Good morning everyone and welcome to the Delta Air Lines June quarter 2018 financial results conference. My name is Alan. I will be your coordinator today. At this time, all participants are in a listen-only mode until we conduct a question-and-answer session following the presentation. As a reminder, today's call is being recorded. Now I would like to turn the conference over to Jill Greer, Vice President of Investor Relations. Please go ahead, ma'am.

Thanks Alan. Good morning everyone and thanks for joining us for our June quarter earnings call. Joining us today from Atlanta are CEO, Ed Bastian, our President, Glen Hauenstein and our CFO, Paul Jacobson. Our entire leadership team is also here in the room for the Q&A session. Ed will open the call and give an overview of Delta's financial performance. Glen will then address the revenue environment and Paul will conclude with a review of our cost performance and cash flow. To get in as many questions as possible during the Q&A, please limit yourself to one question and a brief follow-up. 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 will also discuss non-GAAP financial measures. All results exclude special items unless otherwise noted and you can find a reconciliation of our non-GAAP measures on the Investor Relations page at ir.delta.com. With that, here's Ed.

Thanks Jill. Good morning everyone. I appreciate you joining us today. Earlier, Delta reported a $1.6 billion June quarter pretax profit and earnings per share of $1.77, beating consensus of $1.72. Our EPS was up 11% over last year driven by tax reform benefits and the lower share count. Our revenues grew 10% to $11.8 billion, a record level for the June quarter. We have seen early success in addressing the fuel cost increase and we did offset two-thirds of the $600 million impact from higher fuel in the June quarter. While this is good progress, there is still more to be done. Strong demand, a recovering fare environment and momentum across our business will all be critical as we work to fully recapture higher fuel costs. I would like to thank the Delta people for all their doing, especially during our busiest time of the year. With a record 50 million passengers this quarter, more customers than ever are choosing Delta because of the great service our people provide and the reliabilities of the product that we deliver. We are running the world's best operation and our people continue to raise the bar. For the first half of the year, we have had 58 days without a single cancellation across the entire Delta system, an improvement of 23 days versus the same period last year. This is continuing in July. I would like to congratulate our Delta connection team as they are currently on a 12-day streak this month without a single cancellation. Our customer satisfaction scores demonstrate that we are increasingly a carrier of choice. Year-to-date, we are seeing a domestic net promoter score of 44%, up three points versus the prior year. This is all a testament to our employees and it's an honor to recognize them…

Thanks Ed and good morning everyone. First I would like to thank the entire Delta team for the great service they provide customers each and every day, enable us to generate record revenues of $11.6 billion in the June quarter. These results were driven by a continuation of strong demand coupled with yield momentum that built throughout the quarter. We also experienced significant gains in cargo, loyalty and branded fares all contributing to nearly $1 billion of topline revenue growth. This produced a 4.6% improvement in total unit revenues year-over-year at the high-end of our initial guidance for the quarter. Corporate revenues grew 10% and were our highest quarterly corporate revenues ever. There were increases across all entities and across all industry sectors. Our corporate demand outlook remains strong. In our most recent survey, 84% of corporate travel managers expected to maintain or increase their travel spend in the third quarter. Improving corporate yields remains a significant opportunity and focus. While we are pleased with the June second quarter revenue results, as of June we have only recovered 20% of the decline in domestic corporate fares since our peak in 2014. While we saw sequential improvement in corporate yields within each of the three months in the second quarter, we still see great opportunity and momentum as we continue to work every day to recapture the cost of higher fuel through further yield improvements. In the June quarter, cargo and loyalty revenues both grew by double digits. Our close relationship with American Express is a true source of competitive advantage. In the quarter, we drove an incremental $120 million in value and we are on pace to deliver $3.4 billion in total for 2018, up from our initial prediction of $3.3 billion. Direct digital channels experienced their best quarter on…

