Just as a delta is a symbol for change in math, Delta Air Lines symbolizes the changing mathematics of the airline industry. Delta became one of the world's largest airlines by traffic after its $2.8 billion acquisition of Northwest Airlines in 2008. Through its regional carriers (including subsidiary Comair), the company serves about 320 destinations in more than 60 countries, and it operates a mainline fleet of 700-plus aircraft, as well as maintenance, repair, and overhaul (MRO) and cargo operations. Delta is a founding member of the SkyTeam marketing and code-sharing alliance (airlines extend their networks by selling tickets on one another's flights), which includes carriers Air France, KLM, and Alitalia.
Delta operates from domestic hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York, and Salt Lake City. Delta has international hubs in Amsterdam, Paris, and Tokyo.
Other Delta businesses include Delta TechOps, which provides maintenance and engineering services for the Delta fleet as well as more than 150 other aviation customers, and Delta Global Services, which provides staffing for about 150 clients. Another unit, MLT Vacations, wholesales vacation packages.
Delta divides its operations into two chief segments: airline and refinery. The airline segment provides scheduled air transportation for passengers and cargo throughout the US and around the world and other ancillary airline services, including maintenance and repair services for third parties.
The refinery segment provides jet fuel to the airline segment from its own production and through jet fuel obtained through agreements with Phillips 66 and BP. The costs included in the refinery segment are primarily for the benefit of the airline segment.
Delta earned profits of more than $1 billion in 2012, $850 million in 2011, and around $590 million for 2010 -- a vast improvement from the $1.2 billion loss it reported in 2009. Year-over-year total operating revenue rose 4% from 2011 to 2012, reaching a historic high of $36.7 billion.
By segment, mainline passenger also jumped by 5%. International passenger revenue in the Pacific and Latin America regions climbed by 9% and 5%, respectively, for 2012.
Like its counterparts in the airline industry, Delta has been struggling with rising fuel costs. As a percentage of total operating expense, these fuel expenses have been around 35% for both 2011 and 2012. The company attempts to cushion itself against rising prices with a hedging program.
The airline industry is fueled by strategic alliances that allow individual carriers to extend their service without physically flying into new territory. In late 2012 Delta announced it was acquiring the 49% stake Singapore Airlines owns in Virgin Atlantic. Pending regulatory approval, the new alliance will strengthen Delta's flight services between North America and the UK, especially the New York, London market.
In mid-2011 Delta previously created its Trans-Pacific Alliance with Virgin Australia Airlines, for travel between the US and Australia. Earlier in the year Delta created an alliance with WestJet Airlines, a popular Canadian airline.
While the interline agreement with WestJet is important, it's Delta's alliance with SkyTeam that allows the airline's reach to extend to more than 900 destinations in 170-plus countries around the globe. Looking to become the preferred carrier in New York City, Delta expanded a hub at LaGuardia Airport in 2012 to provide flights to almost all top domestic destinations. The company is also redeveloping its facility at JFK International with a focus on more transcontinental and international service. The company gets a boost in global coverage with airlines around the world coming aboard the SkyTeam alliance.
Besides the SkyTeam alliance, Delta offers more international service through a joint venture with Air France-KLM and Alitalia. The airlines share revenue and split the cost of trans-Atlantic flights between North America and Europe, Africa, the Middle East, India, and Latin America.
Combining with Northwest represented a milestone in Delta's efforts to regain its financial footing since its emergence from bankruptcy in 2007. Delta finished integrating Northwest's infrastructure, flight network, reservation systems, and brands with its own operations in 2010. With its mainline operations bolstered, Delta shed two regional carriers that had been part of the Northwest deal, Mesaba Airlines and Compass Airlines. It sold Mesaba to Pinnacle Airlines; to fuel the transaction, Delta loaned $62 million to Pinnacle. Delta sold Compass to Trans States for $20.5 million.