Table of Contents
Table of Contents

How Delta Air Lines Makes Money

Passenger revenue is rising rapidly amid a recovery in travel demand

Delta Air Lines Inc. (DAL) is a global airline based in the U.S. The company provides air transportation services for passengers and cargo. It also operates an oil refinery business through subsidiaries. The oil refinery business serves the primary airline business by providing jet fuel. Additionally, Delta provides ancillary air services and a customer loyalty program. Delta's competitors include American Airlines Inc. (AAL), Southwest Airlines Co. (LUV), and United Airlines Holdings Inc. (UAL).

Like most airline companies, Delta has experienced a significant adverse impact to its business as a result of the COVID-19 pandemic. In 2020, the company served approximately 70 million customers, down nearly two-thirds from 2019. Travel demand has begun to recover over the past year amid vaccine rollouts and an easing of travel restrictions. Delta said that, while its business and international travel demand is still recovering, its domestic consumer travel demand has returned to 2019 levels.

Key Takeaways

  • Delta Air Lines is a global airline providing air transportation for passengers and cargo.
  • Delta's passenger revenue is growing fast as travel demand rebounds after being decimated by the pandemic.
  • Delta cancelled its code-sharing agreement with Russia's national carrier Aeroflot amid Russia's invasion of Ukraine.

Delta Air Lines' Financials

Delta announced in mid-January financial results for Q4 of its 2021 fiscal year (FY), which ended Dec. 31, 2021. Because of the dramatic impact the pandemic had on the company's business in FY 2020, Delta presented its fourth quarter results for FY 2021 in comparison with fourth quarter results from FY 2019, before the pandemic. Normally, companies compare their results with the year-ago quarter. Both the year-ago and two-year-ago comparison are provided below.

Delta reported a net loss of $408 million in Q4 FY 2021 compared to net income of $1.1 billion in Q4 FY 2019. In Q4 FY 2020, the company reported a net loss of $755 million. Revenue in the fourth quarter was $9.5 billion, down 17.2% compared to Q4 FY 2019 but up 138.4% compared to Q4 FY 2020. The narrower net loss and rapid rise in revenue in the most recent fourth quarter compared to the year-ago quarter are an indication that Delta's business continues to recover following the initial shock from the pandemic. However, earnings and revenue have still not recovered to their levels prior to the pandemic.

Delta Air Lines' Business Segments

Delta has two operating segments: airline and refinery. The airline segment constitutes a single business unit representing all air transportation services for passengers and cargo worldwide, as well as the company's customer loyalty program and ancillary airline services. The refinery segment represents Delta's wholly-owned subsidiary Monroe Energy LLC, which operates an oil refinery business that supplies jet fuel to Delta's airline operations.

In both its annual and Q4 FY 2021 financial reports, Delta also breaks out operating numbers differently from the above. In these cases, Delta breaks out revenue for three operating areas: passenger, cargo, and other. The company did not provide net income or loss figures for these three areas.

Passenger

Delta's passenger revenue primarily consists of revenue for airline tickets sold to customers flying in both business-cabin and main-cabin seating. This category also includes revenue generated from loyalty travel awards and from travel-related services.

Passenger revenue was $7.2 billion in Q4 FY 2021, up 168.4% compared to the year-ago quarter but still down 29.3% compared to the same quarter in FY 2019. Passenger revenue accounted for more than 76% of the company's total revenue during the quarter.

Cargo

Delta's cargo revenue includes revenue generated from scheduled air transportation service for non-passenger cargo. The company introduced cargo-only charter flights in 2020 in response to a reduction in industry cargo capacity due to the impacts of the pandemic.

In Q4 FY 2021, cargo revenue was $304 million, up 49.0% compared to the year-ago quarter and 62.6% compared to the same three-month period in FY 2019. The rise in cargo revenue compared to two years ago reflects Delta's ability to ramp up capacity with cargo-only flights amid a broader industry-wide shortage. Cargo revenue comprised about 3% of companywide revenue in the fourth quarter.

Other

Delta's other revenue includes the company's oil refinery business and other ancillary businesses, including aircraft maintenance services provided to third parties and the company's vacation whole sale operations. It also includes a portion of the company's loyalty program revenue and miscellaneous other revenue sources.

In Q4 FY 2021, other revenue was $1.9 billion, rising 79.7% compared to the year-ago quarter and up 91.2% compared to Q4 FY 2019. Other revenue represented 20% of total revenue during the quarter.

Delta Air Lines' Recent Developments

In late February 2021, Delta said that it would no longer sell flight tickets operated by Aeroflot, Russia's national carrier and largest airline, nor will it allow Aeroflot to sell tickets on its own flights. Delta canceled its code-sharing agreement with Aeroflot amid Russia's invasion of Ukraine. The company did not provide a reason for ending its market agreement under which the two airlines sell tickets on each others' flights. Various aviation sanctions have been imposed on the global aviation industry since the invasion.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Delta Air Lines Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 107.

  2. Delta Air Lines Inc. "Form 10-K for the fiscal year ended December 31, 2020," Page 2.

  3. Delta Air Lines Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 2.

  4. Delta Air Lines Inc. "Form 8-K dated Jan. 13, 2022," Page 7.

  5. Delta Air Lines Inc. "Form 8-K dated Jan. 14, 2021," Page 7.

  6. Delta Air Lines Inc. "Form 10-K for the fiscal year ended December 31, 2021," Pages 37 & 76.

  7. Delta Air Lines Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 5.

  8. Delta Air Lines Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 39.

  9. The Wall Street Journal. "Global Air Travel Is Disrupted by Russian Invasion of Ukraine."

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description