Thank you Glen and good morning everyone and thanks for joining us. For the June quarter, total operating expenses increased 13%, or $1.1 billion with over half of the increase driven by higher fuel prices. With market fuel prices up 10% over the March quarter and 50% versus prior year, our fuel expense increased nearly $600 million for the quarter. For the September quarter, we expect our all-in fuel price to increase approximately 40% over last year to $2.32 to $2.37. At the current forward curve, year-over-year increases in fuel should moderate to about 20% in the December quarter. In the third quarter, we expect earnings per share to be in the range of $1.65 to $1.85 per share which equates to a pretax margin of 12% to 14%, about two to three points behind last year's 15.6% results. With a strong revenue environment and a back drop of moderating fuel increases, improving our non-fuel unit cost trajectory will play a key role as we drive toward a return to margin expansion by the end of the year and in 2019. Non-fuel unit costs were up 2.9% for the June quarter, a one point step down from the March quarter. In the September quarter, we take a bigger step down and expect our non-fuel CASM to be flat year-over-year with the fourth quarter slightly better than that. As we have discussed since Investor Day, the second half of 2018 is an inflection point on CASM as overhead pressures moderate from categories like depreciation from our fleet retirements, investments made in the back half of 2017 related to our products and security enhancements and one-time benefits last year from the Republic bankruptcy emergence and other settlements which occurred in the first half. Unit cost in the back half of the year…

Alan, we are ready for the analyst Q&A section, if you could give the instructions for how to get into the queue.

[Operator Instructions]. We will take our first question from Jamie Baker with JPMorgan.

Good morning everybody. Paul, the $3 billion in AmEx contribution last year, can you tell us how you are tracking in 2018, but also how we should reconcile that on the income statement? How much is accounted for in revenue? How much is accounted for in reduced expenses? Just trying to understand how you define the term contribution?

Sure. As Glen mentioned in his comments, we are expecting $3.4 billion from our AmEx relationship this year, which is higher than our original expectation going into the year. The overwhelming majority of that appears in the other revenue line through both other revenue and then once the miles are redeemed for flying. There is some element of cost and we can walk you through separately on the detailed modeling exercise of that.

That helps. Second question for Ed. This whole leap of faith and I know that's not your term, but you know we have said it different this time. It's not your grandfather's airline industry. You have spoken to the industry's structural changes. I think you and I are in agreement on this topic, but the economy is roaring, your stock's down 10% year-to-date, you are trading at a multiple that's no better than when the industry was basically a joke, you are essentially getting zero credit for what you have accomplished. I mean I think the sell side has done a pretty good job at pointing out what's better, the rating agencies get it, marks investors, the credit market gets it, look at your debt costs. So my question is, what is still broken here? And please don't tell me that we have to pass the recessionary test in order for multiples to rise because that just means there is no reason to own the stock today. So I promise there is a question here. What is still broken? What does Delta or the industry in general still need to tackle in order to get its message through to the equity market?

Well, Jamie, you expressed a frustration I think many of us in this room and throughout the industry feel. Fundamentally, we believe in the thesis we need to continue to perform. I agree that I don't think we need to go through hard times to demonstrate that this model works. All you have to go back is through the hard times in 2009 at the bottom of the recession, ex a bad fuel hedge decision, Delta would have been profitable in 2009. And if you model us today, in any reasonable economic downturn, we are, I think, talking significantly profitable going forward. So we are going to continue to produce. We are going to continue to point investors to where the opportunities are. Certainly fuel prices have been weighing on the stock. One of the things, I think, is most important that we get back to margin expansion. When you think about the margins in this industry, they have declined now three years in a row. We need to stop that. We need to grow the margin and I am hoping, certainly by year-end, that we are starting to grow margins again and hopefully, with a little luck, maybe even in Q4.

All right. I appreciate the comments. I will turn the microphone back to others for all the RASM and CASM questions. Thanks guys.

All right. Next, we go to Savi Syth with Raymond James.

Hi. Good morning. I guess I will ask the RASM question. Just on the international side, I was wondering if you could give a little bit more color on what you think the transatlantic, especially dies FX start to be less of a tailwind? And also, does Air France-KLM strikes have any kind of beneficial impact there in the first half and maybe not as much in the second half?

We see very robust demand and continued strength into the third quarter and the early results for fall, as you know, transatlantic tends to book sooner than domestic. So we have a little bit more visibility into what we are seeing in the third quarter and beyond. And we feel really comfortable and this is a very, very strong environment for the transatlantic.

So then what's driving that? Is it strong economy? Or any kind of thoughts on that?

Business traffic, some things that are a little less obviously, I think, is we hear a lot about Brexit and we see all the rhetoric about Brexit, but business traffic to and from the U.K. on Delta and our partners is at record levels. Similarly in Continental Europe, we are seeing record revenues in terms of yields and in terms of traffic into Continental Europe. So it is a relatively robust business environment and very, very strong leisure demand. And I think when you think of how fuel weighs on the ultra low cost carriers in that marketplace, it tends to have more of an impact on them and their raising fares has translated into our ability to get higher fares for not only business but for leisure as well.

