Delta Air Lines Inc. (DAL, Financial) filed Quarterly Report for the period ended 2010-06-30.
Delta Air Lines Inc. has a market cap of $9.23 billion; its shares were traded at around $11.69 with a P/E ratio of 55.6 and P/S ratio of 0.3. DAL is in the portfolios of Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, David Tepper of APPALOOSA MANAGEMENT LP, Louis Moore Bacon of Moore Capital Management, LP, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Pioneer Investments, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, Stanley Druckenmiller of Duquesne Capital Management, LLC, PRIMECAP Management.
Volatile fuel prices continue to represent a significant risk to our business and the airline industry as a whole. Including our contract carriers under capacity purchase agreements, our unhedged fuel price increased 39% to $2.31 per gallon compared to $1.66 per gallon in the June 2009 quarter. Our fuel price, including the impact of our fuel hedge contracts, was $2.32 per gallon for the June 2010 quarter compared to $2.06 per gallon for the June 2009 quarter. We recorded $14 million in net fuel hedge costs in the June 2010 quarter, compared to $390 million in fuel hedge losses in the June 2009 quarter. In an on-going effort to manage fuel price risk, we enter into derivative instruments to hedge a portion of our projected aircraft fuel requirements. As of June 30, 2010, we have hedged approximately 50% of our projected fuel requirements for the September 2010 quarter and six months ended December 31, 2010. Our current hedge portfolio primarily utilizes call options, which help us to mitigate the risk of aircraft fuel price increases, while allowing us downside participation through market purchases should aircraft fuel prices decline.
Our net income for the June 2010 quarter includes (1) a $46 million charge for merger-related items associated with Northwest and the integration of Northwest operations into Delta and (2) a $36 million charge related to the impairment of retired B-747-200 aircraft. Our net loss for the June 2009 quarter includes a $58 million charge for merger-related items.
At June 30, 2010, we had $4.4 billion in cash and cash equivalents, and $1.6 billion in undrawn revolving credit facilities. During the June 2010 quarter, cash provided by operating activities was $1.0 billion. During that period, we repaid $1.3 billion in long-term debt and capital lease obligations. We also invested $196 million in property and equipment, including the purchase of five previously owned MD-90 aircraft and four previously leased B-757-200 aircraft. We contributed to our defined benefit pension plans $440 million in the June 2010 quarter and $225 million in the March 2010 quarter. As a result of the $665 million in contributions for the six months ended June 30, 2010, we satisfied, on an accelerated basis, our minimum required contributions for our defined benefit pension plans for 2010. In July 2010, we completed a $450 million offering of Pass Through Certificates, Series 2010-1A. For additional information, see Note 4 of the Notes to the Condensed Consolidated Financial Statements.
Merger Synergies. We achieved $700 million in merger synergy benefits in 2009. During the June 2010 quarter, we realized $200 million in incremental merger synergy benefits. We are anticipating a total of $1.5 billion of annual merger synergies by the end of 2010, and to achieve our goal of $2.0 billion of annual merger synergies in 2011. We have completed substantially all customer facing merger-related milestones and the majority of our merger integration, including combining frequent flyer programs, consolidating and rebranding all airport facilities, achieving a single operating certificate from the Federal Aviation Administration, and integrating the reservations and flight planning systems.
Aircraft fuel and related taxes. Aircraft fuel and related taxes increased $148 million primarily due to a $550 million increase associated with higher average unhedged fuel prices, partially offset by a $376 million reduction in fuel hedge losses. We recorded $14 million in net fuel hedge costs in the June 2010 quarter, compared to $390 million in fuel hedge losses in the June 2009 quarter. The fuel hedge losses in the June 2009 quarter were primarily from hedge contracts purchased in 2008 when fuel prices reached record highs and were expected to continue to rise.
