Please standby, we're about to begin. Good morning, everyone and welcome to Delta Air Lines September Quarter 2021, financial results conference call. My name is Jenn and I will be your coordinator. At this time, all participants are in a listen-only mode until we conduct a question-and-answer session following the presentation. As a reminder, today's call is being recorded. I would now like to turn the conference over to Ms. Julie Stewart, Vice President of Investor Relations. Please go ahead.

Thank you, John. Good morning, everyone and thanks for joining us for our September quarter 2021 earnings call. Joining us from Atlanta today are CEO Ed Bastian, our President, Glen Hauenstein, our CFO, Dan Janki, and Ed will open the call with an overview of Delta's performance and strategy. Glen will provide an update on the revenue environment and our brand momentum, and Dan will discuss costs and our balance sheet. Similar to last quarter's call, we scheduled today's call for 90 minutes to make sure we have plenty of time for questions. For analysts, we ask you please limit yourself to one question and a brief follow-up so that we can get to as many analysts as possible. After the analyst Q&A, we will move to our media questions after which Ed will provide a brief closing statement. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Some of the factors that may cause such differences are described in Delta's SEC filings. We also discussed non-GAAP financial measures in all results excluding special items, unless otherwise noted. 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.

Thank you, Julie. And good morning, everyone. I appreciate you joining us this morning. The September Quarter marked another important milestone in our recovery. We achieved our first quarterly profit since the start of the pandemic with the pre-tax results of $216 million and a pre-tax margin of nearly 3%, despite still missing one-third of our revenue base compared to the same period in 2019. We saw a full return of domestic consumer travel to 2019 levels as our customers safely returned to the skies and our people delivered industry-leading operational performance through a very busy summer once again, showing why they are the best in the business. I want to thank every member of the Delta team for your hard work and dedication during a truly historic summer where we faced the challenges of standing up our operation after such unprecedented disruption. I'd also like to recognize the Delta teams who played a central role in transporting 10,000 Afghan refugees that were evacuated from harm's way in Afghanistan over the last couple of months and delivering needed supplies. It was an amazing effort that involved everyone from Delta's flight crews to operations control, to government affairs, to our charter and fleet team. Our revenue recovery in the September quarter reached 66% of 2019 levels, progressing from 51% in the June quarter and just 25% at the start of this year. This was led by strong consumer demand, growing improvement in business and international travel, and reflected the resilience of some of our diverse revenue streams, which are already back to or higher than pre-pandemic levels. While the recovery in business travel paused in August and early September as case counts increased, demand has picked up since Labor Day. Last week was our top corporate revenue booking week since the start of the pandemic. And with the announcement that U.S. borders will open in November, bookings from Europe and Brazil to the U.S. are rapidly improving. The third-quarter results reflect Delta's differentiated position in the industry and a continued focus on executing our customer-centric strategy. The strategy is rooted in providing best-in-class service to our customers, strengthening preference for our brand, while at the same time creating a simpler, more efficient operation. At the heart of our brand promise is operational reliability. Restoring our operations safely and reliably with a strong commitment to cleanliness remains our top priority. And we're proud to be leading the industry in all key operational metrics through the summer, as well as year-to-date. One important indicator is what we call brand-perfect days. Those days when we don't experience a single cancellation across our mainline and regional operations. I'm happy to report that we have delivered 116 brand-perfect days in 2021, which are on par with pre-pandemic levels as our people are delivering outstanding reliability. We're delivering on our commitment not just to return our service levels to pre-pandemic performance but to exceed those levels by the end of this year. A key component is staffing, and we have added 8,000 people to the Delta team this year. This new talent is helping us build the airline of the future, which includes a focus on improving diversity and representation across all levels of our workforce. Our culture of putting our people and our customers first is building stronger preference for the Delta brand. At its core, the Delta brand stands for connection, creating unique relationships with our customers, driving strong engagement, higher loyalty, and a sustained revenue premium to the industry. More customers are engaging with Delta than ever before, driving record downloads of our Fly Delta app and record sign-ups for our SkyMiles Loyalty Program. Our Delta American Express co-brand program continues to show strong resilience with card acquisitions nearly 95% restored and card spend 115% recovered to 2019 levels. As a result, remuneration from American Express in the September quarter exceeded 2019 levels, totaling just over a billion dollars in the quarter. Demonstrating the durability of our brand preference as we continue to deepen our customer relationships. Our revenue premium and our customer satisfaction have not just endured, but they've strengthened through the pandemic with both above 2019 levels. These outcomes are a true validation of our customer-centric strategy and people-first approach. At the same time, we're also building a simpler, more efficient airline. As we rescale the operations and refresh our fleet, we will unlock efficiency gains while also improving our product and customer experience. Dan will speak more about our fleet