Thanks. And if I might ask just a follow-up on the capacity comment? I know you have talked about adjusting capacity in the markets where you can pass through the higher fuel costs. But as you look at your position in the second half and beyond, are there markets where you are actually seeing stronger than expected results and maybe an opportunity to increase capacity in some of the entities?

I think that's what we do every day here is, try and figure out where we want to position the airline's capacity and try and continue to optimize it. And we are working very hard. And I think the result in the second quarter saw again a step function improvement versus the general industry and our ability to go ahead and do that and that's a testament to the entire commercial team here at Delta who takes the great product that our people produce every day and takes the demand set for that and then tries continuingly to reoptimize it. And I think if you look at long-term trends, this will be yet another record for our system unit revenues versus the industry.

All right. Thank you.

Next, we go to Hunter Keay with Wolfe Research.

Hi. Thank you. Good morning. How do you calculate that two-thirds of fuel being passed through? I am curious because you mentioned in the context of how you think about capacity planning and I would love to be able to replicate that in my model simplistically if I am able to do it.

Sure. Good morning Hunter, it's Paul. What we do is, we basically take all the revenue growth, subtract out the cost and then cover the difference in pretax margin as a function of what the fuel price is. So if you look at that, our pretax was down slightly under $200 million for the quarter on $600 million of fuel pressure.

Okay. Great. Thank you. And then with the caveat that this is not necessarily a comment on capacity guidance for next year, how are you thinking about net changes to the fleet count or even better on a seat count basis in 2019?

Hunter, we haven't given the 2019 guidance. We are not going to give it on this call, as you can appreciate. I think our fleet is expected to grow by about 80 aircraft next year. In total the gross new aircraft we are taking, most of those will be replacement aircraft. But we haven't decided what the net growth position of the airline will be.

Okay. Thank you.

We will go now to Andrew Didora with Bank of America.

Hi. Good morning everyone. I guess Glen, just wanted to touch upon your total revenue growth number share. Coming to the years, you said that you didn't really expect much deviation in quarterly RASM. Now with your 3Q guide, first half results, this has really been true. I think total revenue growth has been around 9.5%, but fuel has obviously moved here. So I would have thought things should be getting better but that's not really what your 4Q revenue guide would imply. Given your total revenue growth number for the year, it now goes down to 7% to 8%. And I know there are tough comps out there, but can you maybe walk us through any headwinds that you see as we get later into the year? Or is your total revenue growth outlook really more a function of having shut down the refinery for most of 4Q? Thanks.

I will turn that over to Paul here.

Yes. So Andrew, thanks for that. As we have talked about going back through Investor Day, we do expect that the refinery will be shut down in 4Q for its systematic turnaround effort. So that's a bigger drain on 4Q that is a disproportionate step down from what we have seen for the rest of the year.

Got it. Okay. So just in terms of everything else in the business, it seems like pretty, when I back that out, it seems like pretty steady growth is still anticipated?

Yes. We are seeing very good momentum on the passenger revenue line item. And I think we are anticipating that to continue in the third and fourth quarters.

Okay. That clarity is helpful. Thank you.

Next, we go to Michael Linenberg with Deutsche Bank.

Yes. Two quick ones here. Just on the refinery in the quarter, Paul. I don't know if it was in the press release. Do you have what the P&L was on that?

Yes. It was about a $40 million benefit for the quarter.

Okay. Great. And then just to Glen. Glen, you talked about third quarter RASM outlook. I mean it sequentially looks better than June. And then you talked about the fact that there are some headwinds. I think you said holiday shift, maybe difficult comps. Is the holiday shift, is that Labor Day or July 4? And what about the storm impact? Was that a benefit? Or how do we think about those?

So there are a of ins and outs in the quarter as they are always are. The holiday we are referring to is the shift of the Jewish holidays from a weekend day in October timeframe to a weekday in September.

Okay.

And that's actually a pretty big number, when you think about the quarter shifting and actually going from a weekend to a weekday ruins a whole week of business travel for a sector of our business travelers. So that is impacted, also the storms as we said last year, were one point favorable impact and then we have a difference in the PRASM to TRASM which has been negative in the third quarter, which was a positive in the second quarter.

Okay. Great. All right. Thank you.

