Delta Air Lines, Inc.

Good morning, everyone, and welcome to the Delta Airlines June quarter financial results conference call. My name is Cecilia, 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 Jill Greer, Vice President of Investor Relations. Please go ahead.

Thanks, Cecilia. Good morning, everyone, and thanks for joining us for our June quarter earnings call. Speaking today on the call will be our CEO, Ed Bastian, and our CFO, Paul Jacobson. We also have our President, Glenn Hauenstein, and our entire leadership team here with us for the Q&A. To get in as many questions as possible during the Q&A, please limit yourself to one question and a brief follow-up. 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'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.com. And with that, I'll turn it over to Ed.

Thanks, Jill. Good morning, everyone. Thank you for joining us today. We are now four months into the pandemic and the nearly $4 billion pre-tax loss that we just posted reflects the severe impact that COVID-19 is having on our company and our industry. The June quarter was remarkable for a confluence of crises that have rocked our nation. In addition to the pandemic and its impact on public health and the economy, the issue of inequality and social injustice for Black Americans has been front and center. In this environment, our number one focus is taking care of our people. This includes not only protecting the health and safety of our employees, but also maintaining our commitment to supporting the fight for equality and social justice. We are committed to listening and understanding. We must be a stronger advocate for justice and equality across our business, from our operating procedures to the programs that we offer our people to support for policy change. Our people are the heart and soul of Delta, and I am incredibly proud of their perseverance and resiliency through these trying times and forever grateful for the sacrifices that they are making for our company. Since demand bottomed in mid-April at less than 5% of our normal traffic, we've seen a small but welcome uptick in passenger volume, being driven almost entirely by domestic leisure travelers or those flying for essential reasons. And while it's encouraging to see customers start to return, the revenue environment remains challenging. We have thought from the start that the recovery will be choppy, and the past few weeks have shown that to be true. We're expecting our overall revenue for the September quarter will be only 20 to 25% of what we saw last summer, and we've seen demand growth flatten recently with the rise in COVID-19 cases. We are watching trends closely and have pared back our capacity plans for August. Business travel, which typically provides 50% of our revenue, has not yet returned in any meaningful way. With corporate offices slow to reopen, quarantine restrictions in markets like New York and Chicago, and states in the Sun Belt reversing or pausing reopening plans, we remain cautious on the pace of recovery through the balance of the year. In addition, there isn't a clear timeline when international borders will open for U.S. travelers. So it's against that uncertain backdrop that we are taking the industry's most conservative approach to capacity. For the September quarter, we expect our seats available for sale, which accounts for 60% load factor cap, will be 20 to 25% of last year's level, up from 10% in the June quarter. Given how dynamic the current environment is, we are maintaining our flexibility and will adjust our capacity plans as needed based on changes in demand. Since the crisis began, we have taken decisive actions to protect our people and our customers, increase our liquidity, and importantly, preserve our ability to respond in the future. Customer employee safety remain our top priority, and restoring consumer confidence in travel is at the forefront of our recovery plan. We have taken extensive and proactive measures to implement a multi-layer approach to protect customers and employees. Additionally, All of our aircraft are equipped with HEPA filters, generating high-quality, hospital-grade air quality onboard. Restoring consumer confidence to travel on Delta is the driving force behind our DeltaCare standard, which includes requiring customers and employees to wear masks, enhancing cleaning protocols for aircraft, electrostatic spraying before every departure, blocking middle seats and capping load factors at 60% to provide more space on board. We're committed to blocking middle seats through September and expect to continue our policy beyond that date as well. We've also created a Delta Global Cleanliness Organization and are collaborating with two of the world's best health organizations, the Mayo Clinic and Quest Diagnostics. The Mayo Clinic is helping to assess our safety protocols, consulting on how to improve safeguards as well as designing COVID-19 testing for our full workforce, both for the active virus and the presence of antibodies. The added layers of protection are having an impact. Since implementing these changes as of the 1st of May, the infection rate among our customer-facing employees, those who spend their days working onboard our aircraft and in our airports, is well below the national average, providing another solid data point on the safety of air travel. In addition, our net promoter scores have never been higher, as customers recognize our health and safety efforts on board and on the ground. Our top financial priority has been to protect our liquidity. Paul and the team moved quickly and decisively to raise capital, ending the quarter with $15.7 billion in liquidity. Entering this crisis with a strong balance sheet allowed us to access nearly $15 billion in new capital. on top of the $5.4 billion from the CARES Act without issuing equity. And while accessing capital is critical, the most important liquidity action we can take is reducing our cash burn. In June, our daily cash burn for the month averaged $27 million a day, a substantial improvement from the $100 million per day that we were experiencing in late March. The major force in that improvement is our cost performance. which has been remarkable, as we'll take out over 50% of our total operating expenses. That's due in large part to the more than 40,000 Delta people term unpaid leaves. Our crews who have seen their hours reduced as flying has been cut back, and the sacrifices made by our hourly and merit ground employees whose work schedules have been similarly reduced by 25%. I want to thank all the Delta people who volunteered for an unpaid leave. They are making a real difference in helping us navigate this crisis. We also want to thank all our colleagues who have been serving our customers in the face of this pandemic. The spirit and teamwork of our people is the difference has never shined brighter. With demand growth stalled at present, we expect July's daily cash burn to be similar to what we saw in June. As we go through the summer and into the fall, we'll continue to move quickly to balance the 88, MD90, 777, and 737-700 fleets. We have the most flexible fleet in the US and are pulling forward these and additional fleet simplification initiatives, which we believe will provide a lasting benefit to our cost structure. The difficult reality of resizing the airline is that we need a smaller workforce until we see demand return. We'll be wrapping up our voluntary departure in early retirement programs this month. And as of last night, we already had over 17,000 employees voluntarily sign up to depart the company. We also have thousands more signed up for voluntary unpaid leaves of absence into the fall. We are hopeful that we can accomplish the vast majority of the headcount changes we need through these programs, minimizing, if not eliminating, the need for involuntary furloughs. This will require creativity and collaboration across all of our work groups, and I'm hopeful that we can get there. And as we navigate this difficult environment, we're also working closely with our airline partners around the world who are facing even more significant financial challenges. During the quarter, both LATAM and Aeromexico filed for bankruptcy here in the U.S. under Chapter 11, and Virgin Atlantic is working through an out-of-court recapitalization. While each of these is disappointing, None of our partners' home countries were prepared to provide governmental financial support similar to what the U.S. Treasury did with the CARES Act, which necessitated their decisions to restructure. We have the utmost confidence in all of our partners and remain firmly committed to our partnerships, which will be important when we rebuild a much more resilient international network in the recovery. In closing, we remain grounded in the strengths that are core to Delta's business. Our people, our brand, our network, and our operational reliability. These strengths and the shared values of the Delta family guide every decision we make, differentiating Delta with our customers and positioning us to succeed when demand returns. I want to thank everyone who's contributing to Delta's support and recovery efforts through the most challenging time in this storied company's history, our customers, partners, suppliers, owners, community leaders, government officials. Their support has been overwhelming. And a special thank you to the finest group of airline professionals ever assembled, our Delta people who are managing this difficult environment with grace and poise, determined to return Delta to her position of leadership in our industry and in our world. And with that, I'll turn it over to Paul to go through our financials. Paul?