Delta Air Lines, Inc. (DAL) Earnings Call Transcript & Summary

Okay. Good morning, everybody. My name is Jamie Baker. I work at JPMorgan. I cover the U.S. airlines and aircraft leasing companies. I am joined by my good friend and colleague, Mark Streeter, and it's our pleasure to welcome you to what I believe might be the 18th Annual JPMorgan Industrials Conference, which in fairness started out as a treasurer credit afternoon under Mark's watch and hopefully has grown into one of the better, if not the best, industrials events. We hope to make good use of your time today. We certainly respect that you're here to see the companies and not me and probably not Mark. But why don't you add to that, and then we'll kick off the show.

You're probably all wondering why we're not on the second floor. That space is under renovation. The new building opens up in summer of 2025. So if you stick around for March of '26, we'll be across the street. But next year, we should be back in our old space. Thanks, everyone, for coming.

And somebody asked me this morning why Delta usually has the privilege of going first, and I explained it's comparatively simple. As an airline, you need to generate half of the industry's profit, you have to pay out more in profit sharing than every other U.S. airline combined, and then you get the opening slot. So that's my challenge to Delta's competitors: if anyone would like to have the opening spot next year, go for it. So with that, I will turn it over to Julie Stewart for the safe harbor. But we'll be joined momentarily by -- Ed Bastian, Dan Janki and Glen Hauenstein will be joining us up on stage. And very eager to get an update on the Delta story. Good morning, everybody. Thank you.

Good morning. Today's discussion contains forward-looking statements that represent our beliefs, our 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. And we'll also talk to non-GAAP financial measures. Please see the appendix of today's presentation at ir.delta.com for more information. Now, I'll turn it over to Ed.

Well, thank you, Julie. Good to be here. And Jamie, I agree with you. This is in my opinion, my humble opinion, the premier industrial conference that we get to present at each year. So thank you and Mark and your teams for putting together a great lineup, giving us great access to some high quality -- many high quality investors and being able to tell the story as an industry, not just as an individual airline. So with that, let's get going. Julie, you said that really quickly. That's a lot of words.

I practiced that.

