Delta Air Lines, Inc.

phone to enter the question queue at any time. I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations. Please go ahead.

Thank you, Matthew, and good morning. Thanks for joining us for our December quarter and full year 2023 earnings call. Joining us from Atlanta today are our CEO Ed Bastian, our President Glenn Hauenstein, and our CFO Dan Jenke. Ed will open the call with an overview of Delta's performance and strategy. Gwen will provide an update on the revenue environment, and Dan will discuss costs in our balance sheet. After the prepared remarks, we'll take analyst questions. We ask that you please limit yourself to one question and a brief follow-up so that we can get to as many of you as possible. After the analyst Q&A, we'll move to our media questions. As a reminder, 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, and 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 the call over to Ed.

Well, thank you, Julie, and good morning, everyone. We appreciate you joining us this morning. Earlier today we reported our full year in December quarter results posting fourth quarter earnings of $1.1 billion or $1.28 per share on record quarterly revenue that was 11% higher than 2022 and an operating margin of 10%. I want to sincerely thank the 100,000 strong Delta team for their outstanding work in delivering these results and serving our customers. Delta carried more travelers this holiday season than any other time in our history, and we delivered industry-leading operational performance with the number one system completion factor amongst our peer set throughout the December quarter. To put that in context, we carried 9 million customers, a record 9 million customers, I'd add, on 60,000 mainline flights over the holiday period, with fewer than 40 cancellations in aggregate. Our December quarter results marked a strong close to year two of our three-year plan. For the full year, we reported earnings of $6.25 per share, the second highest EPS result in our history on revenue that was 20% higher than the prior year. We delivered an 11.6% operating margin and pre-tax income of $5.2 billion, a near doubling over 2022. We generate free cash flow of $2 billion while investing 5.3 billion back into the business. And we improved our leverage by two full turns and reinstated our quarterly dividend. Return on invested capital was 13.4%, a five-point improvement from 2022. A tremendous amount of progress, especially if you consider where we sat a short three years ago. And I'm so proud of our team across the board. Sharing our financial success is a long-standing pillar of Delta's culture, and I'm thrilled to announce that we'll be rewarding our employees with $1.4 billion in well-earned profit sharing on Valentine's Day. For our employees, the estimated payout will be approximately 10% of eligible 2023 compensation, about double of what last year's payment was. I expect our profit sharing payments will be more than our three largest competitors combined. Our people consistently deliver operational excellence with a relentless focus on raising the bar at every stage of the travel journey to deliver safe, reliable, and caring service for our customers. They are the reason our brand and our customer loyalty lead the industry, why Delta was recognized as the world's 12th most admired company by Fortune, and why Glassdoor named us yesterday as the 13th best employer in the country. In 2023, we made meaningful investments in our people, our operation, and our customers. We provided well deserved pay increases for the Delta team, continuing our philosophy of industry leading pay for industry leading performance. In the operation, the investments that we made supported the best in class operational performance that Delta has long been known for. Our operational excellence was recognized by Cerium last week, which named us, yet again, the most on-time airline in North America. Our people and our operational reliability are the foundation of Delta's trusted consumer brand, and we are building on that foundation as we elevate the premium flying experience and grow our SkyMiles members' engagement with Delta. Today, we also announced an order for 20 Airbus 350-1000 aircraft with options for 20 more for delivery starting in 2026. These planes complement our fleet strategy and will offer a world-class customer experience for international travelers with more premium seats, higher gauge, and great customer amenities. These aircraft are over 20% more fuel efficient than the 767s that they'll be replacing, further supporting our long-term sustainability goals. And with the successful launch of fast, free Wi-Fi and Delta Sync, we are enhancing the inflate entertainment experience for SkyMiles members. We expect to have these products rolled out globally by the end of this year. On the ground, we are building the airports of the future in some of the most important markets and adding new Delta SkyClubs to provide our customers a world-class airport experience. We completed our transformation at Los Angeles 18 months ahead of schedule Dave Kuntz, Including a state of the art facility and a new delta sky club that was named North america's best airline lounge for 2023 by business traveler we open the latest phase of our salt lake city expansion and will complete the generational rebuild of la guardia this year. Dave Kuntz, Our digital investments continue as we work to increase our agility and provide employees with better tools and customers with a more seamless experience. Customers visited the FlyDelta app over 1 billion times last year, using our self-service tools almost 10 times more often than 2019, with much higher overall satisfaction. As 2024 begins, our enterprise has moved from a period of restoration to optimization. We are focused on delivering excellent reliability, elevating the customer experience and improving efficiency across the company to support continued growth in our earnings and our cash flow. We expect demand to remain strong, particularly for the premium experiences that Delta provides. Consumer spend is continuing to shift from goods to services, and our customer base is in a healthy financial position with travel remaining a top priority. And corporate travel continues to improve, with demand accelerating into year end. On supply, industry growth is normalizing after several years of network restoration. For 2024, we plan to grow Delta's capacity three to five percent below the mid single digit range that we discussed at our June investor day as we've refined our plan. Domestically, supply and demand are coming into better balance. as the industry adjusts to rising cost of production and we are seeing a positive inflection in domestic unit revenue growth. Internationally, we expect another strong year as we optimize our network and leverage our global JV partners. With that backdrop, we are providing full-year 2024 guidance for earnings of $6 to $7 per share and free cash flow of $3 to $4 billion. Free cash guidance is up to $2 billion higher than 2023, driven by growth and profitability, lower capex, and an improved mix of cash sales. As we continue to grow earnings and reduce debt, we will further reduce leverage and advance our balance sheet towards investment grade metrics. Glenn and Dan will provide more details shortly, including our outlook for the March quarter. In closing, The people of Delta delivered a remarkable 2023, leading the industry operationally and financially while providing a world-class experience for our customers. Delta is well-positioned to build on our momentum in the new year with continued growth in earnings and cash flow in 2024. I could not be more excited about what's ahead for Delta and our customers, and I am confident that our returns-focused strategy will drive significant value creation for our owners in the years to come. Thank you again for the support you show to our company. And with that, I'll turn it over to Glenn.