure. You probably have seen that the industry has made a request to the FAA to extend the New York slot waiver another season, and that's what I would call a responsible partnership with our regulator in light of the staffing challenges they've had. So, great relationship, deep partnership with you. Okay, thank you.

David Scott Vernon: I would hope so if we look at our wide bodies, we're now at or above where we were at 90% in terms of annual utilization CR and this is going to be a game of working with our operators to improve asset utilization across the network whatever they are planes airports and.

Conor T. Cunningham: Thank you. Your next question is coming from Savi Sith on Raymond James. Your line is live. Hey, good morning.

Savanthi Nipunika Prelis: Just to follow up to Jamie's question on the premium revenue, just kind of curious if you could share how much of that 10% is coming from volume versus yield. And, and I think you've mentioned continuing to grow the premium offering. So curious what the trend might be.

David Scott Vernon: That's the game, we're playing the long game and I think that's been a really exciting challenge for us all.

David Scott Vernon: Okay, and then and then I guess as you think about the yield management.

David Scott Vernon: Problems sort of through the summer months, you didn't have a lot more premium capacity into the mix does that change. The way you guys go about sort of a day to day and managing pricing are there are there are opportunities in there that you see.

Glen W. Hauenstein: Right now, I would say the premium is probably a 50-50 split between traffic and yield. That's helpful. And then, in terms of the volume growth in offering, how should we think about that? Well, I think we've said that, you know, if you look at the longer-term trends, that we really haven't been adding coach seats in the domestic arena over the past 10 years.

To continue to kind of work the segmented cabin differently than you may have done in the past I'm just trying to get a sense for.

David Scott Vernon: As this new sort of models being marketed at a higher level of volume at a greater distribution of the number of seats javelin each aircraft.

David Scott Vernon: Is that changing sort of the upper frontier on what you might be able to get out of yield management.

Glen W. Hauenstein: So all of our growth has been in premium products and services. And I think on investor day, we're going to talk a little bit more about where we see that going. But I think we see a long runway for that in the coming years.

None: I think what we've said is that what really pushed us to do this journey. Several years back was the fact that on.

On the premium products and experience aside we control more of our destiny than we did on the commodity side and so absolutely. That's been our journey is to continue to play the game against ourselves as opposed to playing against the lowest common denominator and I think we'll have a lot again on our investor day to talk about what we see in the next evolution, but we see a lot.

Glen W. Hauenstein: Product Quality, Pace, Main, Cap, and all the way, as you look at our fleet deliveries through 2015, very helpful. And if I might, on another follow-up, just on the domestic capacity growth with building back the hubs, is that then where the capacity comes a lot in this kind of regional type market? Or should I think of it as kind of growth in regional aviation, then shift some of those aircraft on to kind of other bigger markets that you could use those aircraft? I think a little of both.

None: Runways that not to tease it out, but we see a lot of runway even taking this even further and using new tools and using things that we'll be talking about in November that I think will be very exciting for our investor base.

Glen W. Hauenstein: You know, we've been very short on our regionals. We still have probably, you know, at least 50 regionals either not flying or underutilized, probably almost 100 when you include the underutilization. So that's a lot of seats and a lot of departures that we need in our hubs, and we're missing a lot of the core feed from the regional feed in the local vicinity. So right now, some of that's being done by mainline, and those planes can't get gravitated out.

None: Okay, and then last one for me is that you may.

None: And something about.

None: Improvements in retailing could you elaborate a little bit around what youre talking about there.

None: Well I think that that's the Holy Grail is why did we wind up in a commoditized environment was because we couldnt distribute products and services. We werent. The industry was not geared to this and this has been a long journey and every day, I think we get better and better and better at it whether or not we're working internally.

None: To improve our own internal displays where we're 65% direct to consumer right now or whether we're working with online booking tools to improve their display of products and services.