The lawyers have been hard at work on that page I can tell. Well, it's good to see everyone. Thank you for coming. 2023 is off to a strong start for our airline. We'll be talking a lot about 2023 over the course of today. But before I do that, I wanted to spend a second letting you know that we're on plan with our 3-year plan, we're on trajectory. About this time in Vegas about 15 months ago, we laid out a 3-year plan at our Capital Markets Day December of '21. And when you think about all that's happened in the intervening 15 months, things that could have thrown us off track, to be able to say that almost halfway through that 3-year plan that we're on track. 2022 performance was ahead of what we were planning in that 3-year plan. And our '23 targets and forecasts and guidance is right in line, if not slightly better than we were thinking. And we're expecting '24 to be the same. It's a real testament to the strength of the operating system at Delta, the people at Delta and what we've created as the world's best airline. It all starts with people. I always laid off each one of my presentations thanking the Delta team. We have the best people. We were at a investor dinner last night and I got asked the question: "Just how do you guys consistently deliver top tier performance when everybody else has many of the same attributes, the same equipment, the same stations, the same route networks?" And the only thing that really separates us from our peers are the people of Delta Airlines and their quality, their consistency, their focus on service. The culture of performance is something that we take great pride in. And our people are leading the way. They're our greatest strength. We were pleased to be able to offer, as Jamie said, the largest profit sharing in the industry. In fact, our profit sharing payout to our employees this past year was $550 million, which was greater than all of the other airlines put together in terms of their profit share payout. So you see a great alignment of the rewards together with the hard work and sacrifice that alignment with our owners as well as our customers. And the management team is really the glue that holds this whole thing together. And we're also pleased that we received strong ratification from our pilots on our new contract, our new 4-year agreement. That's done. Our pilots -- it was a well-deserved increase. It was a long period of time to have the negotiations over. And we're now focused on the marketplace. We're no longer focused on how to get the contract done. We're now focused on winning together. And that's a great thing as well. For the rest of our employees, we have maintained the premium place they sit within the industry on pay. And we've already announced that starting April 1, all of our other employees -- the pilot's union, if you don't -- you're not that familiar with Delta, it's the only union -- main union we have on property, already kicked in at the start of this year. The rest of our employees will be getting a 5% increase starting April 1. That's already in our guidance, that's in our forecast. That was in the plan for the year. And so all of our labor costs are in the numbers. They're not just in the numbers, they're known by our people. And we've taken a big uncertainty off the table for our investors. For our customers, the work that our team delivers is top-notch. You can see on the bottom of the slide, it has many of our awards. We are humbled by the awards, the recognition that we continue to receive. But one of the awards -- or 2 of the awards, I'll talk about for a second, that's really driven by our people and their operational excellence was in 2022, which, in my opinion, was the most difficult and challenging environment in U.S. aviation history as we tried to bring the airline systems back up against unprecedented demand. People were just ready to go. And it didn't matter where they were going or how much they're paid, they just wanted to get out. And our resources, clearly, were not in position to be able to satisfy that large amount of demand. Our people still won the award by Cirium, which is the top consultancy that looks after global airline performance, as the most reliable, the most on-time airline of the year in 2022. Quite a statement in the most difficult period ever. Also quite a statement the fact that 1/4 of our total team of 90,000 are new within the last 2 years. So having a strong base of new talent joining us, you can see how culture matters in terms of bringing that operating performance to light. Innovation and digital technology is something that we're spending a lot of time. We spent a lot of time over the course of the pandemic investing in digital engagement. Increasingly, that's one of the reasons our customers are choosing Delta. And the strength of our brand is the quality of the digital engagement, the self-service in your hand with the Delta app. 3 years ago when I was at Consumer Electronics Show, I described a future where you would have a red coat, a famous Delta red coat by your side, not necessarily in person, but in the form of virtual, of your app of Delta being able to take care of any need you have as your plans change, as you want to manage your schedule, as you want to book a trip, as you want to way-find and navigate your journey with us. We now have that technology in the app and it's one of the best travel apps in the industry, and we continue to make it better. Witness the announcement we made at CES this year about offering free Wi-Fi on all of our fleet, fast, it's free, it works and there's no charge. It doesn't matter where you're sitting on the plane, it works just great and there's no cost to our customers. I'll talk a little bit why we did that in a second. And then finally, the SkyMiles penetration, the co-brand acquisitions continue at double-digit year-on-year growth. We've talked a lot about our targets for 2023 to get to a $6.5 billion contribution with American Express, and we're on track to deliver that, and hopefully, even a bit more as we progress over the course of the year. And then for our owners what does that mean? That means high-end performance within our industry. We get a lot of questions around demand. I get -- everyone is worried about it. I know -- I saw the announcement that people are trying to figure out with United what's going on. I can't talk to that. I know Scott is going to follow me, so you can ask him those questions. But I can tell you at Delta, our demand is strong and getting stronger. In the last 10 days -- or excuse me, in the last 30 days, we've had the 10 highest sales days in our company's history, 10 highest sales days in our company's history in just the last 30 days. So if anyone is looking for weakness, don't look at Delta. I mean we're seeing great, great strength. Acknowledging part of that is a little bit of consumer behavioral shift. People remember last spring and summer, how hard it was to get those trips that they wanted to go on. So we've seen a little bit of a pull forward in terms of the advanced bookings. But that's modest relative to the strength of the underlying demand when you look at the price points, the yield that we're seeing on a global scale, not just on a domestic scale. And that's enabling our ability to generate strong cash flow. We're expecting to generate over $2 billion of free cash this year for our business while investing close to $6 billion back into the business. I know a lot of airlines are either investing heavily in CapEx, and thus, don't have free cash flow, or they have free cash flow because of not investing heavily in the business. At Delta, you get both. We're doing both and we're proud of that. So this is a slide from our investor deck in December when we gave an update, and it speaks to the unmet demand that this industry has experienced over the course of the pandemic. As you can see on the slide, going back into the 1980s, there was a very, very tight correlation between GDP in a given year and the amount of spend on airfare, airline travel, whether it be on U.S. airlines within the U.S. or international airlines in and out of the United States. It's 1.3%, 1.4% on a consistent basis. It's broken a couple of times. 