filings.toolsItem 2. MD&A - Supplemental Information
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Item 2. MD&A - Supplemental Information
| Operating expense, adjusted reconciliation | |||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||
| (in millions) | 2023 | 2022 | |||||||||||||||
| Operating expense | $ | 13,036 | $ | 10,131 | |||||||||||||
| Adjusted for: | |||||||||||||||||
| MTM adjustments and settlements on hedges | 41 | 4 | |||||||||||||||
| Third-party refinery sales | (916) | (1,187) | |||||||||||||||
| One-time pilot agreement expenses | (864) | — | |||||||||||||||
| Restructuring charges | — | 5 | |||||||||||||||
| Operating expense, adjusted | $ | 11,296 | $ | 8,954 | |||||||||||||
| Fuel expense, adjusted reconciliation | |||||||||||||||||||||||
| Average Price Per Gallon | |||||||||||||||||||||||
| Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||
| (in millions, except per gallon data) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Total fuel expense | $ | 2,676 | $ | 2,092 | $ | 3.01 | $ | 2.79 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| MTM adjustments and settlements on hedges | 41 | 4 | 0.05 | 0.01 | |||||||||||||||||||
| Total fuel expense, adjusted | $ | 2,718 | $ | 2,097 | $ | 3.06 | $ | 2.79 | |||||||||||||||
| TRASM, adjusted reconciliation | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| TRASM (cents) | 20.80 | ¢ | 18.04 | ¢ | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Third-party refinery sales | (1.49) | (2.29) | |||||||||||||||||||||
| TRASM, adjusted | 19.30 | ¢ | 15.75 | ¢ |
| CASM-Ex reconciliation | |||||||||||||||||||||||
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2023 | 2022 | ||||||||||||||||||||||
| CASM (cents) | 21.25 | ¢ | 19.56 | ¢ | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Aircraft fuel and related taxes | (4.36) | (4.04) | |||||||||||||||||||||
| Third-party refinery sales | (1.49) | (2.29) | |||||||||||||||||||||
| Profit sharing | (0.12) | — | |||||||||||||||||||||
| One-time pilot agreement expenses | (1.41) | — | |||||||||||||||||||||
| Restructuring charges | — | 0.01 | |||||||||||||||||||||
| CASM-Ex | 13.86 | ¢ | 13.24 | ¢ | |||||||||||||||||||
Delta Air Lines, Inc. | March 2023 Form 10-Q 29
Item 2. MD&A - Supplemental Information
Free Cash Flow
The following table shows a reconciliation of net cash provided by operating activities (a GAAP measure) to free cash flow (a non-GAAP financial measure). We present free cash flow because management believes this metric is helpful to investors to evaluate the company's ability to generate cash that is available for use for debt service or general corporate initiatives. Adjustments include:
- Net purchases of short-term investments. Net purchases of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.
*•*Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items because management believes investors should be informed that a portion of these capital expenditures from airport construction projects are either reimbursed by a third party or funded with restricted cash specific to these projects.
*•*Financed aircraft acquisitions. This adjustment reflects aircraft deliveries that are leased as capital expenditures. The adjustment is based on their original contractual purchase price or an estimate of the aircraft's fair value and provides a more meaningful view of our investing activities.
- Pilot agreement payment. In March 2023, Delta pilots ratified a new four-year Pilot Working Agreement effective January 1, 2023. The agreement includes numerous work rule changes and pay rate increases during the four-year term, including an initial pay rate increase of 18%. The agreement also includes a provision for a one-time payment upon ratification in the March 2023 quarter of $735 million. We adjust for this item to provide investors a better understanding of our recurring free cash flow generated by our operations.
| Free cash flow reconciliation | |||||||||||
| Three Months Ended March 31, | |||||||||||
| (in millions) | 2023 | ||||||||||
| Net cash provided by operating activities | $ | 2,235 | |||||||||
| Net cash used in investing activities | (1,100) | ||||||||||
| Adjusted for: | |||||||||||
| Net purchases of short-term investments | 102 | ||||||||||
| Net cash flows related to certain airport construction projects and other | 19 | ||||||||||
| Financed aircraft acquisitions | (137) | ||||||||||
| Pilot agreement payment | 735 | ||||||||||
| Free cash flow | $ | 1,853 | |||||||||
Delta Air Lines, Inc. | March 2023 Form 10-Q 30
Item 3. Market Risk
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