strategy and cost outlook shortly. As we look ahead, it's clear that the recovery will continue to be choppy, but we see a number of encouraging trends. Restoring the remaining one-third of our revenue base is dependent on further business and international demand improvement. In the September Quarter, domestic corporate volume was 40% recovered, up 10 points from the June quarter. With the spiking case counts delaying office re-openings, we did not see the progression we had expected at the start of the quarter, particularly after Labor Day. But as the variant recedes, business travel has picked up over the last month, with volumes now reaching the highest level we've seen in the recovery. In the last week, our domestic business volume was close to 50% restored. We expect continued improvement as offices reopen at the start of the new year. We hear regularly from our corporate customers that they're ready to get back to travel, see their clients face-to-face, renew business relationships, and develop new ones. That sentiment is coming through loud and clear in our most recent corporate surveys. More than 90% of our respondents mentioned that they expect travel volumes in the December quarter to either be the same or outpace September quarter. Nearly 60% of our accounts are telling us that they've already reopened their offices, with an additional 10% expected to open their offices before year-end. We're also seeing improving trends internationally spurred by the decision to lift 212(f). This decision marks a critical moment in our road to international recovery, and we thank the Biden administration and our supporters in Washington for their work to reopen travel to the U.S. Thanks to this important policy change, many families are going to be reunited this holiday season for the first time in almost two years. Against this backdrop, we anticipate our revenue momentum to show good progress through the December quarter, finishing the month of November and December combined, at a 75% recovery. This 10-point improvement from current levels is driven by offices reopening, international restrictions easing, and our expectation that consumer strength continues into the holidays. So putting the year in context, we started at only 25% of our business restored, total business for the Company. And we'll end the year at 75% restored. While choppy, there is a clear underlying momentum in our Company that gives us optimism as we go into '22. As those fundamentals improve, we also see fuel prices continue to rise, which will pressure our ability to remain profitable in the December quarter. At present time, we're expecting a modest loss in the fourth quarter with crude prices driving that up nearly 60% year-to-date and more than 15% just over the last month. While we operate in a volatile and uncertain environment, I have the utmost confidence in our return to sustained profitability as the recovery progresses into the new year. As we continue to restore our airline, our actions are guided by three near-term priorities. First, to deliver for our customers, providing the great service excellence they expect from Delta. We've worked hard to get our staffing levels in place, reducing wait times at our reservation centers, improving self-service options, the return of food and beverage options on board, upgraded Wi-Fi and in-flight entertainment, and the full reopening of our Delta Sky Club network in July of 2021. We continue to deliver on the need for flexibility with policy changes in extension of medallion status and SkyMiles benefits into 2023 to give our most loyal customers more flexibility as travel resumes. Our next priority is to re-scale our airline efficiently and reliably. We're remaining disciplined about how we're rebuilding our network, prioritizing operations, and matching our supply with demand. A measured approach to restoring capacity is critical to delivering for our customers and to managing through an environment of rising fuel prices. Finally, we're preparing for the future to position Delta for success in the next leg of the recovery and beyond. While restoring capacity in a measured way, we are growing share in key markets with high-value customers. We're making smart investments in our business to elevate the customer experience. That includes technology to enable efficiency and improve our digital capabilities while accelerating construction projects in key airports like LAX, LaGuardia, and JFK. On the balance sheet, we're focused on returning to our investment-grade metrics, having experienced firsthand just how important it was to have a strong balance sheet as we entered the pandemic. We're advancing our fleet renewal and opportunistically acquiring aircraft while maintaining flexibility, trying to engage in efficiency that we expect will improve our long-term cost structure and our carbon footprint. Our commitment to being a carbon-neutral airline globally differentiates us as we know customers are choosing brands that they believe in, and employees are looking to work for a Company that's dedicated to a sustainable future. Carbon neutrality is a fundamental part of our mission, and a meaningful step that we can take right now to protect our world for generations to come. We've recently announced our commitment to work with the Science Based Targets initiative to set a net-zero by 2050 target and an interim emissions intensity target for our airline operations in line with the Paris Agreement. This quarter, Delta also announced a 250 million gallon off-take agreement for sustainable aviation fuel on our road to a 10% SAF consumption level by 2030. We also announced plans to join several coalitions, including The Leaf Coalition, The World Economic Forum's Clean Skies Tomorrow, and the UN-led Race to Zero. You'll be hearing more about all of these efforts at our Capital Markets Day on December 16th in New York. The power of our purpose-driven brand, our people, and our strategy position Delta incredibly well for the future. We're building on a strong foundation to extend Delta's leadership position in the years to come and drive long-term value for all of our stakeholders, our people, our customers, our owners, and our communities where we live, work, and serve. And with that, I'll turn the call over to Glen.