9/11 it broke and it bounced right back. The recession at the end of last decade it broke and bounced right back. Then obviously, the pandemic it broke, and people are still looking at what the trajectory back means. The amount of unmet demand that consumers had for air travel relative to what they actually spent and were able to spend because of the pandemic, that gap is $300 billion by our estimate. And we anticipate, clearly, the $300 billion isn't going to come back. But we are going to overcorrect on that historical relationship of 1.3% to 1.4% of GDP. And that's why you see despite all the challenges that the world is talking about on the health of the consumer economy, airfare and air travel continues to be right at the top of the list as a priority for consumers. We've talked a long time over the last 1.5 years that we're going to see a flip between the good sectors and the service sector. Indeed, we've seen that over the course of the last year. In the service sector, our business is an experienced business. We're part of the experience economy, not just the services, we're part of the experience economy. And what people -- why they use our product is because of the experience that they're going to, the experience that they're enabling -- or that we're enabling for them. That is the premium part of the overall service shift that you see coming back and it's roaring with great strength. So I anticipate over the course of the next several years, not just the next several quarters, you're going to see the continued out delivery of that historical 1.4% of GDP for our industry. Just the gap in 2022 alone between where we were at 1.4% historically and the actual spend is somewhere in the $30 billion to $40 billion range. And that's what you see continuing to drive the strength. That's one of the reasons. In fact, it's the main reason why we have had the 10 highest sales days in our history within the last month. That core demand is really, really strong and it's our job to make sure we're delivering it in great execution manner. So at this year's Consumer Electronics Show, we went and we were one of the keynote presenters. I had the opportunity to do that in Vegas. It was a lot of fun being back on stage in Vegas. And we made a pretty simple announcement: "Wi-Fi is free basically everywhere you go but air travel." In fact, I was giving a presentation a week ago to a group and the opening slide I had in my presentation was: "With all the innovation and investment in air travel and our industry over time, there's one unmet question that still needs to be solved is why does in-flight Wi-Fi suck so bad?" And the reality is it's hard. It's a tough thing. It's great when you're sitting on the ground and you're able here in this room to call up anything you want and be connected to anywhere in the world you want. You go up in the sky and you're traveling at 500 miles an hour, it's a little more difficult. So this is hard stuff that we've done. But we have enabled -- and partly because of the pandemic, we were able to make the improvement and the progress both in the equipment that we're carrying as well as changing out our service provider, moving to Viasat, create an opportunity for customers to experience free, fast Wi-Fi wherever they go. We're already up and running. 80% of our U.S. domestic seats have that service capability today. And we're seeing people use it, and they're -- we're seeing no deterioration in the quality of the performance despite the massive amount of pipe that we've now opened. International is not yet open. That will be opened by the end of next year as we bring the international fleet up. But there's a lot of reasons why we did this. First and foremost, it's part of the core experience. We are in the business of connecting people. And it was always ironic to me, and I've talked about this for years, how we're in the experience business, we're in the connected world, the only place you're not connected is in the sky. And now some people like that. They don't want to be found by their boss. They don't want to be bothered by their spouse or whatnot. I mean they -- we've ruined it for them. So my apologies. But the vast majority of us need to stay connected, and particularly, younger generations of travelers really want to be connected. I talk about the fact that Delta, we carry 200 million people a year in terms of aggregate number of consumers. And within that number, 50 million of those are unique customers and many customers fly as many times a year. We have 200 million people a year with us on average 3 hours a session. And we even have them seat belted in and all facing forward. They can't move and their bored out of their minds. This to me has always been the gold mine as to how we could figure out a way to create value for our customers, first and foremost, but also for our owners by having that captive audience and what can you do to create a better experience for them. Well, Wi-Fi is the answer to that, because Wi-Fi can only -- you can only get to those consumers if you come through our pipes. People cannot connect on Wi-Fi in the air unless you're connected through the airline system. So that's why Delta kept the system. That's why we've invested over $1 billion in the last 3 years in creating this opportunity. And we're there along with partners. So it's not just Wi-Fi that's for free. Starting in April, we're going to have several partners that are on that Wi-Fi portal that we call Delta Exclusive Sync, where we're going to have T-Mobile providing exclusive opportunities for customers, together with SkyMiles opportunities to make offers of interest to customers if they decide to look at it, but they'll have the opportunity to be present on that. Paramount+ is providing their full library of content to our Delta Wi-Fi portal users. Historically, we would pay -- and we still pay -- for the in-flight entertainment product that you see on our seat-back screens starting in April, that content is going to be free up for Paramount+ on that Wi-Fi portal. In fact, they'll pay us for the opportunity to be able to provide that content. And of course, we have American Express as well. That's also with it. So with 3 lanes of opportunities with -- we also have the New York Times puzzles, we have Atlas Obscura that's going to be on the site. So we want Wi-Fi not just to be about Wi-Fi. We want