Please stand by. Good everyone, and welcome to the Delta Air Lines March Quarter 2022 Financial Results Conference Call. My name is April, and I will be your coordinator. At this time, all participants are in a listen only mode until we conduct a question and answer session following today's presentation. As a reminder, today's call is being recorded. I would now like to turn the call over to Julie Stewart, Vice President of Investor Relations. Please go ahead. Thank you, April, and good morning, everyone. Thank you for joining us for our March Quarter of 2022 Earnings Call. Joining us from Atlanta today are our CEO, Ed Bastian, our President, Glen Hauenstein, our CFO, Dan Janki. Ed will open the call with an overview of Delta's performance and strategy. Glen will provide an update on the revenue environment, and Dan will discuss costs, fleet, and our balance sheet. After the prepared remarks, we'll take analyst questions. Please limit yourself to one question and a brief follow-up so we can get to as many of you as possible. After the analyst Q&A, we'll move to our media questions. 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. With that, I'll turn the call over to Ed. Well, thank you, Julie. Good morning, everyone. We appreciate you joining us today. Before we begin, I want to acknowledge the humanitarian crisis in Ukraine. We are proud to have raised the Ukrainian flag at our global headquarters in Atlanta in solidarity with the people of Ukraine. At Delta, we've provided meaningful financial and operational support to assist the people of the region in connection with our partnership through the International Red Cross. This morning, we reported March quarter results, marking another important step forward in our recovery. We generated $200 million of free cash flow in the quarter and a 10% operating margin in the month of March. Our revenue recovery in the March quarter reached 79% of 2019 levels, five points ahead of the midpoint of our initial guidance. As expected, January and February generated operating losses. As Omicron receded, we saw a surge in demand, supporting an inflection to a solid profit in the month of March. Delta continues to provide best-in-class operational, customer, and financial results in a dynamic environment. This results from the dedication, professionalism, and hard work of Delta's more than 75,000 people worldwide. Restoring capacity during a period of rapid demand recovery has proven challenging for all of us in the industry, but Delta people continue to lead the way. I wanna thank our customers for their patience and understanding as we navigate the challenges of ramping up operations into the peak travel period. I know our teams have been working incredibly hard, and I wanna thank all of them for what they're doing for our customers and for each other. We rewarded our people, excuse me, with a special profit-sharing payout in February based on the second half of 2021 profitability and announced a 4% pay increase that's going to be effective May 1. These actions align with Delta's longstanding values of shared success with our people. With a rebound in demand, the month of March was the best cash sales month in Delta's history, outpacing our prior record from spring of 2019, despite offering 10% fewer seats. In March, we had our first month in two years of positive unit revenue compared to 2019, and we achieved record co-brand acquisitions, co-brand spend, and cargo revenue. Domestic consumer revenues are exceeding 2019 levels, and the recovery in business travel revenue has accelerated as offices reopen and business travelers rebuild face-to-face relationships. Demand for long-haul international is growing as travel restrictions lift, led by the transatlantic. To date, we have not seen an impact to travel demand from the conflict in Ukraine, but we of course are monitoring this closely. Nearly all European countries have now removed entry testing requirements for vaccinated customers. We continue to join the rest of the U.S. travel industry in urging the U.S. government to lift pre-departure testing requirements. As we prepare for the peak summer season, we continue to be very focused on operational readiness. With 4,000 new members joining the Delta team already this year, we feel good about our staffing and our ability to meet demand as we continue to restore the airline. Our customers are seeing the benefits of our ongoing investments to improve the travel experience. This spring, we are opening new modernized terminals in Los Angeles, LaGuardia, and Seattle. These generational investments enhance Delta's already leading positions in key hubs and provide an elevated ground experience for our customers. We continue to upgrade our fleet, recently taking delivery of our first Airbus A321neo. This state-of-the-art aircraft is scheduled to begin service May 20 from Boston to San Francisco and features our new domestic first class seat design. With nearly one-third of the seats in premium cabins and improved fuel efficiency, these will be the best aircraft we fly for our customers and generate the highest returns for our owners. Our strategic decision to accelerate investments in our airports, our fleet, and our technology during the pandemic will benefit Delta and our customers for years to come. As COVID shifts from a pandemic to a manageable seasonal virus, there are clear signs of pent-up demand for travel and experiences as consumer spending shifts from goods to services and experiences. Travel restrictions lift and business travelers continue to return to the skies. Against this improving backdrop, we are building momentum in the June quarter, with expectations for a 12%-14% operating margin and strong free cash flow despite higher fuel prices. Our revenue recovery is expected to reach 93%-97% of 2019 levels, with double-digit unit revenue improvement. We are successfully recapturing a significant portion of the run-up in fuel. This is occurring almost in real time, given the strong demand environment as well as Delta's growing brand preference, our premium product focus, and measured approach to capacity. While we are confident in summer demand and the capacity plans that we have in place, given macro uncertainty, we will remain nimble on capacity for the second half of the year and continue to prioritize sustained profitability. I'd like to pause and put that Q2 guidance into perspective. At 12%-14% operating profit, we are only four points behind our June 2019 quarterly operating margin, and that's despite fuel prices being up 50% from that time period and our capacity only 85% restored. We are greatly encouraged by the momentum we are seeing, and we remain confident in our outlook for meaningful full-year profit for 2022. As we take note of these achievements, I'm pleased with the progress we're making across the three core priorities we laid out at Capital Markets Day