Well, thank you, Ed. Good morning, everyone. Generating a profit for the quarter, even with the third of our revenue still to come, is a great achievement and is another important milestone as we continue down the path of recovery. Over the last 18 months, we have stayed true to our core strengths in our commitment to the customer, from improving our position in key markets to growing Infinity with our high-value customers, to driving outperformance in premium products and diverse revenue streams, we are extending our competitive advantages. The September quarter started out strong and the consumer demand environment remained robust throughout the quarter. We had a profitable summer in Europe as vaccinated U.S. tourists were welcomed back to the continent. With the variant taking hold in early August, we saw a temporary pause in demand, especially business travel as many companies delayed office reopening plans. Despite the variant's impact, we remain within our initial guidance range with revenues coming in down 33.8% versus 2019 or two-thirds restored. This represented a $1.9 billion sequential improvement in total revenue to $8.3 billion. Total unit revenue improved 17% versus the June quarter, on an 11-point improvement in load factor and a 4% improvement in yield. Since Labor Day, we've seen improvement in demand with daily cash sales growing each week. Domestic consumer revenue remains fully recovered to 2019 levels. And we are seeing continued improvement in domestic corporate sold revenue, which as Ed mentioned, is at the highest level we've seen during the recovery. We expect continued improvement throughout this quarter. On the international front, we continue to see positive trends led by Latin with passenger revenues 84% recovered versus 2019, a 20-point sequential improvement driven by leisure traffic to beach markets. Transatlantic recovery improved by 20 points versus the June quarter to 35% recovered versus the September quarter of 2019, with corporate sales and this entity now nearly 30% restored. We are also encouraged by the administration's recent decision to lift the 212(f) restrictions. Following the announcement, Europe point-of-sale bookings for November and December are more than six times what they had been pre this announcement. As we progress through the last few months of the year, we expect strong results for Thanksgiving and Christmas. The month of October is impacted by the lingering effect of the variant, resulting in an expectation that revenue will be approximately 65% recovered. But as we move into November and December, the sunset of the 212(f) and a higher mix of consumer traffic are expected to support revenue recovery in the 75% range to 2019 levels. With these monthly trends, we expect a percentage of revenue recovery in the low 70s for the December quarter. Consistent with our disciplined approach on matching capacity to the emerging demand environment, we expect our December quarter capacity to be approximately 80% of 2019 levels. Balancing the restoration of our capacity with demand remains a strategic priority for Delta and is more important than ever given the uneven recovery and the increase in fuel prices. While fuel is a near-term headwind for our results, we expect to recapture higher fuel in the medium to long run as we return to a more historical correlation between fuel prices and revenue. As we look to '22, we plan to progress our network restoration in line with demand. We have the ability to achieve 2019 capacity levels by the second half of next year. In addition to this quarter's financial results, there are several other accomplishments that we're very proud of. Our premium products continue to outperform. During the quarter, premium revenue in domestic short-haul surpassed main cabin by approximately 10 points, as paid load factors in Comfort Plus and first-class cabins exceeded 2019 levels. This is a great validation of our premium strategy, especially given the higher mix of consumer demand. Our diverse revenue streams remain resilient. Other revenue in the quarter was 91% recovered to 2019 levels. Within that category, loyalty revenues are more than 80% restored, supported by strong card spending and acquisition trends. Cargo revenue, which we expect will continue to grow and enhance our future international profitability, was nearly 40% higher despite flying less than half of our wide-body international flights compared to the same period of 2019. MRO revenue was more than 90% recovered on increased engine volume. Our conservative approach to restoring capacity combined with the strength of our premium products and the resilience of our diversified revenue streams resulted in a unit revenue premium relative to the industry throughout the pandemic. As we closed the books on the September quarter, we expect that trend to continue with our unit revenue premium relative to the industry exceeding our highest third quarter on record, even with business and international, less than 50% recovered. This result validates a basic but powerful premise. Putting the customer at the center of everything that we do and pursuing diverse revenue streams translates into a sustained revenue premium. As consumers returned to the skies, we've been focused on increasing stability and trust. We're also reducing friction points by eliminating change fees, enhancing self-service options, and developing our Flex product that provides full refundability for those that value flexibility the most. We're progressing towards a fleet that is more cost-efficient and fuel-efficient and one that offers even better onboard experience with a higher mix of premium seats and enhanced Wi-Fi and IFP products. Enhancing the customer experience doesn't stop onboard our aircraft. It also extends to the experience on the ground. We're accelerating investments in our airports and continuing to innovate. In Atlanta, we're launching digital ID, allowing customers to rely on facial recognition to create a seamless airport experience from check-in to boarding. We're investing in our Sky Clubs, including two of our largest clubs in Los Angeles and LaGuardia, scheduled to open in March and April of '22. As Ed mentioned, we are seeing strong consumer engagement and growing brand preference. More customers are choosing our digital channels, which are highly effective selling and self-service platforms. For example, our Fly Delta app downloads reached a record in the September quarter, up 25% versus 2019, with monthly downloads now surpassing 1 million for the first time ever. Buyer digital engagement is fueling growth in our SkyMiles program, which secured the number one spot against all global airlines in the U.S. News ranking of all airline loyalty programs. Congratulations to our customer engagement and loyalty team on this great accomplishment. Customers are joining SkyMiles at a faster rate than the passenger recovery. For the quarter, our SkyMiles acquisitions were more than 100% recovered relative to 2019. And finally, our co-brand program continues to show resilience and drive tremendous value for both our Delta and our partner, American Express, and importantly to our highest-value customers. We're seeing more demand for our premium co-brand credit cards with both new and existing cardholders, as more customers are increasing their perception of value proposition. Our well-defined improvement strategy of focusing on the customer positions Delta well for many years ahead. Key to our success is the fact that we have the best people in the industry delivering on our brand promise to our customers every single day. And with that, I'll turn the call over to Dan.