Wi-Fi to create an opportunity in entertainment channel to create engagement. Also the fact that we have so many -- as I talk about the 50 million individual unique users we have, only half of those are members of our program today, the SkyMiles program. So we have 25 million customers that travel on Delta a year that we don't know who they are really. And the only ask that we make in order to access the portal is that you be a member of our program. It doesn't cost anything. It's free. It's great and provides us opportunities to personalize service to you and build better connectivity with our customers. And we've seen the success. It's amazing. We started a soft launch in November. We went to a full launch in February 4, meaning 80% domestic. We're still not even in international. And we already have had over 300,000 people sign up to be SkyMiles customers that are already our customers that were already on board our flight signing up to say, "Yes, I want to be part of this movement that you're creating." And the average age of that customer is 32 years old. The average age of our SkyMiles portfolio in total, the demographic is 38 years old. So we're getting the desired effect in terms of younger people that want to be connected. And we know that we're building loyalty that's going to last generations by doing this, which is another reason why it's free. We want those customers to stay with us. Because when customers come to Delta, they tend not to leave us. We're very sticky as a brand. So this is, I think, generation building for years and years and decades to come. And that's why we're pleased to launch this. And we're going to continue to be very aggressive in pursuing this avenue for the future. That's our next step in digital. But there's many more aspects of digital than simply that. The financial outlook is strong. This is the guidance that we presented at the Capital Markets Day in December. It stays intact. Our full year 2023, we're looking at revenue growth in the 15% to 20% range, an operating margin of 10% to 12%, EPS of $5 to $6 per share. That's almost double from our '22 EPS to '23. And a free cash flow greater than $2 billion, which is helping us reduce the leverage that we carry. The leverage ratio we're targeting for this year is -- by the end of the year is between 3 and 3.5x. '24, which is the last year of the 3-year plan, we're on track. We're targeting a mid-double-digit operating margin between 13% and 15%, EPS of $7 a share or greater and free cash flow of over $4 billion for next year. And all signs are good. With respect to the current quarter, we're on track with our guidance. We're going to be profitable this quarter, one of the few airlines that will be profitable in the first quarter. This will be the fourth quarter in a row that the airline is profitable. So on a 12-month run rate, we've crossed all those hurdles. And now we need to work -- figure out in the first quarter excluding -- how to be profitable every month of the first quarter, which will be our next task for next year, but I'm confident we will get there. I know we'll get questions during the Q&A and some of the guideposts within the quarter since the numbers have moved around just a touch to get there, but the EPS, the guide that we gave is solid and it's unchanged as we see the business. So in conclusion, you can tell, hopefully, from our presentation, the short presentation that we've got a lot of enthusiasm and excitement for our future and we really do believe that Delta is uniquely positioned to continue to perform and lead the industry with the best-in-class people, service and operation, supported by a consumer brand that's gaining a strength as a premium airline. Fortune Magazine last month named Delta as the most admired airline in the world, first time that we ever had that honor, as well as the 12th most admired company, period. When you think about it, an airline getting that level of recognition coming through a pandemic, it's a real testament to the team and the people of the company. We have the world's leading international joint ventures in our business. We have great investments in LATAM airlines, not just JVs, but investments at LATAM, Korean Air, both of which are the 2 leading franchises in South and Latin America as well as in Asia, that we really haven't even started to scratch the surface on that we're now getting at as everyone is coming through the pandemic. And just a great set of partners in Europe with Virgin Atlantic, Air France and KLM. So we feel great. And of course, Aeromexico on our southern border. So we have great partnerships, great team and the pandemic candidly brought us all closer together as we went through the fire and we stayed tight through this. We've got a great management team. Glenn, Dan, Julie are representative of that. We're a team that's been together for a long time. We've been through it. We've been through 9/11 together. We've been through recessions together. We've been through mergers together. We've been through bankruptcies together. We've been through the pandemic together. Okay? So this is a tested team. And that's why when you saw how we performed over the course of the pandemic that disciplined approach. We weren't jumping around. We weren't trying to grab market share here and be opportunistic there. We kind of -- we've been having a very steady hand as to the strategy we're deploying. And it's working and it has got us back to the top. The industry is constructive. I think everyone is familiar with that. The supply constraints that are in place, the training requirements to be able to bring pilots and other staff in are unique. Consumer spend is shifting towards this experience sector. And while we always get the question, I'm sure we will today, on where's corporate travel. Corporate travel is somewhere in the mid-80s, back to traditional corporate travel. But as I tell many of my CEO friends across the industry and outside of the industry, I know where your employees are. They may not be in the office, but you can find them on my airplanes. And that's because of the new way of work, the new hybrid, new mobility. And I don't think that's changing. I think that's going to be something that stays with us. Anything, anything that enhances mobility, in my opinion, enhances our opportunity to succeed and grow and provide greater value to our customers. And finally, I just covered the financial momentum that continues to build. We're feeling good about that EPS guide of $5 to $6, double over the '22 EPS performance. And we're feeling very, very good as we're going into the heavy spring and summer season when I mentioned the amount of cash that we're building and the demand that is off the charts in terms of any kind of precedent. So I present to you Delta Airlines. I thank you for those of you that are owners of the stock already for your support of us, your encouragement. It's been a tough 3 years. This first time personally I've been back, Jamie, I think, since 2019, since you -- as you mentioned last night, you were the first to cancel -- or go virtual rather on the conference, and you were the first also back out. And I wasn't able to come here last year at this time, but I'm glad to be back. It feels good, and it's great to be here with you. Thank you.