I want to just reiterate that the passenger revenue momentum that we saw accelerating into the second quarter is continuing into the third quarter.

Okay. Great. Thanks Glen.

Next, we go to Brandon Oglenski with Barclays.

Good morning. Thanks for taking my question. So I guess Ed or Glen, I mean, back to Jamie's first question here, should investors just expect that we are going to have a lot of earnings volatility in any up economy, because when we go back historically, usually oil prices move with economy. So how do you think about is going forward? What are some proactive measures you can make to maybe temper out some of that fuel driven earnings volatility?

Well, Brandon, I can't speak to the industry at large. I can only speak to Delta. What we are trying to do is deliver a premium product that customers prefer. It's driving our net promoter scores. It's driving an outperformance within the industry. It's top line, not just growth for growth sake, but growth for premium sake as well. And get back to margin stabilization and expansion. The fuel price volatility has certainly been somewhat dysfunctional within the industry over the last several years. We have all talked about that and fuel prices where they are today at roughly $75 brent does not scare. I think that's actually a good stable place that we can platform from to continue the growth to get back to growing more margins. So I think that's what the industry needs to do.

Okay. I appreciate that. And Paul, can you remind us on the One Delta initiatives what your long-term CASM guidance is? I think you did provide that through 2020? And I think you said $1 billion of non-fuel costs that you are looking to save by that time period. Does that also include the fleet renewals that we are looking at?

No. So Brandon, thanks for that question. The One Delta initiative stand on its own and it's all about improving processes and really an enterprisewide project for just performing better and more efficiently. That is over and above the fleet efficiency. So what we have said is, $1 billion from that program building over the next few years will keep us below 2% unit cost inflation and help us to drive towards the continued goals for the long-term.

Thank you.

Next, we will go to Duane Pfennigwerth with Evercore ISI.

Hi. Thanks. As you watch how the rest of the industry has implemented basic economy so far, have you detected any positive share gain versus some of the more punitive implementations of it, no carry-on, et cetera? Any sense the customers really don't like it?

Those are not a very, very difficult things to isolate and I think you know what we look at is our relative revenue performance in aggregate and are we supplying the right products and services that people want to buy from us and I think as the quarter unfolds over the next couple weeks here, as everybody announces the details of their earnings, you will see that we, I think, took another step function improvement in aggregate and produced the highest level of revenue premiums we have in our history. So it's very hard to isolate which individual piece contributed to the whole brand impact, but I think that's certainly a contributing factor.

Part of that, Duane, also is the net promoter scores that we see and mentioned our domestic net promoter scores were up three points year-over-year, which is huge when you measure net promoter scores to drive an improvement at an already good base of further improvement. So clearly, customers of all classes are preferring Delta in increasing numbers.

That's helpful. And then Glen, I always appreciate the reminder on how much you recovered in corporate fares and how much potential is out there. I wonder if you could offer a view on short headroom by geographic region, which geographic entity do you think has the most upside potential? Thanks for taking the questions.

Well, I think we are most focused on domestic, right. The domestic is where we really need to get those fares moving. They have moved internationally. And we are continuing to focus on that everyday. We see great opportunity and that's what gives us really good confidence as we move through the rest of the year that we will be able to hit the margin expansion by year-end.

Thank you.

And next, we will go to Rajeev Lalwani with Morgan Stanley.

Hi. Good morning gentlemen.

Good morning.

Ed, in terms of the capacity outlook, can you just reconcile the full year guide going to the to the top end of the range, but then also highlighting 50 to 100 bips or so of trimming in the fall schedule?

Well, I will let the Paul and Jill provide some of the details, reconciliation of the numbers. Part of the increase is the higher completion factor that we are running above plan. That's a meaningful part of it. But the other thing to think about when you are looking at our overall 3% capacity, that's entirely gauge and stage related. Departures actually are down for the full year. Our expectations are departures count will be down and when you are thinking within the industry, I think we are the only major, maybe the only airline out there that's got departures down. But I think we are being very prudent as to how we are thinking about capacity. We are certainly outperforming the industry on revenue production and revenue productivity and we also know that we have got big non-fuel CASM reduction plan that we are working heavily on and fleet is a big part of that too.

Got it. Thanks. And Glen, a network question for you. Can just talk about how you go about evaluating whether or not to take away a flight or even add a flight? Is it looking at margins? Or is it just simply, hey, if a route is profitable, there is no reason to cut it?