Glen W. Hauenstein: But mostly, we'll be adding frequencies back in that historically have been there from feeder markets into our. Thank you. Thank you. Your next question is coming from David Vernon from Vernon. Your line is live. Maybe just following up on that point of thought there, Glen, as you think about the improvements in the regional routes, is there also some room for improving utilization to prior pre-COVID levels on the narrow-body fleet as well, or is this primarily just a, You know, I would hope so. If we look at our wide bodies, we're now at or above where we were in 19 in terms of annual utilization. And, you know, this is going to be a game of working with our operators to improve asset utilization across the network, whatever they are, planes, or airports. And, you know, that's the game we're playing. That's the long game.

None: And making progress on that front as well. So this has been a very very long journey.

None: Every day, we're working on improving.

None: Alright, thanks very much.

None: Thank you. Your next question is coming from Sheila <unk> from Jefferies. Your line is live.

Sheila: Good morning, everyone. Thank you for the time.

Sheila: Maybe just a follow up on that in Latin America, and a large capacity growth area in partnership with Latam, Obviously magnifies the unit revenue declines.

Sheila: Of course, you talked about making these investments possibly.

Sheila: Maybe can you talk about where you are today relative to your expectations in Latin America, and how you expect that profitability curve.

Sheila: In the coming quarters and years.

Glen W. Hauenstein: And I think that's a really exciting challenge for us all. Okay, and then I guess as you think about yield management. Transcripts provided by Transcription Outsourcing, LLC. The way you guys go about your sort of day-to-day. Well, I think what we said was that what really pushed us to make this journey several years ago was the fact that on the premium products and experiences side, we controlled more of our destiny than we did on the commodity. So absolutely, that's been our journey: to continue to play the game against ourselves as opposed to playing against the lowest common denominator.

Sheila: Sure.

Sheila: Yes.

Sheila: I think we still see opportunity we've got a lot of the opportunities now are in our baseline and we will continue to work with <unk>, we'll refine that moving forward, but I don't see think youll see this kind of dramatic growth in the out years. It will be more focused on turning that into more of a harvest mode as opposed to an investment mode. As we continue to.

Sheila: Work on bridging the two networks together.

None: Okay, and then maybe.

None: On cost just to sum it up Q1, CASM performance is only going to.

None: And you talked about.

None: Completion factors than just operations, helping that so the Q2 guide.

None: More normalized.

None: 2% cost growth.

None: Is it just fair to think about that run rate in the context of the year with a low single digit guidance.

None: What are the moving pieces as we think about head count maintenance cost and any other noise you'd highlight throughout the year.

Yes, I think the 2% is in line with the low single digit.

None: I think when you think about.

Glen W. Hauenstein: And I think we'll have a lot again on our investor day to talk about what we see as the next evolution. But we see a lot of runway, not to tease it out, but we see a lot of runway for taking this even further and using new tools and using things that we'll be talking about in November that I think will be very exciting for us. And then last one for me is that you mentioned something about sort of improvements in retailing. Could you elaborate a little bit on what you were talking about? Well, I think that that's the holy grail is why did we wind up in a commoditized environment was because we couldn't distribute products and services.

None: The variables inside of that.

None: Run it starts with running a great operation when you when you run a great operation that sets. The foundation you get those frictional costs out and it really allows the operators and youre seeing it two quarters in a row to have the confidence and it really lean in and continue to drive not only better improvement in the operation, but also get after.

None: Are those efficiencies and as you do that it we said that we were carrying head count higher than historical for what we ran in 2019 about 10% and we'll grow into that and that drives the efficiency associated with that.

Glen W. Hauenstein: We weren't; the industry was not geared to this. And this has been our long journey. And every day, I think we get better and better and better at it, whether or not we're working internally to improve our own internal displays, where we're 65% direct to consumer right now, or whether we're working with online booking tools to improve their display of products and services, and making progress on that front, as well. So this has been a very, very long journey. And, you know, every day we're working on improving. Alright, thanks very much for your time.

None: And no change to the maintenance maintenance is as we expected.

None: And but we'll continue to manage the supply chain, it's going to be the one that is has the largest constraint still associated with it as we execute through the year.

None: Great. Thank you.