Just for those of us that didn't get a chance to really dig into the 8-K. I know the guide for the first quarter was affirmed, but you alluded to some of the guideposts having moved around. How did the quarter develop relative to the plan that you laid out on January 12 or whenever it was.

It's -- and Glenn and Dan can provide a little more detail. It's largely played out as we thought. One thing that we have experienced this winter, particularly in the northern tier of our country, really disruptive weather. So our capacity is not able to come -- we're not -- we're going to be shying capacity a touch. I don't know if the number is less than a point, but it's a meaningful point of capacity relative to the plan we had. And so that's got a cost impact in terms of nonfuel costs. So we guided in the quarter, our nonfuel unit cost to be up 3% to 4%. So it's going to have a 4 handle on it as compared to a 3 end on it, but it's not out of control. It's within the general range. And the gross amount of revenue might be -- I think we're going to be pretty close, but the TRASM might be helped a bit. So on balance, we're kind of right down the middle in terms of the guide. Anything you guys want to add to it.

Really good about where we sit on margins and EPS and cash is coming in better than expected. We had $500 million of debt maturities in the quarter, but we're doing more proactive liability management in the quarter in the open market and chipping away at debt reduction and reduction in interest expense.

And then, Ed, so you may not remember this, but a few years ago, this was pre-COVID clearly. One of my competitors on the American call, asked Doug Parker at the time. I believe the question was, are you an airline or are you a marketing company? And I think most people, and certainly, Doug, they just kind of brushed the question aside. But I didn't think it was that off base. And when I listened to your presentation today, I mean, it really seems -- I mean, I know that RASM/CASM fuel is always going to live the root of what you do, connecting people. But are you a consumer brand at this point? Should investors be thinking about you differently than just the traditional nuts and bolts of flying?

I think so, Jamie, and it's -- very much think so. We talked last night, and we used to target being a high-quality industrial. I'm not sure what people know what that means. But people do know what a premium consumer brand means because we're direct to consumer. Yes, what we operate. It's capital intensive. It's got long cycle, the big scale. But at the end of the day is to deliver a consumer experience. And consumers what we've learned during the pandemic more than ever value that experience. They value the -- not just the cleanliness and the comfort and the care that we take of them, which was evidenced by whether we bought the middle seat for 1.5 years or whatever we approached it is the on-time performance, is the reliabilities, is the consistency of execution, the friendliness of our team when you're on board Delta. We want our customers to feel like they're halfway home when they cross foot onboard our aircraft. And the investment we're making in the airports that are consistent, whether it's the new liquidity, whether it's LAX and many, many more that were in process that we continue to finish out. It's the technology, they have in that digital. One of the things that has changed a lot over the last decade is that our overall direct-to-consumer sales on our website were over 50% of the actual bookings we take is direct to Delta. That's more than tripled in the last decade. And so the world of the OTAs controlling pricing and commoditizing the sector, at least at Delta that's changed meaningfully. And customers trust us. And so they give us -- they may shop separately, but they know they get the best value on Delta and a personalized opportunity. And the more and more which we can continue to drive to our employees as well as our investors that this is a brand that matters -- you don't get the ranking of 12th most admired company by Fortune if you're not a brand. That matters to consumers. I think it will pay dividends for how we look at our business, the investments we're taking going forward, and hopefully, how investors will start to see where that multiple gap and the opportunity for value it creates both on the cash side -- the American Express partnership, probably one of the leading, if not the leading commercial partnership, period. The Delta-American Express card, what we're doing on the clubs, just across the board. It's a different company, a very different company that we accelerated during the pandemic.