last December. First, we continue to fortify our trusted consumer brand, demonstrated by loyalty and record engagement with our customers. The strength of our brand has never been greater and has been recognized by The Wall Street Journal, Fortune, Business Travel News, and many, many others. Our customers are taking note that our Net Promoter Score's consistently above 2019 coming out of the pandemic. We intend to build on the momentum we gained over the last two years. Second, we are restoring our financial performance. As revenue improves and we regain a competitive cost structure, we're returning to profitability, generating strong free cash flow, and making progress on debt repayment. Our third priority is building a better future for our people and our planet, including our ongoing commitment to creating a sustainable future for aviation. We are continuing to invest in the physical, emotional, and financial well-being of our people while prioritizing diversity, equity, and inclusion at all levels of the company. Our mission of connecting the world has never been more important than it is today, and I'm as confident as ever that we'll achieve our ambition for our leading consumer brand to transcend the industry and deliver financial outcomes that create significant and resilient long-term value for all of our stakeholders. It's been an encouraging period of recovery, and it's exciting to see our customers returning to the skies. Thank you again, and with that, I'll turn it over to Glen to update the revenue environment. Thank you, Ed, and good morning, everyone. With robust demand, growing preference for the Delta brand, and quick actions to recapture higher fuel prices, we achieved significant milestones in the month of March and have momentum as we head into the summer. None of this would be possible without our people, and I couldn't be prouder of the Delta team and the results that they are delivering. A huge thank you to all. During the March quarter, we generated $8.2 billion of revenue. This was approximately $500 million higher than our initial guidance in January, resulting in a revenue recovery of 79% compared to 2019. We continue to execute a disciplined approach to keeping capacity in line with demand. For the quarter, capacity was 83% restored versus 2019 and at the low end of our initial guide and below the industry. The quarter was a tale of two halves. While Omicron depressed demand in January and early February, we saw an unparalleled demand recovery from President's Day on. Our revenue recovery versus 2019 progressed from 70% in January to approximately 80% in February to 85% in March, with momentum building into April. March was the first month in two years of positive unit revenue compared to 2019, with PRASM up 1% and TRASM up 3%. Premium products once again led the way with domestic premium revenue approximately 100% restored to March of 2019 levels. We also achieved our highest ever monthly cash sales, as Ed mentioned, our highest direct sales, highest co-brand acquisitions, highest co-brand spend, and highest cargo revenue in the month of March. Business travel volumes reached the highest post-pandemic levels we've seen, and importantly, in March, corporate fares inflected to positive versus 2019 for the first time. This drove an acceleration in the recovery of business revenues with improvement in both corporate contracted customers and small and medium-sized enterprises. As we exited the quarter, domestic corporate sales improved to approximately 70% recovered versus 2019. Our recent survey results show that 90% of our corporate accounts anticipate travel volumes to increase in the June quarter as offices continue to reopen. Additionally, we are seeing more corporates implement changes to travel policies. For example, domestic travel restrictions have been completely removed for all of our top corporate accounts. Increasingly, corporates are allowing upsells to premium cabins and refundable products. Strength in cash sales and seasonality drove a $2.8 billion sequential increase in our Air Traffic Liability. The increase in advanced ticket sales outpaced normal seasonal trends, resulting in an ATL balance of $9.1 billion at the end of March, up from $6.6 billion in March of 2019. We expect the ATL will continue to build in the June quarter, albeit at a slower rate than what we saw in the March quarter. For the June quarter, we expect revenue recovery versus 2019, as Ed mentioned, to improve to 93%-97% on 84% capacity restoration. This reflects a low double-digit TRASM growth versus 2019, with all entities expected to post positive unit revenues compared to 2019, except for the Pacific. We expect April yields to be up double digits compared to 2019, with further strengthening as we approach June, positioning us to successfully recapture a significant portion of the higher prices, fuel prices in the June quarter. Geographically, domestic and Latin revenues continue to lead the recovery, and fewer restrictions in major international markets are unlocking demand for long-haul travel. We expect a very strong summer in the transatlantic based on demand trends, and in the Pacific, we are encouraged by the opening of Australia, South Korea, and other countries in Southeast Asia. When countries reopen, we see a rapid restoration of demand. For example, following South Korea's border opening on April first, we expect load factors to improve from the low 50s in March to the low 90s by June. We expect that heavily restricted regions such as China and Japan will continue to put pressure on overall Pacific unit revenues until borders fully reopen. A few months ago, at Capital Markets Day, we outlined three commercial strategy pillars, and we've made strong progress, of course, across each of these for the start of this year. First, our premium products continue to lead the recovery, and the introduction of Delta Premium Select to the transatlantic marketplace has been a success, with early returns far exceeding our expectations. By this summer, we will have expanded DPS to 80% of our transatlantic flights. Over the next few years, we expect premium seat growth to continue to outpace main cabin, and we're confident in the consumer shift towards higher quality products is here to stay. To date, premium recovery has been led by consumer, and we see further upside as more and more business travelers return to the skies. Next, growing loyalty is evident across several key metrics. Our Net Promoter Score remains above 2019 even as volumes increase. During the quarter, we acquired a record number of new SkyMiles members, and our co-brand spend continues to far outpace 2019, up 39% in the month of March. Loyalty is an important driver of our third pillar, increasing our revenue diversification. Other revenue was fully recovered to 2019 levels during the March quarter, led by loyalty and cargo. Remuneration from