None: Matthew will now go to our final analyst question before moving to the media.

Matthew: Certainly your last question is coming from Stephen Trent from Citi. Your line is live.

Brandon Robert Oglenski: Thank you. Your next question is coming from Sheila Kahyaoglu from Jeffries. Your line is live. Good morning, everyone.

Stephen Trent: Good morning, everybody and thanks very much for squeezing me in.

Stephen Trent: Just a follow up question to <unk>, if I may when we think about.

Sheila Karin Kahyaoglu: Thank you for your time. Maybe just a follow-up on Latin America, you know, the large capacity growth there in partnership with LATAM obviously magnifies the unit revenue decline, but you've, of course, talked about making these investments profitably. So maybe you could talk about where you are today relative to your expectations in Latin America and how you expect that profitability curve to shape up in the coming quarters and years? I think we still see opportunity. We've got a lot of the opportunities now in our baseline, and we'll continue to work with LaTowne to refine that moving forward. But I don't think you'll see this kind of dramatic growth in the out-years, as we'll be more focused on turning that into more of a harvest mode as opposed to an investment.

Stephen Trent: Probably.

Stephen Trent: Across the industry fleets are getting older.

Stephen Trent: Can you give us a high level sense about.

Stephen Trent: How valuable Delta Tech ops is it going to be for you guys.

Stephen Trent: Over the next 10 years for example.

Stephen Trent: And that competitive advantage you have.

None: As your legacy competitors. Thank you.

None: Okay.

None: Yes, we can.

None: I think it is a unique advantage that along with our fleet. Our fleet has actually gotten younger over the last few years.

None: But we've also given the constraints in the industry around the Oems have leaned in to restore the network into our flex fleets. So flying 87, 1% of its flying the seven five sevens longer than we anticipated and that puts demand on our tech ops team and their ability to ensure that we have those aircraft.

Glen W. Hauenstein: We continue to work on bridging the two networks together. Okay, and then maybe one on cost, just to sum it up. Q1 CASM performance was really good, Ed, and you talked about completion factors and just operations helping that. So the Q2 guide seems a bit more normalized, putting you guys at 2% cost growth. So is it just fair to think about that run rate in the context of the year with a low single-digit guide? And what are the moving pieces as we think about headcount, maintenance costs, and any other noise you'd highlight throughout the year? Yeah, I think the 2% is in line with the low single digit.

None: <unk> that the reliable.

None: Is is really allows us to flex and be more nimble.

None: And as we go through.

This period and it gets more normalized we are at a period of more normalized growth and more consistency around equipment. It's also going to allow us to go into a period of more natural retirements. We haven't retired any aircraft in 2022 and 2023, we'll start that at the back half of this year and Thats really where our team is always <unk>.

Daniel Janki: You know, I think when you think about the variables inside of that, it starts with running a great operation. When you run a great operation, that sets the foundation. You get those frictional costs out, and it really allows the operators, and you're seeing this in two quarters in a row, to have the confidence and really lean in and continue to drive not only better improvements in the operation but also get after those efficiencies.

None: And the ability to naturally retire, but then recoup that equipment and reuse that used material and run out the fleets and they did it with the MD, 88% to 90, they've done it for a decade and they have that history and that's really what we have in front of us.

Stephen if I could if.

None: If I could add on on the backend to Dan's comments.

None: Two things in the first quarter, our overall mainline reliability and completion factor was the strongest first quarter in our history.

Daniel Janki: As you do that, we said that we're carrying headcount higher than usual for what we ran in 2019, about 10%, and we'll grow into that, and that drives the efficiency associated with that. [inaudible] Matthew will now go to our final analyst question before moving to the meeting. Certainly. Your last question is coming from Stephen Trent from Citi. Your line is live. Good morning, everybody.

None: And that's quite a statement given where we've been through in supply chain chain constraints that still exist.

None: I attribute a lot of that to the maintenance team the tech ops team, having the product ready everyday and responding to the opportunities that we see in front of us. So that's going to continue to be.

None: A positive green Arrow forward as we move forward. These next couple of years as Dan was saying.

