Delta Air Lines is one of the world's largest airlines by traffic. Through its regional carriers (including subsidiary Comair), the company serves about 330 destinations in about 60 countries, and it operates a mainline fleet of 800-plus aircraft, as well as maintenance, repair, and overhaul (MRO) and cargo operations. The airline serves nearly 180 million customers each year and offers more than 15,000 daily flights. 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, Boston, Cincinnati, Detroit, London, Los Angeles, Minneapolis/St. Paul, New York, Seattle, and Salt Lake City. Delta has international hubs in Amsterdam, Paris, and Tokyo. The US market is its largest, representing 70% of net sales.
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.
Sales and Marketing
Delta serves nearly 180 million customers each year. Its tickets are sold through various distribution channels including telephone reservations, Delta.com, and traditional brick and mortar and online travel agencies. It spends about $200 million each year on advertising.
The carrier has achieved unprecedented growth over the years, with revenues peaking at $40.7 billion in 2015, a company milestone. Delta's profits, however, have fluctuated wildly; after dropping significantly in 2014, profits skyrocketed by more than 500% to reach $4.5 billion in 2015.
The historic revenue growth for 2015 was driven by a 4% spike in domestic services, resulting from a strong performance from its hubs in Atlanta, New York-LaGuardia, and Seattle. In addition, its international revenues climbed by 2% fueled by a capacity growth in the Latin America region.
The massive surge in profits for 2015 was attributed to a sharp decrease in fuel expenses and favorable adjustments on fuel hedges. In addition, Delta's operating cash flow has sharply risen the last few years; it climbed by 60% in 2015.
The airline industry is fueled by strategic alliances that allow individual carriers to extend their service without physically flying into new territory. Delta's alliance with SkyTeam allows the airline's reach to extend to more than 900 destinations in 170-plus countries around the globe. The company gets a boost in global coverage with airlines around the world coming aboard the SkyTeam alliance.
To boost its position in the important region of China, Delta in 2015 expanded its global network with China Eastern, one of the leading airlines in China. The agreement included a $450 million investment by Delta to acquire an almost 4% stake in China Eastern. The move allowed Delta and China Eastern to compete more effectively on routes between the US and China and provided more travel options for customers in both countries.