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Delta Air Lines Inc. has a market cap of $9.23 billion; its shares were traded at around $11.69 with a P/E ratio of 55.6 and P/S ratio of 0.3. DAL is in the portfolios of Ken Heebner of CAPITAL GROWTH MANAGEMENT LP, David Tepper of APPALOOSA MANAGEMENT LP, Louis Moore Bacon of Moore Capital Management, LP, Louis Moore Bacon of Moore Capital Management, LP, Jim Simons of Renaissance Technologies LLC, Pioneer Investments, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC, Stanley Druckenmiller of Duquesne Capital Management, LLC, PRIMECAP Management.
Highlight of Business Operations:
We reported net income of $467 million in the June 2010 quarter, compared to a net loss of $257 million in the June 2009 quarter. The $724 million improvement primarily reflects (1) a strengthening of the airline industry revenue environment, including improving business travel, due to improving economic conditions and (2) merger synergies. These benefits were partially offset by higher fuel prices and profit sharing expense in the June 2010 quarter.Volatile fuel prices continue to represent a significant risk to our business and the airline industry as a whole. Including our contract carriers under capacity purchase agreements, our unhedged fuel price increased 39% to $2.31 per gallon compared to $1.66 per gallon in the June 2009 quarter. Our fuel price, including the impact of our fuel hedge contracts, was $2.32 per gallon for the June 2010 quarter compared to $2.06 per gallon for the June 2009 quarter. We recorded $14 million in net fuel hedge costs in the June 2010 quarter, compared to $390 million in fuel hedge losses in the June 2009 quarter. In an on-going effort to manage fuel price risk, we enter into derivative instruments to hedge a portion of our projected aircraft fuel requirements. As of June 30, 2010, we have hedged approximately 50% of our projected fuel requirements for the September 2010 quarter and six months ended December 31, 2010. Our current hedge portfolio primarily utilizes call options, which help us to mitigate the risk of aircraft fuel price increases, while allowing us downside participation through market purchases should aircraft fuel prices decline.
Our net income for the June 2010 quarter includes (1) a $46 million charge for merger-related items associated with Northwest and the integration of Northwest operations into Delta and (2) a $36 million charge related to the impairment of retired B-747-200 aircraft. Our net loss for the June 2009 quarter includes a $58 million charge for merger-related items.
At June 30, 2010, we had $4.4 billion in cash and cash equivalents, and $1.6 billion in undrawn revolving credit facilities. During the June 2010 quarter, cash provided by operating activities was $1.0 billion. During that period, we repaid $1.3 billion in long-term debt and capital lease obligations. We also invested $196 million in property and equipment, including the purchase of five previously owned MD-90 aircraft and four previously leased B-757-200 aircraft. We contributed to our defined benefit pension plans $440 million in the June 2010 quarter and $225 million in the March 2010 quarter. As a result of the $665 million in contributions for the six months ended June 30, 2010, we satisfied, on an accelerated basis, our minimum required contributions for our defined benefit pension plans for 2010. In July 2010, we completed a $450 million offering of Pass Through Certificates, Series 2010-1A. For additional information, see Note 4 of the Notes to the Condensed Consolidated Financial Statements.
Merger Synergies. We achieved $700 million in merger synergy benefits in 2009. During the June 2010 quarter, we realized $200 million in incremental merger synergy benefits. We are anticipating a total of $1.5 billion of annual merger synergies by the end of 2010, and to achieve our goal of $2.0 billion of annual merger synergies in 2011. We have completed substantially all customer facing merger-related milestones and the majority of our merger integration, including combining frequent flyer programs, consolidating and rebranding all airport facilities, achieving a single operating certificate from the Federal Aviation Administration, and integrating the reservations and flight planning systems.
Aircraft fuel and related taxes. Aircraft fuel and related taxes increased $148 million primarily due to a $550 million increase associated with higher average unhedged fuel prices, partially offset by a $376 million reduction in fuel hedge losses. We recorded $14 million in net fuel hedge costs in the June 2010 quarter, compared to $390 million in fuel hedge losses in the June 2009 quarter. The fuel hedge losses in the June 2009 quarter were primarily from hedge contracts purchased in 2008 when fuel prices reached record highs and were expected to continue to rise.
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