None: Second thing is the MRO, while we've taken I would say a pause given that we've had to focus our energies on our own fleet as compared to our our customers fleets going forward in the next couple of years, that's going to start turning back on again and that growth rate that we've talked about is still there. It's just waiting for us.

Stephen Trent: And thanks very much for squeezing in. Just a follow-up question to Sheila's, if I may, when we think about, you know, probably, across the industry's fleets getting older, could you give us a high-level sense about, you know, how valuable Delta Tech Ops is going to be for you guys over the next 10 years, for example, and that competitive advantage you have, you know, versus your legacy competitors? Thank you......, https://www.youtube.com.au, So flying 8717s, and flying 757s for longer than we anticipated.

None: <unk>.

None: I am very very excited as to what you talked about a five to 10 year timeline on that that business is I think it's going to be our ability to capture that business is going to be even stronger.

None: Then we were thinking pre pandemic given what we've all been through so.

None: Hats off to the Tech ops team a lot more work to go but we are absolutely on the right path.

None: Well, thank you very much Ed and Dennis I appreciate the time.

None: Thanks, Steve that will wrap up the analyst portion of the call I'll now turn it over to Tim Mapes to start to media questions.

Tim Mapes: Julie Matthew if you don't mind as we transitioned from the analysts to reporters could you repeat the instructions for one question and a follow up please.

Certainly at this time, we'll be conducting a Q&A session for media questions. If you have any questions or comments. Please press star then one on your phone.

Daniel Janki: And that puts demand on our tech ops team, and their ability to ensure that we have those aircraft and that they're reliable really allows us to flex and be more nimble. And as we go through this period and it gets more normalized, we're in a period of more normalized growth and more consistency around equipment. It's also gonna allow us to go through a period of more natural retirements.

Julie Stewart: These hold while we poll for questions.

Julie Stewart: And once again, if you have any questions or comments. Please press star then one on your phone.

Julie Stewart: These hold while we poll for questions.

Daniel Janki: And that's really what we have in front of us. Stephen, if I could, if I could add to the back end of Dan's comments, two things. In the first quarter, our overall mainline reliability and completion factor was the strongest first quarter in our history.

Julie Stewart: Your first question is coming from Leslie Joseph from CNBC. Your line is live.

Hi, everyone. Thanks for taking my question.

Leslie Josephs: On operations just wondering if you saw any benefit from the fact that a lot of your hubs. This past winter got rain and not blizzards. It seems like if it was 10 15 degrees cooler we've been talking about grounding the airline for a little bit at those hub and then separately on the mechanical issues that some airlines have been having recently have you.

Edward H. Bastian: And that's quite a statement given where we've been and the supply chain constraints that still exist. And I attribute a lot of that to the maintenance team, the tech ops team, having the product ready every day and responding to the opportunities that we see in front of us. So that's gonna continue to be a positive, a green arrow forward as we move forward these next couple of years, as Dan was saying. Second thing is the MRO. While we've taken, I'd say a pause given that we've had to focus our energies on our own fleet as compared to our customers' fleets, going forward in the next couple of years, that's gonna start turning back on again. And that growth rate that we've talked about is still there; it's just waiting for us. And I'm very, very excited about what you talk about a five to 10 year timeline for that. That business is, I think it's gonna be our ability to capture that business is gonna be even stronger.

Leslie Josephs: Reminded your employees or put out any kind of communication just to ensure that.

Edward H. Bastian: [inaudible] Thank you very much Ed and Dan. I appreciate the time. Thanks Steve. That will wrap up the analyst portion of the call.

They are following all protocols and just kind of re emphasize safety thats out there.

Leslie Josephs: Hi.

Leslie Josephs: With respect to whether we certainly have had a nice run whether broadly across our system.

Leslie Josephs: Candidly across our country.

Leslie Josephs: And that certainly has helped with respect to the overall operational performance, but what we like to do is neutralize for weather events and we see the performance of the airline whether adjusted within our own system and we are outperforming our prior performance even weather adjusted so the improved weather it just adds.