Great. Thank you, Glen. The team's world-class capability and continued commitment to delivering best-in-class service and reliability certainly sets the foundation for our financial success, and this quarter was no exception. The Delta people continue to execute well through a dynamic environment. Across our teams, we are focused on preparing the operations for the next leg of the recovery, taking the steps required to position Delta for the future, where we build upon our industry leadership position in the years ahead. Let me start with a few highlights for the September quarter. Even with the pause in the pace of recovery, we achieved our goal of profitability for the current quarter with earnings-per-share of $0.30, pretax profit of $216 million, a margin nearly 3%, and revenue of $8.3 billion. Total third-quarter operating expense was $7.8 billion. That was a 12% increase from the second quarter, driven primarily by non-fuel costs from the continued restoration of the airline. Fuel expense, $1.5 billion increased 5% sequentially as lower fuel prices were partly offset by an 11% increase in capacity versus the second quarter. Adjusted fuel price per gallon was $1.94, which was 8% lower than the second quarter, driven by refinery contributions versus a loss in the second quarter. We realized 4% fuel efficiency versus the same period in 2019 as we continue to capture benefits of our fleet renewal. Non-fuel costs of $6.3 billion increased 14% sequentially. That was on revenue growth of 30% driven by higher capacity and double-digit improvement in load factors. We saw a step-up in costs in the quarter to support operational performance and higher revenue capacity volumes while we positioned for further demand recovery. The impact of these costs combined with a network that was 30% smaller resulted in September Quarter non-fuel CASM being 15% higher than 2019. Now, moving to cash flow and the balance sheet. The September quarter operating cash flow was $151 million. We ended September with $19.3 billion of adjusted net debt. The pause in the paces of our recovery along with seasonality as we transitioned out of the peak summer resulted in a sequential decline in our air traffic liability balance of $562 million to $6.4 billion. We expect the air traffic liability to begin to build as we enter 2022 as travel restrictions ease and more customers begin to make plans for the spring and summer season. Balance sheet management remains a priority as we chart our return to investment-grade metrics in the coming years. During the September quarter, we used excess cash to reduce gross debt and interest expense, while rebuilding unencumbered assets and managing our debt maturity profile. This includes the execution of a billion-dollar tender offer, paying cash for the majority of our aircraft, and commencing $500 million of incremental debt reduction initiatives. Over the last 12 months, we've reduced our financial obligations by $12 billion. These actions drive interest savings, fund our pension, and smooth our debt maturity profile. Now, turning to capital and fleet, we invested nearly $620 million of Capex in the September quarter. That was below our guidance of $800 million due to timing of used aircraft delivery. Our full-year 2021 gross Capex is unchanged at $3.2 billion. On the fleet, we continued to build on our progress to transform and gauge our fleet to be simpler and more efficient, being opportunistic while maintaining flexibility to adjust to the shape of the recovery is a priority. In 2020, we accelerated our fleet renewal with the retirement of over 200 aircraft and elimination of two fleet families. We also deferred deliveries worth more than $5 billion, resulting in lower planned Capex in 2020 and 2021. To capitalize on the recovery and replace retired aircraft in a capital disciplined manner, we converted a total of 55 A321 NEO options to firm orders, with delivery scheduled between 2022 and 2027, and opportunistically entered into agreements to acquire 38 gently used aircraft at compelling economics, two of which we announced today. Our decisions are guided by a fleet strategy, focused on simplification, scale within our fleet types, higher gauge, and sustainability. The simplification and revitalization of fleet is driving permanent change in our cost structure, with benefits estimated to be around $400 million in 2021 and around $650 million in 2022. This is compared to 2019. These savings will continue to scale in future years as we take delivery of next-generation aircraft, restore flying volumes, and further simplify the fleet. With these actions, we are unlocking efficiency gains, while also improving the product and customer experience. By next summer, nearly half our narrow-body seats will be produced by larger gauge aircraft, our most profitable fleet category. This is an improvement of 10 points versus 2019. Our wide-body fleet next-generation aircraft will make up 25% of our fleet by next summer, a 15-point improvement versus 2019, that will drive efficiency gains, premium product enhancements, and expanded cargo capability. Now, turning to the fourth quarter, we expect a modest loss as the recent rise in fuel prices will pressure our ability to remain profitable in the current quarter. Adjusted fuel price per gallon is expected to be between $2.25 to $2.40. This represents an increase of nearly $0.40 per gallon from the September quarter, as market prices have moved up sharply. Mind you, a $0.05 movement in fuel equates to roughly $40 million of expense. Fuel efficiency is expected to be approximately 4% better than the December quarter in 2019. Non-fuel costs are expected to increase 2% to 4% sequentially, as we incur people-related costs to prepare our operations for the acceleration in demand covering in 2022. Non-fuel CASM is expected to be 6% to 8% higher to 2019 in the fourth quarter. When comparing to 2019, our Non-fuel CASM profile is impacted by the cost required to restore our operations and how we're applying our network. As we rebuild, additional maintenance and training costs are required to prepare our fleet and our crews to fly a larger schedule next summer. The size of the network and the deployment of the fleet are also contributing factors; from a scale perspective, our network is 20% smaller in the fourth quarter compared to 2019. Our mix that we're flying is also different. We have less long-haul international capacity, which is structurally low CASM given long stage length nature of that flying. Until we are more fully restored, we expect non-fuel CASM to be above 2019 levels. As our operations normalize, I'm confident in our ability to drive operating leverage and recognize the benefit from our fleet renewal. As we look to 2022, we are optimistic about the continued demand recovery and are prioritizing driving margins, profitability, and restoring our balance sheet. I look forward to building on the team's strong track record of financial discipline and balanced capital allocation and sharing more with you on long-term expectations and goals of our Capital Markets Day in December in New York. In closing, as I continue to spend time with the Delta people, my conviction in our future only grows stronger. During my first 90 days, I've been most impressed with the team's resounding commitment to our employees and our customers which comes through in every action I have across our operations. It's clear to me that there's something truly special about the Delta family. I want to echo Ed's and Glen's sentiment, thank all my Delta colleagues for everything that they do to carry out our mission to bring people together and connect the world. With absolutely the best employees in the business, a clear focus on the customer, and continued financial discipline, I'm confident we are positioned to create long-term value for all our stakeholders. Now with that, I'll turn the call back over to Julie to begin Q&A.