Well, I have a dart board in my office. We have teams that comb through the day-in and day-out and we have really the best teams in the industry. I am really so proud of them and they are every day working to optimize our capacity and press the envelope in terms of trying to raise the yield. So this is a great process that we have in place and one, I think, that's proven Delta as at the top of the industry, year after year in producing these returns. And I would love to say it's me, but it's not. It's a team of hundreds of professionals every day that are working to make this happen for us and they do a great job at it.

Right. So maybe the other way to ask the question is, if you have got, say, a flight out there and it's barely profitable, do you say, hey look, that's additive to EPS. We should keep it there? Or is it sort of, hey it's not really reaching a return threshold, it's time to go kind of a thing?

I think that highly oversimplifies the process that you look at a flight plate. It's clearly in terms of the competitive dynamics of that and what your expectations are for that individual flight. And of course, when you look at the flight level details, what time of day is it, what's the opportunity cost for that flight. So it's a very complicated transaction. I think we are oversimplifying it by trying to put it in boxes like that. It's a much more complicated and rigorous and happy to spend a day down here sometime, if you want to come down and look how we do it, because I think it's a really interesting feature.

Very helpful, as always, guys. Thank you.

Next, we will go to Helane Becker with Cowen and Company.

Thanks very much operator. Hi guys. Thank you very much for taking the question. So I think you mentioned that, for an example, you were adding Indianapolis to Europe service. Is that a connection? Is it really about connecting Indianapolis traffic with other points in Europe as opposed to point-to-point and instead of over hubs in New York and Detroit? And B, should we think about opportunity for you in that small or medium size city to Amsterdam and Paris and to some extent London going forward?

Helane, a great question and I think that really is the point is that when we fly from Indianapolis to Paris, we are not just flying from Indy to Paris, we are flying from Indianapolis to Paris connecting to all of Europe and then really connecting Asia and Africa through Paris. So we would never contemplate flying from Indianapolis to Paris if it were two endpoints on our network, but really given the strength of the frequent flyer base and the loyalty we have in Indianapolis and the amount of traffic that's continuing on to those destinations beyond Paris, that's where we have really added over the past years, using our partner hubs. Really exciting for the results too. Indianapolis to Paris is doing quite well in its first year of operation. We also added Orlando to Amsterdam. That's also doing quite well. And Los Angeles to both Paris and Amsterdam. Interesting factoid is, of the three major U.S. carriers in Los Angeles, we were the only one that did not have nonstop European service on our own metal. So we added that this year and that's doing really well as well.

Is that designed to prepare the airline and your partners in case there is no EU-U.K. or U.K.-U.S. agreement after March 29?

We haven't really done that with that in mind, but I think we don't connect a lot of traffic in Heathrow, because we have a great partner that has the number two position in the U.K. But it's really not a hub connecting complex. They have a few connections, but it's not the size and scale and scope of Paris or Amsterdam, which are two of the largest connecting complex is in all of Europe.

Got you. Okay. Thank you very much. I appreciate the answers.

Next, we will go to Dan McKenzie with Buckingham Research.

Hi. Good morning. Thanks guys. Glen, the stat in the script that stood out to me is an 8% increase in premium seats that drove a 20% increase in upsell revenue. Please correct my math here, but it sounds like premium products in total are driving roughly $2 billion annually. And I am just wondering if we should interpret this segment of the business as growing double digits? Or maybe if you could just clarify and help us understand how to think about the sustainability of the premium suite of products that you are selling today?

Dan, this is really something we continue to remain excited about and excited about our future. As we continue to drive brand loyalty and to drive better customer segmentation, we have seen continued strength here. And when you add 8% in capacity and you far outpace that in terms of revenue growth, we think that's just another factoid in, hey people really want to buy that from us. So our fleet sets up nicely in the next few years to continue to expand those number of seats and then we are taking some changes to the fleet. For example, adding the Premium Select into all of our international widebody fleet, which is a really a new announcement that we made in this call that will all be complete by 2021 because people want to buy these products and services from us. And quite honestly, we haven't made it that easy for them. And over the next months and years, we are going to make it easier and easier with more and more ways to buy these products and services and we see that as a real growth opportunity.