Leslie Josephs: Nice icing to the cake, but the fundamental core is running at a much much better clip and as the communications safety is job one at all times every single day, we don't send out special messages around safety. We every day is safety day around here.

None: Thank you.

None: Thank you. Your next question is coming from maybe each Lincoln Stein from Bloomberg News Your line is live.

Unknown Attendee: Good morning, I wanted to ask on the request for an addition of the slot waivers through another year.

Unknown Attendee: Have you seen any improvement at all in the ATC issues and the New York area and does the slot waiver extension also include the D C area.

Julie Stewart: I'll now turn it over to Tim Mapes to start the meeting. Thank you, Julie. Matthew, if you don't mind, as we transition from the analysts to reporters, could you repeat the instructions for one question and a follow-up, please? At this time, we'll be conducting a Q&A session for media questions. If you have any questions or comments, please press star then 1 on your phone. Please hold while I poll for questions. And once again, if you have any questions or comments, please press star, then 1 on your phone. Please hold while we poll for questions. Your first question is coming from Leslie Joseph from CNBC. Your line is live. Hi everyone.

Unknown Attendee: So Mary Thank it's Peter Carter. It does traditionally include the D. C area, that's the way the FAA likes to view it and we still have a shortage of ATC controllers. So it's still an incredibly challenging environment.

Peter W. Carter: Have you seen any improvement at all.

Mary: We have.

None: We've had the waivers in place so of course with those waivers there would be improvement because there is less capacity less capacity in that marketplace, but but absent the waiver.

None: I think we'd have some as an industry some real challenges in New York.

None: Great. Thank you very much.

None: Thank you for the question Mary Beth you I believe that wraps up our time, if you want to close out the call.

Certainly thank you that completes our Q&A session and everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.

Leslie Josephs: Thanks for taking my questions. On operations, just wondering if you saw any benefit from the fact that a lot of your hubs this past winter got rain and not blizzards. Seems like if it was, you know, 10, 15 degrees cooler, we'd be talking about grounding the airline for a little bit at those hubs.

None: Okay.

None: Okay.

Edward H. Bastian: And separately, on the mechanical issues that some airlines have been having recently, have you reminded your employees or put out any kind of communication just to ensure that they're following all protocols and just kind of reemphasize safety at Delta? Thanks. Hi Leslie, it's Ed.

Edward H. Bastian: With respect to weather, we certainly have had a nice run of weather broadly across our system, and, candidly, across our country. And that certainly has helped with respect to overall operational performance. But what we like to do is neutralize for weather events, and we see the performance of the airline, weather adjusted within our own system, and we're outperforming our prior performance, even weather adjusted. So the improved weather just adds nice icing to the cake. But the fundamental, the core, is running at a much, much better clip.

Leslie Josephs: And as communications professionals, safety is job one at all times, every single day. We don't send out special messages about safety; every day is safety day around here. Thank you. Thank you. Your next question is coming from Mary Schlangenstein from Bloomberg News. Your line is live. Thank you. Good morning.

Mary Schlangenstein: I wanted to ask about the request for an extension of the slot waivers through another year. Have you seen any improvement at all in the ATC issues in the New York area? And does the slot waiver extension also include the DC area? So, Mary, thank you. It's Peter Carter. It does traditionally include the D.C. area. That's the way the FAA likes to view it, and we still have a shortage of A.T.C. Controllers, so it's still incredibly challenging. Have you seen any improvement at all?

Peter W. Carter: Well, we've had the waivers; we've had the waivers in place. So, of course, with those waivers, there would be improvement because there's less capacity, less capacity in that market. But absent the waiver, I think we'd have some, as an industry, some real challenges in the Great.

Mary Schlangenstein: Thank you very much. Thank you for the question, Mary. Matthew, I believe that wraps up our time. If you want to close out the call,

Matthew: Certainly. Thank you. That concludes our Q&A session. And everyone, this concludes today's event. You may disconnect at this time. Have a wonderful day. Thank you for your participation.