Thanks, Dan. As a reminder, please limit yourself to one question and a brief follow-up. Jen, can you please remind the analysts how to queue up for questions?

Thank you. We'll go first to Jamie Baker with J.P. Morgan.

Hey, good morning, everybody. First question goes possibly to Glen and Dan. So pre-COVID, I had asked Paul about the amount of time that it would typically take Delta to recalibrate the higher fuel prices. I'm not staring at the transcript, but its estimate of time was 4 to 6 months, which was an improvement from historic levels. So my question, I guess for Glen, is whether the booking curve is deep enough right now that you might actually be able to recapture the top line more quickly than that? And similarly for Dan, whether there's anything we should be thinking on the costs or operations side that could accelerate the process and basically just trying to understand whether four to six months is still the right estimate for us to be using.

I would just comment. I think we’re a bit in uncharted territory here as the recovery continues. And well, I think it might be difficult in the very short run despite the fact that the booking curve has moved in a bit, I would estimate that 4 to 6 months is about right because we believe that demand and capacity will fall back into very good equilibrium by next spring, which would put you inside that window.

Okay. All right, so no structural changes that you can identify that would greatly alter it one way or the other then?

No. I think that would be where we would expect it to manifest itself in the same window.

And then second question, just as it relates to the international demand that you're seeing from Europe since the Biden announcement, can you say how skewed the improvement is to the European point-of-sale. I'm just trying to reconcile some data that we have here that largely excludes Euro point-of-sale, just trying to get a feel whether it's 70-30, 60-40, 80-20 something like that.

The winter season typically sees more sales from Europe than the summer. We’re likely looking at a normal distribution of about 60% from the U.S. and 40% from Europe. Interestingly, we've experienced growth on both sides, not just in European sales. It seems many Europeans in the U.S. were concerned about returning, leading to a notable increase as we approach November and December, especially after the lifting of the 212(f) restrictions.

Okay. Very helpful. Thank you, Glen.

We'll go next to Duane Pfennigwerth with Evercore ISI.

Hey, thanks for the time. So in terms of the cost guidance, which is where we're getting a bunch of questions this morning. Can you just bridge from the early September commentary that you'd see being down. You're over 2 by a little. And today where you see it up, 6 to 8 on a unit basis. What are the main buckets? What changed over that call in 5, 6 weeks?

What I would say is that first, the capacity adjustments we made in the fourth quarter were a key factor, along with the speed of the rebuild and preparations for demand in 2022. These were the two main reasons for that outcome.

Okay. And then on fleet restoration, would you put some numbers to that, perhaps? What is that in 2021? And what do you expect that to be in 2022? And do you have a sense for when we cross over from leap restoration investment to the benefits we were hearing about a while ago from fleet simplification? And thanks for taking the questions.

Yeah. The restoration, when you think about bringing aircraft into service through 2021 to '22, we'll bring back into service 160 to 170 aircraft. And that's really the element that the vast majority of that rebuild is focused on bringing those aircraft back. And then as we restore to more fully restored capacity levels to '19, that will dissipate and trail off and be transitory in nature from that perspective.

Duane, this is Ed, if I could add a couple of points on the overall cost outlook. We are committed to our long-term guide and we'll talk more in December at the Capital Markets Day as to where we see costs going over the next couple of years. Clearly in our business, there's a race to try to capture the available demand and stand our business back up after an unprecedented level of disruption and ensure that we are not experiencing any kind of operational limitation in our ability to get our service levels and customer expectations met. So we put the paddle down to get the staffing in place to get our service levels back, to get the quality of performance that drives the brand premium that this company stands for. And it may take us a few extra quarters to get down to those 2019 and below levels, but that's still our goal.

Okay. I appreciate the thoughts. Thank you.

We'll go next to Brandon Oglenski with Barclays.

Yeah. Good morning, and thanks for taking the question. And Ed, you kind of answered it there; but I guess, Dan, is it still right to be thinking 2019 costs are the benchmark here, especially just given all the wage inflation that we're seeing across the economy?