Very good. And then just a second question here. We got a better revenue outlook this morning, despite greater macro volatility and so the revenue outlook is a little better than I would have anticipated. And the industry has cited, escalating trade war as a risk to revenue. And I am just wondering how you guys are thinking about it? What you are seeing today? How that's factored into your revenue outlook, if at all, as we look out through the end of the year here?

Dan, this is Ed. We are not seeing any signs that the rumors escalating trade wars are impacting business travel or travel in general. We just posted our highest quarter in history. Our total topline is up 10%. I think the increased outlook, as you say, we gave for revenue is through the help of the international as well as the domestic economies and also the fact that we need to cover the higher price of fuel in our ticket price. So who knows where the saying goes, but we are not seeing any negative impacts from it.

Perfect. Thanks Ed.

Next, we will go to Kevin Crissey with Citi.

Hi. Good morning. Thank you. Maybe a question for Glen. Your Q2 domestic yield is up 2.5%. That's inclusive of your domestic portion of international itineraries, I assume. Can you talk about what that might look like if we just looked at a domestic origin to a domestic destination? And if you don't have that handy, maybe you could just talk about maybe the situation in ULCC competitive markets? That's what I am getting at there. Thanks.

Well, domestic portion of international journey is not going to have a significant impact on that number. And ULCC traction has been very strong. We have seen a lot of strength in leisure in ULCC competitive markets. When you think about the business model at a more macro level, clearly higher fuel has much more impacted them in terms of trying to drive leisure traffic that might not otherwise fly. So I think we have seen some very good traction in those markets.

If I could just follow-up on that. Given the strength of the international franchise and the yields are putting up there and the overall average fares, why wouldn't the allocation of that to the domestic market be impactful? I am not sure I understand that.

Because the number of passengers, while the revenues are 40%, the number of passengers because of the higher ticket volumes, it doesn't drive a whole lot of travel on the domestic portion and the pro rata relatively low to begin with. So that's not going to drive a whole lot. And we can happily walk you through that math. I mean, it could be a few tenths of a point, but it's not going to be significant.

Terrific. Thank you.

And Alan, we are going to have time for one more question from the analysts.

Okay. We will take that last question from Susan Donofrio with Macquarie.

Yes. Good morning everybody. Just a quick question. So is there, I think following up with Jamie and Brandon's question and trying to think through how to perhaps help mitigate earnings volatility, you guys own your own refinery, as you know and certainly domestically that helps, would you consider, I guess, hedging more internationally? Or is there anything else you could do when you look at some of the drivers that perhaps could help placate investors a little more?

Susan, what do you mean by hedging internationally?

Well, I was thinking more just on the fuel side, if there is more FX currency or just anything you could perhaps put a little more in your numbers?

We are not thinking of doing anything like that, Susan, no.

You are not. Okay. And then just a follow-up domestically. Can you broadly give us maybe more of a sense of pockets of strength and weaknesses? Is it more in the low-fare airline overlap? Just a little more color, I think would be helpful.

I think what we have seen as we seen really robust business travel in terms of volumes. The yields have been weaker than we would have liked or anticipated given the robust levels of demand. And so that's the piece that we are working on every day to try and improve. And leisure travel, so all of the events, as when you look out are very strong in terms of both yield and traffic. So we have the flush of consumer continues and that consumers want experiences and travel fits well into that experiential model. So we see robust demand there and we see really, really strong demand for business in terms of volumes and now we continue to need to work on improving the yields.

Great. I will end with that. Thank you very much.

That's going to wrap up the analyst portion of the call. I will hand it over to our Chief Communications Officer, Ned Walker.

Hi. Thanks Jill. We will go ahead and begin the media Q&A now. First I would like to ask the media to limit themselves to one question with a quick follow-up. That should allow us to accommodate almost everyone. And Alan, if you could please review the process to queue up to ask a question, that would be helpful. Please go ahead.

[Operator Instructions]. We take our first question from Alison Sider with The Wall Street Journal.

Hi. Thanks so much for taking the question. Just sort of curios, looking out, at what point do you start to see higher fares starting to discourage passengers and dampen demand?

Hi. this is Ed. We are not seeing anything other than strong demand for our products. Pricing is certainly a function of cost and with higher fuel prices, you are going to expect to see ticket prices go up as well our pricing currently is up about 4% on a year-over-year basis. So I think it's at a good level, but best revenue performance in our history this quarter and our outlook is strong.

Thanks.

Okay. Next question.

Next, we will go to Leslie Josephs with CNBC.