American Express during the quarter of $1.2 billion was 25% higher than 2019, a new quarterly record that keeps us on track for our full-year goal of more than $5 billion in remuneration. Cargo had an exceptional quarter, up 51% compared to 2019, with the month of March marking our best ever cargo month in the company's history. MRO revenues were 22% below 2019 as supply chain issues slowed our engine throughput. MRO margins remain healthy, and we are excited to scale this business over the next few years as the installed base of next generation engines continues to grow. By leveraging the Delta platform, we are further diversifying our revenue mix. In the March quarter, premium products and non-ticket revenue sources generated 58% of total revenue, up 3 points from the same period in 2019. This improvement gives us a high level of confidence in achieving our goal of more than 60% by 2024, as we laid out in Capital Markets Day. In closing, Delta has emerged in a stronger relative position by staying true to our core competitive strengths and our commitment to our customers and employees. As the final phase of demand recovery takes hold and preference for our brand continues to grow, I am more confident than ever in Delta's path to exceed 2019 financial performance by 2024. With that, I'd like to turn it over to Dan to talk more about the financials. Thank you, Glen, and good morning to everyone. Starting with the highlights of the March quarter. Our operating loss was $793 million, was better than our expectation. As anticipated, we saw losses in January and February due to Omicron and seasonal weakness. We inflected to a solid profit in March with a 9.4% adjusted operating margin. Fuel expense was $2.1 billion. It increased 32% sequentially from the December quarter. Fuel price per gallon averaged $2.79 for the quarter. This included a $0.07 per gallon benefit from the refinery. Non-fuel costs rose 6% sequentially, with non-fuel CASM up 15% compared to 2019 on 17% less capacity. We generated operating cash flow of $1.8 billion. We reinvested $1.6 billion into the business, resulting in free cash flow of $200 million. Delivering a profit in the month of March and positive cash flow for the quarter were important achievements, especially considering the impact of Omicron and higher fuel prices. We ended the quarter with adjusted net debt of $20.9 billion. This was more than $1 billion better than our initial expectations due to strength in cash receipts that Ed and Glen spoke to. We repaid $1.4 billion of gross debt, ending March with nearly $13 billion of liquidity. Now, turning to the outlook. We expect the June quarter non-fuel CASM to be up 17% compared to 2019. The 2-point increase from the March quarter is driven by higher selling-related costs on expected 45% sequential increase in revenue and our anticipated step-up in maintenance costs on a similar level of capacity restoration. With the first half non-fuel CASM in the mid-teens, which is two points higher than planned on lower capacity, we expect to be closer to the high end of the full range of up 7%-10%, implying the second half will improve up to the mid-single digits. This improvement is driven by continued capacity restoration from the low-to-mid-80s in the first half to the mid-90s by the end of the year. The resulting scale and efficiency will drive the step function change in our non-fuel CASM. Now, let me give you a little context on how we get this improvement. The recovery in international travel enables us to shift our wide-bodies from our domestic to our international, where we get better efficiency from gauge and stage and improve staffing. Narrow body utilization will improve with a 10-point increase expected by the end of the year, giving us combined benefit of higher capacity and more efficient allocation of our fleet. Further, as we fill out our schedules and we create greater stability in our operations with more consistency and depth in both the domestic and the international network, this is enabling efficiency gains in our facilities and productivity of our workforce. We remain confident in our multi-year cost framework laid out at Capital Markets Day. Regaining a competitive cost structure is critical to our success. At the same time, we will continue to remain nimble on capacity as we manage for profitability in this higher fuel price environment. On fuel for the June quarter, we expect an adjusted fuel price per gallon of $3.20-$3.35. This includes a $0.20 benefit from the refinery, and these are based on the forward curves as of last Friday. Our Monroe refinery provides a unique benefit, acting as a partial hedge to elevated cracks. This is especially true with New York Harbor jet cracks, where our production at Monroe provides a 100% offset. Based on our June quarter outlook for revenue and cost, we expect operating margins to be between 12% and 14%. With the expectations for solid profitability and further build in our Air Traffic Liability, we expect to generate another quarter of positive free cash flow after investing $1.2 billion in the business and expect to end the June quarter with adjusted net debt of approximately $20 billion. As we achieve sustained cash generation, we will continue to opportunistically manage our balance sheet, reducing debt to return to investment-grade metrics and making progress towards our $15 billion adjusted net debt target by the end of 2024. For the year, our CapEx outlook of $6 billion is unchanged, with our reinvestment primarily driven by the continued renewal of our fleet. We expect to take delivery of approximately 70 new and gently used aircraft this year, including 26 A321neos. This large gauge aircraft fits well with our upgauging strategy and will be our most fuel-efficient aircraft in our fleet with the lowest seat cost. We also continue to accept delivery of new A220s, A330-900s, and A350-900s. These aircraft are expected to contribute to the full restoration of our capacity and to our goal of using at least 7% less fuel per ASM in 2022 when compared to 2019. In addition to the financial benefits, improved efficiency is an important step in our journey to a more sustainable future. During the quarter, we announced actions to scale and advance sustainable fuels. We signed an offtake agreement with Gevo for approximately 75 million gallons of SAF annually over 7 years. We anticipate to start in mid-2026, progressing us towards our 2030 10% SAF commitment. We also announced a collaboration with Airbus on the research and development of hydrogen-powered aircraft and the infrastructure it requires. In closing, we are executing against our priorities laid out at Capital Markets Day, and I'm encouraged by the momentum in our financial recovery. I would sincerely like to thank the Delta people for everything they do every day. Our people will always be our most important competitive advantage. With