Yes, it's certainly a clear marker for us. We believe as we restore this airline we'll be at or better than 2019 cost levels.

And so is that just literally a function of the network getting back to where you were utilizing pre-pandemic, especially with longer-haul flying coming back?

As we move through this transition and complete the rebuild, the challenges will ease. By increasing capacity, we gain leverage and create a better balance between domestic and international operations. Additionally, when considering more systemic aspects, the benefits of fleet simplification will start to manifest, improving fuel efficiency and reducing operating costs.

Brandon, this is Ed. I can echo what Dan is saying. We've taken the opportunity over the last year to rebuild this airline back piece by piece. And we're learning a lot more about what we want to keep forward and retain, and what parts of the business that we don't need to be retaining and some of the cost structure until there is efficiency, whether it's in catering, whether it's in our operational performance; literally every part of our G&A, every part of our operations. Hard to see when our capacity is still only at 80% or more below 2019 levels. But we are very determined to make certain that we retain the value for the period of time we've just been through and that efficiency will show through. It's just going to take a little bit longer and that's why it will be really important in the Capital Markets Day that we show you the pathway to get there.

Thank you.

We'll go next to Catherine O'Brien with Goldman Sachs.

Good morning, everyone. I have a final follow-up regarding the cost outlook. It's clear that we're likely to witness a recovery in available seat miles, not just in the total capacity deployed but also in network allocation as we enhance our longer haul, widebody flying. However, could we discuss the pace of this recovery? Is a full restoration necessary for this acceleration, or can we expect to see significant gains in leverage as we move from 90% to 100% recovery? Any high-level insights on how to approach this pacing would be appreciated. Thank you.

We will provide you with more details as we approach Capital Markets Day, where we will discuss our outlook and provide specifics about the guidance for 2020 to 2022. The key areas to focus on are the reduction of rebuild costs related to our fleet and the timing of that restoration, which will closely align with the return of capacity. Additionally, we will see incremental leverage during this period. While you can expect updates on this over time, the primary objective is to lower the fleet rebuild costs, and we anticipate progress on this as we move forward.

Okay. Got it. And then maybe just one more international. So at TNBC this morning, you noted that the Company saw a tenfold increase in international bookings following the announcement on the U.S. borders a couple of weeks ago. Can you just help us frame when we'll really start to see that momentum build in revenue? It sounds like there's some of that hitting in November-December timeframe driving your more optimistic outlook on those months versus October. But are there also any early indications maybe for next spring or summer? Would love to hear when you think we're going to start to really see that show up in revenue a bit more. Thanks.

Sure, Katy. Yes, we're going to see it in November and December. We're looking at a 10-point recovery improvement, just going from October to November. October, we're estimating at the 65% restoration level, which is where we've been for the last couple of months and received the jump-up in November and December. International was a piece of that, the only driver of that. Business travel is an important piece of that as we see that continuing to improve. We see in our bookings I mentioned I think on the CNBC piece this morning that just in the last week, our cash sales were up 9% week-over-week and that's a trend we've been seeing here for some period of time; steady growth. I believe you're going to witness it soon. Similar to the summer, there will be strong demand from those eager to travel. There might be a brief slowdown in January and February, but I anticipate that Spring and Summer will see another increase, potentially at a higher level. I expect that, especially in Europe, which represents our largest international market, the Spring-Summer season next year will closely resemble what we've experienced in the U.S. during the same period.

Okay. Thanks for that.

We go next to Hunter Keay with Wolfe Research.

Hey, good morning. Glen, these surveys that you're saying, are you asking corporate travel managers these questions or the travelers themselves? And also, how are you contingency planning if we get into late next fall and business travels up only 80% of what it was pre-COVID, what sort of contingency plans do you guys have in place?

Well, first of all, I'll answer the first part of the question. That is a survey that goes out to travel managers. So, that's their reply.

Okay.

Second, and we do other surveys that go through our SkyMiles program for frequent travelers and their return to travel. And I would say that those surveys are pretty well in sync. Clearly, consumers feeling much more confidence than business travelers in terms of their what they expect to fly more, but more and more, we're seeing the business component accelerate. That's pretty exciting for us. And then on contingency plans, I think we are committed to remaining incredibly flexible. We know we're not fully out of the woods yet. We know there's going to be more chop. It's not going to be a straight line out, and there'll be twists and turns. Whether it's fuel, whatever it is, that's part of our business here and we're always managing to the sum of all the inputs.

Okay.

I want to address some of Glen's comments. None of us can predict if classic business travel volume will return. We are optimistic that it will bounce back, but we also understand it will return in a different way. There will undeniably be some level of demand erosion and behavioral changes, but there are also new travel opportunities. The hybrid work model changes the perspective on where and how people work. I've mentioned publicly that video technology does not just keep you at home; it allows you to take the office on the road and stay better connected for various reasons. We plan to discuss this further in December, as many people are curious about the future of business travel. I see as many positive developments emerging from this recovery as there are challenges caused by video technology and other behavioral changes during the pandemic.

Okay. I've always thought that the lack of unions wasn't so much a cost advantage for Delta, but a service advantage. Is there a way that you can get a little bit more creative next year to push that a little bit harder to drive some favorable CASM without sacrificing the frontline morale? Could you follow me?

