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 770-plus aircraft, as well as maintenance, repair, and overhaul (MRO) and cargo operations. The airline serves nearly 170 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, Los Angeles, Minneapolis/St. Paul, New York, Seattle, 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.
Sales and Marketing
Delta serves nearly 170 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.
Delta has achieved unprecedented growth over the years, with revenues climbing 7% from $37.8 billion in 2013 to $40 million in 2014, a company milestone. Delta's profits, however, nosedived 94% from $10.5 billion in 2013 to $659 million in 2014.
The historic revenue growth for 2014 was driven by a spike in passenger revenue resulting from a 2% bump in passenger mile yield on 4% higher traffic. Geographically, domestic services increased by 8%, resulting from a strong performance from its hubs in Atlanta, New York-LaGuardia, and Seattle. In addition, its international revenues climbed by 3% fueled by a capacity growth in the Latin America region.
The massive fall in profits for 2014 was attributed to a sharp rise in fuel expenses, unfavorable adjustments on fuel hedges, and an increase of $413 million paid in income taxes. In 2014 its operating cash flows increased by 10% to $4.95 billion, due to a rise in cash inflows from fuel inventory, prepaid expenses, and accounts payable.
The airline industry is fueled by strategic alliances that allow individual carriers to extend their service without physically flying into new territory. In 2013 Delta acquired the 49% stake Singapore Airlines owns in Virgin Atlantic for $360 million. The new alliance will strengthen Delta's flight services between North America and the UK, especially the New York, London market.
Delta's alliance with SkyTeam 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 also redeveloped its facility at JFK International in 2013 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.