that, I'll turn it back to Julie for Q&A. Thanks, Dan. April, can you please remind the analysts how to queue up for a question and then go to our first question? Absolutely. If you'd like to ask a question, simply press the star key followed by the digit one on your telephone keypad. Also, if you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once again, press star one at this time. We'll first hear from Michael Linenberg of Deutsche Bank. Oh, hey, good morning, everyone. Fantastic outlook. I guess I wanna focus on capacity, so my question is to Glen. Look, you operated 83% of 2019 in the March quarter, and things have obviously gotten a lot better for the June quarter. I mean, I just sort of think about the Omicron impact in January and February. It was pretty impactful. Yet we're just moving up one point sequentially, you know, 83%-84%. I guess, Glen, is this as much, you know, driven by the fact that it's all about maintaining operational reliability and really just running the best schedule that there is, and that will drive, you know, not just the revenue premium, but overall revenue and less reaccommodation costs? I guess as a sort of corollary to that question, are you watching what's going on over in Europe and seeing how, you know, several European carriers are being forced to cancel because of the spread of this other variant, and so you guys wanna make sure that you're just well prepared and well reserved? You know, I think it's all of the above. Yeah, I think you asked and answered your own question there. You did a great job of articulating our viewpoint is the priority is to operate reliably, and the other priority is to not get ahead of demand. You know, this is a very recent demand increase that we've seen. The uptick just started about six-eight weeks ago in late February and March. As we get through the year, if these demand trends continue, we have the opportunity to take another tick up, or we could pivot in a different direction if warranted. But I think Ed has made it very clear to us that being nimble until we get to the very end of this is the key to our success. I think we've done a very good job as a company being nimble in our offering throughout the pandemic and really been closest to actual demand if you look back at what demand was. Great. We and investors love the discipline. Thanks. Next we'll hear from Catherine O'Brien of Goldman Sachs. Hey, good morning, everyone. Thanks so much for the time. So maybe first a bit of a follow-up to Mike's question. I've been hearing from some of your peers and other industry folks that labor supply has continued to weigh down on the ability to ramp up capacity, and that as we enter 2Q, labor might actually be a bit tighter than we thought at the beginning of the year, just given Omicron-driven training delays and higher attrition rates. I guess, first, are you seeing the same at Delta? If so, does that impact your 2Q capacity plans versus your plans back in Investor Day at all? Thanks. Hi, Katie. This is Ed. I'll take that. We've been at this for the better part of the last 18 months, getting ahead of it. We hired over 10,000 people last year. We've hired another 4,000 people already this year. We've hired 15,000 people. We are largely where we need to be on staffing. Yes, pilots have a training pipeline, and it'll take some time before pilots are fully in category and where we want them positioned. It'll probably take another year or two. Flight attendants, likewise. We're hiring flight attendants, and there's a queue as to many people we can put through the training pipeline. But that's not where the real congestion is. It's in the airports. It's on the ground experience. It's making sure we have our suppliers ready and positioned. One thing we did last year, really almost two years ago now, is we took over a lot of the functions at the airport that had been outsourced. The catering, cleaning, wheelchair pushing, and we have Delta people, you know, in position, and we've hired Delta people to do it, to make certain that we get the best experience for our customers. You know what? Not only are people doing a much better job at it, we're also doing it much more efficiently and effectively, and customers are appreciating it. The labor situation, you're right, has changed pretty dramatically over this, the course of the last two years. We've been out ahead, and that's why you look at our operational stats over that timeframe. We've led the industry consistently. That's great. Maybe just a quick one to Glen. You know, the Amex remuneration was a bright spot again this quarter. Would I be correct in thinking maybe Omicron created some noise at the start of the Q? Maybe we see that accelerate even further as we move through the year. I know you just reiterated your goal that you set at Investor Day for $5 billion plus contribution this year. If we do see an acceleration from Q1, might still be some upside to that. Thanks again for all the time. Congrats. Yeah, I think we're always hopeful for upside. I think what we're excited about when we dissect the spend is that you can really see the spend moving from goods to services and particularly increases in airline spend on the card. Those are very encouraging statistics for us to continue to monitor as we move through the year. I think you're really seeing that as the movement away from goods and the movement towards experiences and services. Anything further, Catherine? Oh, nope. That was it for me. Thank you so much for the time. Next, we'll hear from Brandon Oglenski of Barclays. Hey. Hi, Brandon. Good morning, and thanks for taking the question. Glen, you know, you provided an update. I think you said, you know, domestic corporate travel is 70% recovered and international 50% in March. Can you just give us some insight into how those bookings are shaping up here early in 2Q? And then, you know, second to this question, how much do you think the international testing requirement is holding back trips across the Atlantic right now? Well, first, I'll answer the second first. I think that is the next leg up that we see in the demand set, and we think we have quite robust demand. But there certainly is, in the minds of some consumers, some hesitancy to go abroad and risk being caught not being able to get back because of catching COVID. Hopefully we can see that roll back in the next few weeks here. I think we are hearing good signs from Washington. We'll see, hopefully that comes out here. That would be, you know, one of the final things that we would need in place for us to really say that COVID is in our rearview mirror. So hopefully that happens. Then- It- Your second question was what? I'm sorry. You were talking about, I think, domestic corporate travel at about 70%, international at about 50% in March. Can you give us any insights into how that's improving in 2Q? Absolutely. I think the one that we're