I'm not going to comment on the benefits or lack thereof of unions. We have a union; we have a great relationship with our pilots and a lot of our employees are non-union. We have great relationships and great productivity from them as well. What I would tell you about our people is that they are incredible. The reason we have the revenue premium we have is not that we're necessarily smarter than anyone else. We provide the best service, the best reliability, the best product in the sky. And it's not a cost game, it's a performance game. And it drives better revenues; it also drives more productive cost efficiencies. And we've talked a lot over the last few quarters about the need to get our staffing levels back. I've mentioned this morning that we're bringing back 8,000 people, brought back 8,000 people this year. Don't forget, we had 17,000 that retired at this time a year ago. So we are getting significant flexibility and productivity from the team as we get out to the future. And well, our people will continue to lead the way.

Okay. Thank you.

We'll go next to Conor Cunningham with MKM Partners.

Hello everyone, I appreciate your time. One challenge I believe many face is establishing a baseline for capacity, especially given the changing demand landscape. You've mentioned various revenue headwinds and the rise in fuel costs. I'm not looking for a specific figure unless you wish to share one, but how has your perspective on first-half capacity evolved over the last few months? I understood you indicated that 2019 capacity might be achievable in the second half. Is that still your expectation?

I believe we have remained quite adaptable throughout the entire crisis and our intention is to continue being adaptable until we achieve full restoration. We are uncertain about when that will happen. Currently, we aim to grow beyond our present size, but honestly, we have not been able to do so significantly without risking operational performance issues, as we've observed with some other carriers. We intend to operate within a level of confidence that allows us to adhere to the schedules we set. We are currently working on rebuilding costs, bringing back personnel, and reintroducing aircraft. We believe we can reach 100% of our 2019 capacity sometime in the latter half of next year. As we approach that timeframe, we'll provide more details on any decisions regarding capacity adjustments at Investor Day. For now, our priority is to maintain flexibility. As Dan mentioned, for the current quarter we are slightly under our revenue production expectations from about 8 to 12 weeks ago.

Right. Okay. And then to follow up on Hunter's question for premium products continue to perform really well. And I guess in retrospect, it makes sense of pent-up demand and just the consumer being flush with cash. But how do you think about the premium cabin as demand starts to normalize? Do you think the changes are now like structural or is it really just too early to tell in it depends on what the demand environment is later on down the road?

We believe that the changes are structural, and during the pandemic, we established a new class of customer who is the high-end consumer seeking these products, which were previously prioritized for business customers in the booking process. This is one aspect we are considering as we assess whether our fleet can meet the higher levels of demand. These are topics we plan to discuss further at Investor Day. However, we are confident that there will be an increasing demand for these products moving forward.

Okay. Thank you.

In the long run, I think we can get very precise with the average consumers have been through this experience. COVID has led many consumers to rethink their decision-making in spending and time away from home. There's going to be some fond memories that we'll track to and we should keep in mind this share.

As you consider it, there are really three components to think about. First, you need to examine the elements of free cash flow and the movements associated with it. This includes earnings, the changes in working capital, which is essentially the air traffic liability, and finally, capital expenditures. We have provided a guidance framework in relation to earnings. We have indicated that the gross capital expenditures for the year will be $3.2 billion, with $2 billion spent year-to-date, suggesting an additional $1.2 billion in the fourth quarter. Additionally, the working capital movement, which relates to the air traffic liability, typically fluctuates in a way that aligns with traditional seasonal patterns, often in the low teens.

When you think about it, that would likely move in a more traditional seasonal manner in the low teens. However, as we've discussed throughout this goal, we are not necessarily in traditional seasonal periods. Therefore, we would expect that to be slightly lower, in relation to movement. Those are really the key drivers.

Good morning, everyone. Dan, could you explain the main factors influencing the increase from 19 billion to 22 billion, particularly as we approach the December quarter and considering the impact of seasonality?

When you consider this, there are essentially three elements involved. First, we need to analyze the components of free cash flow and their variations. The key elements are earnings, the changes in working capital represented by air traffic liability, and capital expenditures. We've previously indicated that our guidance for capital expenditures is $3.2 billion for the year, with gross capital expenditures of $2 billion year-to-date, which suggests we will have about $1.2 billion in the fourth quarter. Additionally, the movement in working capital, primarily related to air traffic liability, typically experiences seasonal variations and is expected to move in the low teens during a typical timeframe like this. However, as we've discussed, we are not currently in a traditional seasonal period, so we anticipate this figure to be slightly lower than expected. These are the main factors driving our outlook.

Hi. Thanks for taking the question. I want to ask first about Boston, your goals there. Do you have goals beyond the top 10 Atlantic and the top 20 domestic destinations? And in line with that, as for your competitors, if you're growing in Boston, don't they need to grow too, and wouldn't that be part of their case to the Justice Department that they also need to grow?

Well, Ted, I think you know us well enough to know we're not going to comment on what we think our competitors should or could do. But I think what we see is our products suit the Boston market quite well, being a premium carrier and having Boston be a very affluent city with a huge component of corporate travel. We think that we are best suited to deliver the best products and services to the customers of Boston. And we're going to, as I said in previous calls, we don't want to be the biggest, we just want to be the most loved and the most profitable.