And maybe you can take us on a journey around the world. You mentioned your international JVs. So I'm just sort of wondering with your major partnerships, just where we are maybe thinking about which inning we're at in South America versus transatlantic versus Asia, because it seems like the U.S. is more recovered and that the margin upside in the U.S. were getting close. But in international, there might be more upside. So when I'm thinking about your '24 guide for EPS and so forth, how much of that is driven by that further recovery in international with those partners versus ongoing recovery in the U.S.?

I think you're right. I'll turn it to Glenn get him to give his perspective. He's got the best perspective in the industry on that.

Sure. Thanks for the question. I think we're really excited about international returns this year and the development of the international partnerships. If I start with the Pacific, which it's fully recovered really with the exception of China. As we all know, I think we don't know where the China relationship with the U.S. is going, and we're all restricted to very few of the pre-pandemic. So put China aside, the Pacific is fully restored. And we're coming back into a position of strength here because for years, we didn't have an antitrust ATI-enabled joint venture with Korean, and now we have that. And so really leveraging that and having Korea drive our presence into Southeast Asia. So we believe the small hub is the best hub for connections in Asia, and we're really exploiting that, and we're seeing very, very strong returns in Asia. Of course, in South America, when you put LATAM Delta together, we go from #3 position as Delta to a #1 position from U.S. to South America, and we're gaining share as we speak. We -- during the pandemic gained, of course, ATI-enabled joint venture with our partners in LATAM, and we have great plans moving forward. Deep South Latin America was one of the last restore, but it's gaining momentum now and it's on par with the rest of the internationals. And then lastly, in Europe, where we have our most mature joint ventures in place. Last year was a tough year, particularly in Amsterdam, where we had a lot of cancellations. We had a lot of reductions in service, and we had really a customer experience that needed improvement. And we've been working very, very hard with KLM and the Dutch authorities to make sure that, that is not a repeat this year, and we feel very confident. And as we move into spring and summer that was a real drag on earnings last year. And we think that's back in play and that we should have a great summer to the Netherlands this year. So around the world, I think we're very -- just what you see is we're very optimistic, they were the last recovered. But now business recovery in all entities. It's really interesting to see domestic Pacific, ex-China, Latin America and Europe are all in that mid-80s recovery. And they're within a few point band of each other, which people wouldn't think on the service, but it's really progressing quite nicely.

Is there a structural reason why international margins can't be the same as your domestic margins?

That's our long-term goal, and I think we'll achieve a good portion of that this year. We're really expecting to have our highest margins ever. My commitment to add is we'll have our highest margins there this summer IATA season in the transatlantic.

And maybe the structural nature during the pandemic restructure, the fleet penetration of next generation, the growth in premium product on the international is EPS Premium Select the counter seasonal flying along with better cargo. When you put all that together, those are the underpinnings in addition to what Glenn talked about to drive margin improvement.

And we forget the history here is last April, we were still testing to go back and forth to Europe. So people were reticent to go over there, thinking they might get stuck. So this year is going to be a very different year. We think a very robust year for all of the international entities.

And I think a couple of other things in addition is that these number of our carriers, LATAM, Aeromexico, Virgin went through some very difficult restructurings and wind up cleaning up their balance sheets meaningfully, they're getting their cost structure down, they're going to be in strong condition to continue to start to build and grow in the future alongside us. So there's a lot of optimism on the international front. And I really do believe that when you talk about the strength of the demand bouncing back, it's outsized international because in the domestic market, we could still get around somehow. We didn't feel as confined. But people meaningfully lost time international in terms of trips, adventures, business, family, cost of reasons. And we see that component of our business is probably the strongest demand we have period.

One more for me, and then hopefully, we'll take a couple from the audience in the time we have left. So I personally am uncomfortably bolt up about the industry construct right now for a lot of the reasons that you identified and anybody that reads my research, will understand. And it just makes me feel -- I don't know, I wouldn't say 30 inside. But it's just not natural for me to have such a ---

We don't stay in prosperity, will do it.