really excited about right now is transatlantic business, which, for the first time last week, crossed domestic restoration in terms of volume. That was a big improvement from where we had been just 6 or 8 weeks ago. It does look like transatlantic business is returning robustly, and that's very exciting for us. I think what we're also excited about is this survey that we just got back that said 90% expect to travel more in 2Q than they did in 1Q. I think when we report to you next quarter, we'll see both of those numbers continuing to move up. Of course, the big question mark is when will Japan and China reopen? You know, that's probably not in this next quarter and hopefully sometime this fall, but that's a little bit further out. What I would say is, when these countries are open, business returns quickly. To Korea, to Australia, we've seen very rapid increases in business demand as those countries have opened. Thank you. Next, we'll hear from Helane Becker of Cowen. Thanks so much, operator. Thank you for the time, everybody. Just a couple of questions on the cost side of the equation. I know there's not a lot you can do about fuel. On the labor cost side, to attract people, I mean, I think, Ed, you said you're not gonna have to hire that many more people this year. To retain people, are you finding that you have to raise salaries more than the 4% that you've already slated for May first? Hi, Helane. No, we're not. You know, one of the great things about our brand is throughout this period, we've been able to attract and bring in the 15,000 people I talked about with fundamentally not having to change the scales. We've used in select high-price markets some sign-on bonuses very judiciously. Fundamentally, no, our scales are intact, and the 4% increase May first helps. That's very helpful. Thank you. Then my other question's, like, kind of unrelated, but I think I feel like it was Glen who mentioned that you saw a record cargo number in March, I wanna say. I'm thinking about what you're carrying and what you're seeing in airfreight rates and why you think it was so strong and whether that can continue into the second quarter, and if it's meaningful. I- Like, 18 questions in there, Glen. Right. Well, clearly we know about supply chains trying to catch up, and clearly airfreight's been one of the ways to relieve that pressure. We've seen our airfreight rates continue to move in a favorable direction. I'd say the one caution I have right now is the closure of China. Yeah. China has been, of course, a very strong market for us in the cargo area. With Shanghai closed, we're literally not flying to China right now until Shanghai reopens. That's gonna weigh a little bit on cargo revenues as we move forward. As that does reopen, then you can see that pent-up demand for goods that need to get shipped out of China and potentially even another leg up. I'd say we're in a temporary pause right now because of the issues in China, but I expect as China comes back online, and I don't know the exact date, I don't think anybody does, but we could see an even stronger demand coming out of that. Off a good year last year. Yeah. Off a great year last year. That's helpful. Thanks. Thanks, team. Very helpful. Conor Cunningham, MKM Partners. Hi, everyone. Thanks for the time. You know, you really invested in the operation over the years and just the customer experience in general. Maybe this is a follow-up to what Mike was getting to. Just, you know, there's been a lot of meltdowns around you. I'm just curious on how you, as Delta, go after those customers, you know, that have maybe been displaced by another airline. You know, I think about, like, Boston this past weekend. Just curious on how you attract them and make them permanent Delta passengers. Well, thanks, Conor. I think again, throughout the pandemic, we have, as Glen said, been the most disciplined in the return of supply and have probably had a better match to demand than anyone else. It's been interesting to watch because a lot of airlines have taken different approaches over the course of the last two years. Fundamentally, our commitment and our promise to our customers is to give them a great, safe, on-time, reliable experience. We continue to invest more and more in the premium, you know, categories of our aircraft, of our service elements, and the quality of the service that our people drive. It speaks for itself. You know we take very humbly the various awards we've won over the course of the last couple of years. I think we've expanded our leadership during COVID. We had the most to lose, and I think we gained the most over that time frame, candidly. We've got some really nice momentum as we're bringing and opening new airports. We've got the new LaGuardia opening in June, which we'll all be very pleased to be the new LAX that we cut the ribbon on with Mayor a couple of weeks ago, and the new international facility in Seattle and continued expansions in Salt Lake and improvements in Minneapolis, many other places. We're going after the customer experience on the ground as well as in the air with a heightened focus on premium. That's about all we can say. Myles Walton, UBS. Thanks. Good morning. There are some concerns about looking for potential consumer softening through the course of the year, and obviously you're not seeing that in 2Q. I was wondering, Ed, if you're looking for signals of softening in your business, do you think it would sort of start to show up first in a lower uptake of premium products? Would show up first in maybe leisure routes, demand drying up there or somewhere else? Maybe you can just talk to what you'd look for in your watch tower. Well, you're right, Miles. We're not seeing it, but at the same time, we acknowledge our crystal ball is only as good as the next 60 to 90 days or whatever we have in terms of a decent build of bookings on hand. Certainly the next 60, 90 days look good as evidenced by our guidance. We expect a very strong summer coming through that. You know, the health of the consumer is something we spend a lot of time talking about and watching and looking at. There's other elements at play here with respect to the consumer. One is that consumers had not been traveling over the last two years. This is a category that they're prioritizing as they're looking at where their spend is going into travel. You see it in credit card data, you see it all across the board. This is not just true at Delta, this is true within our industry. Hotels are seeing it, rental car companies, et cetera. You know, people are looking for experiences. You're seeing a pretty significant shift coming out of goods and retail into experiences and services. That's, you know, not just the fact that people haven't traveled. They've also saved money as they've accumulated some meaningful cash and discretionary income for what they have been doing over the last couple