Jan 22, 2020 Delta dishes out $1.6B in profit-sharing bonuses for its employees Read More Sweet Valentine's Day... On February 14th, Delta's 90K employees will get a check for an extra 2 months of salary as a bonus. The generous $1.6B payout represents 33% of Delta's 2019 profits, which were extra strong (largely thanks to Delta's serendipitous lack of Boeing 737 Max planes).
Not just in-flight peanuts... Since 2012, Delta has paid out $1B+ a year in profit-sharing bonuses to employees, but this year is a record. Delta's not the only one sharing wealth — it's a thing in unionized industries like airlines and automakers. Since 2015, GM, Ford and Fiat Chrysler have shared a combined $5B with employees. But Delta's bonus (16% of salary) is big compared to average payouts (5% of salary). Here's what companies usually do with profits:
Reinvest: Use profits to grow the biz — purchase new equipment and buildings, conduct R&D, marketing, kombucha on tap, etc.
Dividends & Stock Buybacks: Reward shareholders with dividend payments and/or buy back your own stock to raise the share price for everyone.
Save & Repay: Save $$$ for future expenses and pay back IOUs.The Takeaway:Investing in your people... can sometimes be the best investment. Delta's CEO Ed Bastian said he used to get a lot of heat from Wall Street for using profits for big employee bonuses. But these payouts help make Delta a top-awarded airline. Keeping employees happy (with fat bonus checks) can mean lower employee turnover and higher morale — and that can translate to a better experience for customers (and stronger sales). Dec 31, 2019 US airlines have a surprise for you: A decade-long profitability streak Read More While the peanuts get staler and seats get smaller... the profits are growing. US airlines are about to post their 10th straight year of profits — that's their longest streak in over 40 years. Here's why it's shocking:
80%: The percentage of Americans who'd never flown on a plane in 1965 (air travel used to be a mega-luxury — now it's sweatpants).
1978: The year the Airline Deregulation Act passed. Before it, the government basically guaranteed airline profitability by limiting competition and keeping ticket prices high.
50%: The amount flight prices have fallen since Uncle Sam unleashed competition in the skies. Air travel is way cheaper now as low-priced carriers took off.
$59B: The massive losses of the US airline industry from 1979-2009.
Experiencing turbulence... In 1974, an airline couldn't charge less than $1,442 for a NYC-LA flight. After deregulation, airlines struggled as cheaper absolutely-no-meal-included flights went mainstream. Then this happened:
The Mega-bankruptcies: The jumbo OGs (American, United and Delta) went bankrupt.
The Mega-mergers: When they emerged from bankruptcy, they started merging (remember Delta + Northwest?) — that left 4 airlines in control of a whopping 77% of today's flying market.The Takeaway:Maintaining cruising altitude will be hard... It's not just less competition and a rising economy — airlines profited the last 10 years by cramping seats, charging your luggage, and barely paying crews more. But flight attendants read this Snacks too and want a piece of airline profits. Next year, airlines are set to negotiate with over 120K unionized airline employees (and their salaries are already airlines' biggest expense). Dec 13, 2019 Delta's Investor Day reveals it's really a credit card company Read More All remaining passengers may now board... It's a pretty un-exclusive group that gets to show up at Delta's Investor Day: Any Delta shareholder. The airline uses the opportunity to humble-brag its most impressive company highlights. Here are some stats investors are proud of:
Your legs get less room: Average seats per aircraft jumped from 97 to 127 over the last decade. And probably not just because the planes got bigger.
At least the planes are more environmentally efficient: The company emits 11% fewer C02 emissions overall than it did in 2005.
Flight update: Delta is really a credit card company... We couldn't stop staring at slide #24 in the Investor Day deck — Delta's co-branded credit card with American Express is the airline's true profit puppy:
8% of all Amex spending in 2018 was on Delta.
That Delta/AmEx card earned Delta $1.4B in 2010 — and a whopping $4B this year.
Now the AmEx card is estimated to bring in 35% of Delta's profits.The Takeaway:Delta is a perfect card candidate... because its customers spend lots on it. If you splurge on a few LAX-JFK flights home every year, you'd prefer to use the airline card that's boosting your points situation. Delta owns a big chunk of its close to 200M customers' wallets — and the credit card is where it makes money off them. Oct 3, 2019 After the WTO's big decision, America slapped tariffs on European airplanes and cheese Read More First rule of World Trade Organization... feel free to talk about World Trade Organization. The WTO is actually a 164-nation club of countries down to trade with each other in economic harmony. Here's what the WTO does for its members after they pay club dues:
Set the rules: How should the buyers and sellers of stuff behave? Who pays for what? What taxes and fees are fair?
Resolve conflicts: If two countries aren't on speaking terms because of a trade snafu, the WTO decides who was right/wrong. Apologies ensue.
Ensure peace: Countries that trade with each other are less-likely to go to war with each other — that's the underlying purpose of the entire institution.
The WTO just decided that the US is right... Europe has been busy subsidizing Airbus, the continent's big airplane maker. Since that's not fair to America's Boeing, the WTO OK'd the US to toss $7.5B worth of tariffs on European-made Airbus planes. Delta, American, and Alaska shares all fell because they'll pay big taxes when they next buy Airbus jets.The Takeaway:This is how trade disputes are supposed to be handled... Only problem: it took 15 years for the WTO to reach this decision (literally). The US immediately responded by throwing taxes on goods we import from the European Union, like jets, cheese, and Irish Scotch. Expect Europe to retaliate, as trade increasingly becomes a zero-sum game soaked in politics, not economics. Apr 11, 2019 Delta rises 2% thanks to its "profit puppies" Read More More peanuts... Delta's quarterly profits just jumped by 31%. The stock's now up 14% this year thanks to its two profit puppies: business class and credit cards. The strong economy has flyers upgrading to the expensive seats, but we're more interested in Delta's Amex plastic partnership.
Long-term commitment... Delta just signed an 11-year extension to its American Express partnership for co-branded credit cards. That SkyMiles card is big for the airline's wallet:
Amex pays Delta 1.25-1.50 cents per mile for the points you earn swiping your credit card.
That's expected to add up to $7B annually with this new contract by 2023 — That's double what Delta made with the Amex deal last year.
Now analysts estimate that 35% of Delta's profits come courtesy of all those Delta Amex cards.The Takeaway:"Emerging High Value Customers"... That's the Delta marketing team's over-thought term for top Millennial fliers. It wants you hooked on its loyalty program because frequent flyer programs are airlines' most profitable service. The co-branded Amex card is how it gets young travelers committed ASAP.