Well, I mean the question there has -- I can't accept that every aspect of COVID led to improved structural position for Delta. There has to be something that is impaired in your franchise specific idiosyncratic to Delta as a result of COVID, there just has to be. What am I missing?

Well, I'd say I agree with you. And while we share your bullish optimism, if not even more bullish than you, which is a strong statement, we also understand that we're not fully back to where we need -- no, back isn't it -- we're not where we want to be yet. It's not about going back. It's about going forward. An example of that I mentioned, 1 out of 4 employees of Delta is new or new -- the company over the last year or 2. There's a tremendous amount of experience that we've got to reclaim and we got to invest in, in terms of the productivity, the efficiency, the service standard, the culture of performance at Delta that we have as a system with so many new people into the management as well as the front lines of the company has taken us, catches our breath a little bit when we're -- this training and the continued bringing people to a different level of performance. Even by the way, many of the 25,000 people that have joined us came from other airlines. They always wanted to have a chance to get inside there. And we're having to say, no, this -- somebody else may do it this way, but we do it this way and just kind of keeping that. So I'd say that's certainly one of the things that's holding U.S. back a bit, coupled with the overall fragility of the aviation infrastructure, whether there's air traffic control and going through some of the same challenges of resources and experience and our people. So we'd like to fly more. We'd like to kind of push when the demand is so hot. We'd like to be able to push our revenue and our supply even faster. We can't. We're not going to go through a summer like last summer, ever again, we're not going to outstrip our resources. So I'd say that's one. I'd say another one is that culture. I mean, I started by saying our people are everything to us. They're the reason we have the premiums and the reason we have the leading standing within the industry. And when you have so many new people, the culture is something that you got to fight for. You've got to continue to ingrain in and -- that's why I'm on the road almost every day, different places with our people as many of the management team is. They're continuing to bring them along and understanding what it's like profit sharing, it was great to have profit sharing this past year, but it's still not what it was. And so it's taken some time to coach people up and get that experience where it needs to be. So I'd say that's probably the thing that's changed about the pandemic. There certainly have been other changes that we've gone through, but I'd say those are some of the business.

Questions in the room?

What are the biggest constraints facing the airline? Is it shortage of pilots? I'm hearing young people are not attracted to becoming pilots like they used to be and that the buyouts of the senior pilots had a big impact on the industry. Is that one of the biggest constraints facing you?

I'd say there are several. I'd say pilots are certainly still a constraint for the industry generally. Delta a little bit less so because we've been at this for 3 years. We've hired several thousand pilots over the last couple of years and now it's just getting them through training and into the cockpit and into the proper seat and the proper growth. And it's not just the fact that we have so many pilots that we've hired and trained. There's over 1,000 of our pilots that are experienced that are involved in the training of those pilots. So the vacuum that it creates the ability to fly and push your schedule is meaningfully constrained. It's impacted us at the regionals. At the lower end, that's where we sourced a lot of our pilots. I think this is something the industry -- it will take a number of years for the industry. So I don't think it's that people are unwilling to enter the profession. I think it's just the nature of the beast, the challenges of accumulating the hours, getting the experience is an expensive profession to get into, and you'll see that improve together with the new pilot contracts that Delta signed and I expect a number of our peers will be signing soon, OEM performance, whether it's on the engine side, whether it's on the manufacturer side, the airplane side is something that has taken a huge hit during the pandemic. Boeing's inability to get their certifications that they're expecting that's taken years out of the pipeline in terms of growth for our industry. As an investor, some would say maybe that's good. But it's a constraint that we still see in this -- it's not just with Boeing, it's with Airbus, too. But it's increasing loss of the engine production, the engine manufacturers, the supply chain, the Tier 2, 3, 4 suppliers that they're still having to stand up and create the level of performance that we need to be able to take delivery. I'd say those are 2. There are several others. I mean, I think the volatility in the environment -- the geopolitical environment are constraints that gives us pause as to how hard to push. International growth -- going into China. So we're going into other parts of the world. So those are some of the constraints that we see. Manageable, but I think they will create an opportunity for us all to be very disciplined about how we manage our existing resources. And couple that with the health of the demand environment, should create a very good margin opportunity for the industry, not just for Delta.

Great, Ed. And thank you.

Thank you all. Good seeing everybody.