of years. We feel pretty strongly that we're gonna continue to see this strong demand extend beyond just the normal summer surge, but, you know, into the fall. At the same time, we're watching it. I think the place we'd be looking for is pricing resistance. You know, when we start to see, you know, pricing, particularly with high input costs like fuel starting to challenge our demand and supply assumptions, then we'll take the next step. For now, we're feeling cautiously bullish about the summer. Thanks. Great. Thank you. Next we'll hear from Duane Pfennigwerth of Evercore ISI. Hey, thanks. Good morning. Glen, if I could, on your commentary on yields improving sequentially through the balance of 2Q, assume that is based on what you're seeing in advanced book yields. Can you just comment on, like, when you add it all up, not just advanced book yields, but also bookings, how would you characterize kind of your visibility into May, June versus a normal time? Is it also running ahead? I mean, it's not as snarky as a question as it sounds. I guess my question is, as you offer higher fares out into the future, are you seeing any pushback? Are you seeing any hesitancy? Well, I'd say absolutely not. As a matter of fact, we've been trying to catch up to this robust demand. You know, our quest in the revenue management team, who I think has done an excellent job in managing this surge, is to not run out of seats as we get towards the peak travel, summer travel season. We wanna have reasonably priced offers in market, right up to date of departure, and we don't wanna be running out of seats. Having said that, we are running ahead in terms of absolute bookings domestically in the rest of the quarter, and we're actively managing that down a little bit so that we don't run out as we get very close to departure date. I hope that gives you some color as to what we're looking at right now. We're right now in the mode of trading traffic for yield. That's helpful. I don't know if we've seen enough of a kind of an off-peak environment yet here in 2Q, but can you contrast for us, you know, how are you seeing sort of peak yield improvement relative to 2019 versus off-peak yield improvement? Are you starting to see any, I guess, torque on off-peak? Thank you. No, as a matter of fact, when you look at where we're booked ahead, we have had the offers slightly ahead in peak days and peak travel periods versus off-peak. We've seen the consumer demand that you would expect, travelers moving into the off-peak period, but at higher yields. You know, really encouraged by what we see as we head into late spring and summer. You know, we'll see how it actually materializes. Everything we see right now points to a very robust travel through the remainder of spring and summer. Thank you, Glen. Next, we'll hear from Jamie Baker of J.P. Morgan. Yes, good morning. Glen, a question on premium revenue. What percent is sold at the initial time of ticketing, as opposed to during the window between ticketing and departure? How has that changed over time? We have moved more and more to ticketing, time of ticketing. I'd say, and I don't have these numbers, I can follow up with you, but my guess is that they're around 70% is done at time of ticketing and about 30% post-purchase. Andrew Didora of Bank of America. Andrew, your line is open if you can release your mute function. Hi, can you hear me? We can hear you now. Glen, I know it's really early on in the corporate travel recovery, but we've been hearing from some hotel companies that the corporate booking curve has just shortened tremendously. I think they've been mentioning under two weeks versus normally 30-45 days. Are you seeing a similar shortening in the corporate booking curve? I guess, you know, are you beginning to see any other changes to the way corporates behave here as the recovery unfolds? Thanks. Yeah. I would not say that we're seeing that same phenomenon. Our corporate booking seems outside of 21 D-days now seems to be trending similarly to inside of twenty-one. I'd say we're seeing very normal booking curves in terms of business. I you know I think what we're seeing, and this is more anecdotally than you see in the type of transaction you have, but people's reason for traveling for business is slightly different. We're seeing an increase in meetings. Yeah. An increase in groups, and I think that may be why hotels are seeing further out APs because it's harder to get big blocks. Thank you. April, can we please go to the next question? Savanthi Syth of Raymond James. Hey, good morning, everyone. Just a quick follow-up to, I think Brandon's question earlier. Just if you look at the Q2 guide, you know, what's the level of demand recovery that's reflected in that guide? Business demand. The business demand is in the low 70s%. Okay. Got it. Switching a little bit to the regional airline segment. You know, you started a transition in that segment, you know, dating back to, I think, 2012. I can accelerate it here during COVID. I'm just curious if you kind of view some of the pilot supply issues that the regional industry are facing. Are those kind of transitory or is there a need to revisit the regional airline strategy at Delta? Thanks, Savi. Yes, there's certainly a challenge to the business model that the regionals are experiencing. You're right, we've moved pretty aggressively to transition out of the lower category, the 50-seat regional jet over the last 10 years. As a result of that, we have less lift coming out of the regional in terms of aggregate shelves and pilot requirements and staffing obligations than some of our other competitors in the industry that go down to less than a 100 50-seat regionals, probably meaningfully less at the present time, and we don't intend to grow that. It's gonna continue to drop. You know, it's a reset period. I think everyone is dealing with their partners in a certain way. Certainly it's driving up costs on the pilot side to keep the pilots in the regional category until we're ready to bring them up to the mainline. Fundamentally, it's still a good business for us. We've had a considerable investment in it, and we're gonna do our best to continue to grow it, but not at the lower category. You know, we're happy with our 76-seat product and to the extent we can get more of those, we would. Next, we'll hear from David Vernon of Bernstein. Hey, good afternoon or good morning. Dan, I appreciate the color on the incremental cost guidance. I think we can back into what that number looks like in absolute dollar terms. Could you give us some sense of what are the risks and upside downside risks to achieving that cost guidance? Do we need international to really kind of reopen on some set schedule, or do you feel pretty good about where we're gonna be? Then as a follow-up, as you think about 2022 to 2023 g iven that we've hired ahead, as Ed had mentioned, resourcing the