Hi. Good morning guys. On the premium economy, are you seeing a lot of corporate travelers take those fares and is that cannibalizing from the more expensive business fares? And then also on the international growth, how much of that is on your own metal? And does that help you or hurt you, how it's broken up with your JVs? Thanks.

So we have seen robust demand for our Delta One product, especially in the Pacific as we have introduced Premium Select into over 50% of the market now, we have seen no real degradation in terms of the demand for the premium products and services, the most premium. And what we have seen is really consumer discretionary and corporations that have travel policy that only allow for coach really using that extensible. And as we continue to roll out different ways to buy those products, we will see I think another explosion in demand as other customers will use their miles to sit in the cabins they want. And I think bringing that ability of our frequent flyers to choose where they want to sit after they buy the ticket is really going to be something that's going to generate a lot of great products and services for customers as well as revenue for the airline.

And on the international growth, how much of that is your own flying versus your JVs or cochairs or another partnerships?

So generally, we stay balanced with our partner so that all of our joint ventures are based on a 50-50 growth pattern. And so over the long-term on any individual season or month, it might be a little bit weighed to one or the other, but over the long term, it's based on growing at the same rates. So a lot of that's our own metal and a lot of it's partner related.

Okay. And is there any number on the upsell between economy and premium economy or economy and Comfort Plus? I think you guys were like 50% last year upsell?

Sorry. Could you repeat that question?

What's the upsell from economy to Comfort Plus domestically or economy to Premium Select? I think it was like 50% or 60% last year.. Has that grown?

So the average fare differential from main cabin to Comfort Plus is between $25 and $35 domestically on average. So very nominal fees to get a really, I think, a great product value. And then internationally, which is the only place we have Premium Select, it's about 100% fare premium differential in the markets. Right now, it's mostly in the Pacific. So that's several hundred dollars more but we will be rolling it out to the transatlantic where we actually started but it's really only on one flight right now. But it will be ubiquitous in our long-haul network over the next several years.

And the upsell from the customers that are looking at regular economy versus buying up to something more expensive?

Regular economy. Internationally?

That or both?

Well, domestically it's about $35 for Comfort Plus. We won't have Premium Select in domestic. And then internationally, it's about $50 to $100 depending on the market to go from main cabin to Comfort Plus on the long-haul. And it's about several hundred dollars to move into Premium Select.

Okay. We will take the next question now.

Next, we will go to Edward Russell with Flightglobal.

Hi there. Thank you for taking my question. There has been some recent reports out of Austin about Delta having interest in potentially building a focus city there in the future, especially as the C-Series start to come in, sorry the A220s? Could you comment on this report and Delta's ambitions in Austin?

Ed, we are not going to comment on any future plans that haven't already been announced.

Okay. Understood. And then a follow-up. Could you comment on how many A220s you expect to take delivery of this year and when those deliveries will begin?

So you mean the 220s?

Yes, A220s.

We expect to take delivery of a handful by the end of the year and we will be putting them into service in the first quarter.

Okay. So still no set date or number yet?

It will be the beginning of the year.

Okay. Alan, we have time for one more question.

All right. We will take that last question from Dan Reed with Forbes.

Hi. Dan, we cannot hear you.

I am sorry. Can you hear me now? Okay. Ed, at the risk of -- hello?

Yes. We are having trouble. Sorry, but ask the question again, Dan.

Okay. At the risk of asking you to practice as a psychoanalyst, let me ask you a question that Jamie Baker asked in a different way. Why do you think investors are hesitant to bid up Delta's stock price principally, but also some of the other industry player's stock prices? Why are they being so hesitant to go where you think they should go?

You certainly should get that feedback from the investors directly themselves. We are doing our very best. The Delta stock price is roughly adding American and United's market cap combined, that's what the Delta price is. So we do think we get a premium. And from a performance perspective, we can just control what we control which is delivering an outstanding value for our consumers, great product, reliability, with the best service and hospitality from our employees that's driving the higher customer satisfaction that we have ever seen and the highest revenue growth rate. I think one of the things that's been weighing on the stock, as we all know, is the growth in fuel prices in the short term and we have said on the call that we expect to be able to cover most if not all of it this year by the end of the year and set the pace for margin expansion going into 2019.

Okay. Thank you very much, Ed, Glen, Paul and Joe. That concludes the June quarter 2018 call. Thanks everyone and have a good day.

Again, that concludes today's conference. Thank you for your participation today.