filings.toolsItem 2. MD&A - Supplemental Information
10K characters. Original on sec.gov ·
Item 2. MD&A - Supplemental Information
| Operating expense, adjusted reconciliation | |||||||||||||||||
| Three Months Ended September 30, | |||||||||||||||||
| (in millions) | 2023 | 2022 | |||||||||||||||
| Operating expense | $ | 13,504 | $ | 12,519 | |||||||||||||
| Adjusted for: | |||||||||||||||||
| MTM adjustments and settlements on hedges | 21 | (36) | |||||||||||||||
| Third-party refinery sales | (935) | (1,134) | |||||||||||||||
| Restructuring charges | — | (1) | |||||||||||||||
| Operating expense, adjusted | $ | 12,590 | $ | 11,348 | |||||||||||||
| Fuel expense, adjusted reconciliation | |||||||||||||||||||||||
| Average Price Per Gallon | |||||||||||||||||||||||
| Three Months Ended September 30, | Three Months Ended September 30, | ||||||||||||||||||||||
| (in millions, except per gallon data) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Total fuel expense | $ | 2,936 | $ | 3,318 | $ | 2.76 | $ | 3.57 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| MTM adjustments and settlements on hedges | 21 | (36) | 0.02 | (0.04) | |||||||||||||||||||
| Total fuel expense, adjusted | $ | 2,957 | $ | 3,282 | $ | 2.78 | $ | 3.53 | |||||||||||||||
| Average Price Per Gallon | |||||||||||||||||||||||
| Nine Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| (in millions, except per gallon data) | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||
| Total fuel expense | $ | 8,128 | $ | 8,633 | $ | 2.76 | $ | 3.39 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| MTM adjustments and settlements on hedges | 59 | 41 | 0.02 | 0.02 | |||||||||||||||||||
| Total fuel expense, adjusted | $ | 8,188 | $ | 8,674 | $ | 2.78 | $ | 3.41 |
| TRASM, adjusted reconciliation | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| TRASM (cents) | 21.15 | ¢ | 22.18 | ¢ | 21.53 | ¢ | 21.38 | ¢ | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Third-party refinery sales | (1.28) | (1.80) | (1.38) | (2.20) | |||||||||||||||||||
| TRASM, adjusted | 19.87 | ¢ | 20.38 | ¢ | 20.14 | ¢ | 19.18 | ¢ |
| CASM-Ex reconciliation | |||||||||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
| CASM (cents) | 18.44 | ¢ | 19.87 | ¢ | 19.47 | ¢ | 20.12 | ¢ | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Aircraft fuel and related taxes | (4.01) | (5.26) | (4.00) | (4.97) | |||||||||||||||||||
| Third-party refinery sales | (1.28) | (1.80) | (1.38) | (2.20) | |||||||||||||||||||
| Profit sharing | (0.57) | (0.38) | (0.53) | (0.17) | |||||||||||||||||||
| One-time pilot agreement expenses | — | — | (0.42) | — | |||||||||||||||||||
| CASM-Ex | 12.59 | ¢ | 12.43 | ¢ | 13.13 | ¢ | 12.78 | ¢ | |||||||||||||||
Delta Air Lines, Inc. | September 2023 Form 10-Q 34
Item 2. MD&A - Supplemental Information
Free Cash Flow
The following table shows a reconciliation of net cash provided by operating and investing activities (GAAP measures) 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:
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Net redemptions of short-term investments. Net redemptions 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.
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Strategic investments and related. Certain cash flows related to our investments in and related transactions with other airlines and associated companies, including Wheels Up in the September 2023 quarter, are included in our GAAP investing activities. We adjust for this activity because it provides a more meaningful comparison to our airline industry peers.
*•*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.
| Free cash flow reconciliation | |||||||||||
| Three Months Ended September 30, | |||||||||||
| (in millions) | 2023 | ||||||||||
| Net cash provided by operating activities | $ | 1,076 | |||||||||
| Net cash used in investing activities | (131) | ||||||||||
| Adjusted for: | |||||||||||
| Net redemptions of short-term investments | (1,226) | ||||||||||
| Strategic investments and related | 152 | ||||||||||
| Net cash flows related to certain airport construction projects and other | 40 | ||||||||||
| Financed aircraft acquisitions | (162) | ||||||||||
| Free cash flow | $ | (250) | |||||||||
Delta Air Lines, Inc. | September 2023 Form 10-Q 35
Item 3. Market Risk
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