network, bringing people in, getting the training up, how should we think about that incremental cost and absolute dollars for the next 5% of capacity relative to what we're seeing in the back half of this year? Not looking for guidance, just trying to get a sense for, you know, how we think about or how we should be thinking about that cost build from 2022 to 2023, given the hiring ahead of this demand recovery that we've seen at Delta. Yeah. The so when you think about it, related to it, the biggest risk when you think about the step-up and step function change that we talked about and opportunity ultimately comes back to capacity. It's the ASMs that we fly. That is the. You saw that as we talk about the first half, we're two points lower on capacity, and that translates us to being higher than where we thought we'd be. Put that out there as that's the biggest element of it. That's two-thirds to three-quarters of it. The other quarter of it is driving the efficiency. It's the efficiency in the aircraft, it's efficiency in the airports and the facilities and the people. The biggest one is related to the restoration of ASMs. We're building this to be back restored, and it's the progression of that. We think we're, you know, when we set the multiyear framework, if you go back to that Capital Markets Day said where we'd be this year, we'd be 7%-10%. We'd be low- to mid-single digits as it relates to 2023, and then very low single digits as it relates to 2024. That, again, has you stepping up to being 100% restored in that period of time. You really have, at that point in time, all that transition expense that we've talked about has been sunset. You're fully through the restoration. Now you're getting the real benefit of running it at 100%. Ravi Shanker of Morgan Stanley. Thanks. Morning, everyone. Just to follow up on the previous commentary on the 1Q to 2Q transition. Obviously, your 2Q guidance is pretty strong. Is it fair to say that the kind of extreme peaks that we saw in the back half of 2021, juxtaposed by extreme troughs between it, kind of that is in the past? When you think of a spring break to summer travel transition, you're not going to see as much of a trough in between those peaks. Is that because of corporate? Or, and kind of what does that mean for your network reliability and your ability to run the airline? Well, I think one of the issues is moving out of COVID. We probably will not run the peaks as peaky as we had in the past in order to create more efficiency in the network on a year-round basis. I think we've really instituted a lot of plans in that space to try and ease out some of the peakiness of our operational schedules. I'll give you an example is, historically, pre-COVID, we operated about 20% more wide bodies in the summer than we did in the winter. When you think about the way that we utilize our pilots or our flight attendants in those categories, that they had very easy rosters in the off-peak and very tense rosters in the peak. What we've been really working on during COVID is to come out of this with a more de-seasonalized network so we can improve the asset utilization, flatten out the peaks, and build up on the troughs. We spent a lot of time thinking about that and creating it. I think as we get to the fall and winter schedules, you'll see how we've dealt with that. I don't wanna talk about that right now in detail, but I think those are the real things that we're looking at doing. Next we hear from Sheila Kahyaoglu of Jefferies. Hi, good morning, guys, and thank you for the time. It's Sheila Kahyaoglu from Jefferies. You know, can you maybe talk about your pricing strategy in this inflationary environment, how you've managed it, how that's changed, and then, you know, how have you seen the impact to load factors? I think you said in an earlier question, demand hasn't changed, but obviously for Q2, the guidance for capacity is still 16% below 2019 levels. Maybe can you talk about how you're managing all of that in? Yeah, I mean, we don't talk about future pricing as a rule, so we'll stay away from that subject. I'd just say that when you have stronger demand, you clearly have opportunities on the margin to improve the offer, in the marketplace and see if consumers respond to that. That's really what we've been doing, as fuel prices have continued to run up and demand continues to remain strong. Those levers alone have gotten us to where we feel very comfortable about the 2Q revenue environment. Okay. Thank you. Sheila, did you have another question? I'm sorry. That will wrap up the analyst portion of the call. I'll now turn it over to Tim Mapes, our Chief Marketing and Communications Officer, to start the media questions. Good morning, everybody. April, if you wouldn't mind, reminding everybody about how to ask a question. We have a lot of energy in the room. If we wanna keep the pace of these moving, we'll try to knock out as many of these as possible. Sure. Once again if you would want to ask questions, simply press the star key followed by the digit one on your telephone keypad. And also, if you're using a smartphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We'll first hear from Leslie Josephs of CNBC. Hi, good morning, everybody. I was wondering if you could talk a little bit about the union drive of your flight attendants. There's been a lot of attention on other companies like Amazon and Starbucks. Do you expect your flight attendants to be unionized this year? What is the impact on Delta? Do you think it helps or hurts your recruiting? My second question, are you still charging $200 a month additional for unvaccinated employees health insurance? Thank you. Well, Leslie, on the question with respect to labor and union, this is not new at Delta. The unions for many, many years have been looking at the Delta employees and have been actively seeking their support. We on the one hand absolutely support our employees to make the best decision that's in their best interest. At the same time, we know historically that the employees at Delta have been best served by having the direct relationship with their leadership. We don't, you know. This is not anything new or different. It's really more of the same. I wouldn't read too much into what's going on at Amazon or Starbucks or other places and try to equate that to Delta. It's a very different situation. We've dropped, as of this month, the additional insurance surcharge, given the fact that we really do believe that the pandemic has moved to a seasonal virus, and any employees that haven't been vaccinated will not be paying extra insurance costs going forward. Thank you. Next, we'll hear from Alison Sider of Wall Street Journal. Hi, thanks so much. Just curious what your take is on, you know, all the discussions of consolidation among some of the midsize airlines, without asking you to comment on any specific deal that may or may not