All right. Thank you. And I need to ask about the vaccine. Do you think you can get where you need to get in terms of vaccines without having a mandate at Delta, without threatening firing? Can you get where you need to?

Yeah, well, that's our goal, Ted. The goal here is to get people vaccinated. And we are on a plan to get people vaccinated. I think it's one of the reasons the order came out from the administration was they were uncomfortable that not enough companies had plans to get their people vaccinated. And we already have a plan. And the plan's working well. We're at 90% at the present time, vaccination. We expect to get to 95% as we get into November. And there'll be some exemption requests. So there undoubtedly will be a small number of people that will not be vaccinated. I think it's going to be in the 1% to 2% range, relatively small amount of people. And we'll have to assess that when the time comes. But right now, I think we're fully aligned with the intent of the EO.

Good morning, everyone. I appreciate you taking the time. I'd like to approach the cost question from a different angle. The capacity is projected to be down 80% for the fourth quarter. Could you provide insight into how operating resources compare to 2019 in that quarter? I'm trying to understand how many crews, pilots, and staff are currently working to maintain the schedule with this reduced capacity of 20%. Is the workforce aligned with that reduction, or is it less? Could you help clarify the productivity aspect?

I'm not sure I fully understand the essence of the question regarding where the workforce is relative.

Yes. So regarding productive capacity, if you had 100 people producing at full capacity last year and now you’re at 80, do you have 85% of the resources from 2019 contributing to that production? I'm trying to understand the reduction that has occurred due to the decrease in capacity.

I think the way to approach this is by considering productivity measures by group. As you restore operations, you're getting productivity levels back and getting closer to or exceeding those from 2019, whether it's at the airport, in catering, or other activities. As you make progress, there are also instances where we're hiring in advance to ramp up. These new hires are initially unproductive as they go through training and scaling before they are integrated into the operation, which is when we highlight specifics related to the rebuild.

Let me take a stab at this, David. We have a lot of premium pay over time. The lack of 'productivity' given where we sit with the rapid rebuild of the airline, getting people in position, getting people ready for the future, as Dan said, just covering the operation. And so you have not only just more people than capacity relative to where we are eventually going to end up once our business is restored. But on top of that, you've got a higher level of added costs going into the current funnel to ensure that you're delivering great service and building for the future at the same time on a reduced basic capacity.

That's helpful. Thanks. If I could just squeeze one more in there, Glen. As you think about when we should be getting back to prior period load factors. Are you expecting the airline to get back to that high '18 level in '22 or '23? How should we think about load factor recovery?

Yeah, I think this summer we were running load factors that were within a couple points of 2019 levels. So I would expect by next spring and summer that the industry would be back in that zone.

Well, the next to Mike Linenberg with Deutsche Bank.

Good morning, everyone. Dan, could you please discuss the main components of the upcoming transition from 19 billion to 22 billion, particularly regarding the December quarter and the role of seasonality in this change?

When considering the topic, there are three main components to address. First, you need to analyze free cash flow and its changes. This includes earnings, shifts in working capital which is associated with air traffic liability, and capital expenditures. We have indicated that the guidance for capital expenditures is $3.2 billion for the year, with gross expenditures of $2 billion year-to-date, suggesting an implied $1.2 billion for the fourth quarter. Additionally, working capital movements also relate to air traffic liability, which typically shows a seasonal change in the low teens during this period. When you think about capacity, we believe as we build our schedules back and that equity will move higher and factor there. And we could continue to address all the elements here that help build upon it. So I think we could give you more color and insights as we get closer to Capital Markets Day.

Hi, thanks for taking the question. I want to ask first about Boston, your goals there. Do you have goals beyond the top 10 Atlantic and the top 20 domestic destinations? And in line with that, as for your competitors, if you're growing in Boston, don't they need to grow too, and wouldn't that be part of their case to the Justice Department that they also need to grow?

Well, Ted, I think you know us well enough to know we're not going to comment on what we think our competitors should or could do. But I think what we see is our products suit the Boston market quite well, being a premium carrier and having Boston be a very affluent city with a huge component of corporate travel. We think that we are best suited to deliver the best products and services to the customers of Boston. And we're going to, as I said in previous calls, we don't want to be the biggest, we just want to be the most loved and the most profitable.

All right. Thank you. And I need to ask about the vaccine. Do you think you can get where you need to get in terms of vaccines without having a mandate at Delta, without threatening firing? Can you get where you need to?

Yeah, well, that's our goal, Ted. The goal here is to get people vaccinated. And we are on a plan to get people vaccinated. I think it's one of the reasons the order came out from the administration was they were uncomfortable that not enough companies had plans to get their people vaccinated. And we already have a plan. And the plan's working well. We're at 90% at the present time, vaccination. We expect to get to 95% as we get into November. And there'll be some exemption requests. So there undoubtedly will be a small number of people that will not be vaccinated. I think it's going to be in the 1% to 2% range, relatively small amount of people. And we'll have to assess that when the time comes. But right now, I think we're fully aligned with the intent of the EO.