happen. You know, just how would that sort of change the competitive landscape if you did start to see more consolidation among some of these carriers? Alison, that's a really good try, but we're not gonna bite on that either. Okay. Fair enough. Thanks. Next, we'll hear from David Koenig of Associated Press. Hey, good morning. Glen, you said you were hearing good signs, as you put it, about Washington perhaps rolling back the pre-departure test requirement. What exactly are you hearing and from whom? I guess I'd ask the same question about the mask mandate. Maybe I'll turn that over to Peter, our Chief Legal Officer. You know, we're obviously engaged throughout the administration. I will tell you that we are getting a strong indication that the testing, the pre-departure testing, will be phased out in the near future, which is, of course, quite encouraging. Dawn Gilbertson, USA Today. Hi, good morning. Two questions. First for Glen. You know, there are a lot of questions about pricing resistance and, you know, just a quick check of your fares for a July trip shows $1,500 round trip from Atlanta to Maui, $750 from LAX to Orlando. Are a lot of Americans gonna be priced out of vacations this summer, and do you fear any backlash? That's my first question. The second one is, Ed, you mentioned at the top of the call, you know, about travelers' patience. Where are you still seeing issues and how long will travelers put up, say, with long waits on the phone and other ways to reach you guys? Thank you very much. Sure. You know, we haven't seen a lot of resistance to the price points that we have in market, and our goal is to have reasonable price points in market up to day of departure. You know, as we head to the peak, there are gonna be constraints on peak days. As you shop around, if you're looking for lower fares, you have to be flexible in terms of which days you'd be willing to fly. As we sit today, we have a load factor cushion versus where we sat in 2019, so we have a higher percentage of our total seats already booked, which is, of course, putting a little bit of pressure on the ones we have remaining to sell in terms of increasing the offers on the margin. Look, my advice to travelers is to book early and be flexible if fares are your most important attribute. What we're seeing more and more is that is not the only attribute. That quality of service and that level of service counts more and more. I hope that answered your question. And Dawn, on the question regarding reservations specifically, if that's what you were asking, we have continued a very aggressive drumbeat of hiring in reservations to the point where now over 50% of our total employees in reservations have been hired just within the last couple of years, and we're continuing to grow that. As our people are getting more experienced and more comfortable, you know, the service levels continue to improve. We've also invested aggressively in our digital self-service options, where several years ago, maybe only 20% of the reasons people would call us could actually manage it digitally through self-service channels. Today, that's over 60% of the reasons people call us can be handled digitally, and people are continuing to expand and the adoption of self-service is growing substantially. Obviously, as demand has surged, that continues to put more pressure on the phones. As international is opening, that puts more pressure on the phones. On balance, our phones are generally even, and we allocate based on the level of service and the dialing category they get responded to the quickest. On average, the wait times on the phones are less than 30 minutes. I just make one. The number of transactions that you could actually complete on digital is in the low eighties. The adoption rate is in the low sixties. Continuing to push people and, you know, since you have a direct line to the consumer is encouraging, continue to encourage them to seek a digital answer first rather than calling and waiting on the line. Because most only very complicated transactions now can't be handled digitally. With that, April, we have time for one final question before we turn it back over to Ed, please. Absolutely. Our final question will come from Niraj Chokshi of The New York Times. Hey, thank you. I just had two questions on fuel. First, I was wondering if you could speak to the effect of the higher cost of fuel could have on fares. The other is that, you know, if there's anything more you could add about sort of the role the refinery is playing in helping to offset that. I'll take the first question, Dan can talk to the refinery. It's really a function of demand. To the extent we continue to see very, very strong demand for our product, our ability to push on not just the increased cost of fuel, but all of our cost inputs. You know, we're shortening the time lag between when we experience that cost and when it's in the pricing structure. It's really a function of demand more so than any decisions that we take on our own. Related to the role of the refinery as it relates to managing fuel, 20% of the refinery production is jet, and that jet fuel goes to our New York operations. It is a direct hedge as it relates to the spreads associated with that. It's really a 100% hedge as it relates to how we run our operations and what it provides. The rest of the 80% production is diesel and gasoline as you go through that process. That provides a partial hedge related to the correlation of diesel and gas to jet. By and large, the refinery, when you think about an aggregate relates to spreads, it's about a 40%-50% hedge as it relates to our fuel costs. Thanks. Just on fares, you know, last month at the JP Morgan conference, Glen had given an estimate that, you know, Delta would need to recover, I think it was 15-20 each way on a $400 round trip average. Are you able to kind of provide any update on that kind of figure given the higher fuel costs now? This is Ed again. You know, fares are all over the place. They move every day and fuel prices move every day. We're not gonna track to any specific comment. I think you heard in our remarks that we're actually seeing in pricing today real-time coverage for where fuel costs are. Now at this time, I'll turn the call back over to our presenters for any additional or closing comments. Well, I wanna thank you all for joining us. We are thrilled with the performance of our team, the progress we've made in terms of serving the demand that is returning. We've been waiting for two years to see this, and we're ready to go. Customers are ready to go, and we look forward to a very, very strong spring and summer season, and look forward to speaking to you all in July when we can report on the second quarter results. Everybody have a good day. Thanks for joining us today. That does conclude today's conference. Thank you all for your participation. You may now disconnect.