Good morning, everyone, and welcome to the Delta Air Lines December Quarter and Full Year 2021 Financial Results Conference Call. My name is Cody, 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 the presentation. As a reminder, today’s call is being recorded. I would now like to turn the conference over to Julie Stewart, Vice President of Investor Relations. Please go ahead.

Thank you, Cody. Good morning, everyone, and thanks for joining us for our December quarter and full year 2021 earnings call. Joining us today from Atlanta are 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 and Glen will provide an update on revenue and Dan will discuss cost and our balance sheet. After the prepared remarks, we will take analyst questions and we ask you please limit yourself to one question with a brief follow-up so we can get to as many of you as possible. And after the analyst Q&A, we will 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 will 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. And with that, I will turn the call over to Ed.

Well, thank you, Julie. Good morning, everyone. I really appreciate you joining us today. Before getting into the December quarter results and outlook, I want to spend a couple of minutes discussing the current environment. As everyone is aware, the Omicron variant has significantly impacted our people, our customers, and our operation as well as most parts of society over the last three weeks. The combination of the rapid spread of the variant at the peak of a strong holiday demand period and in the face of extreme winter condition in parts of the country, created some of the most difficult travel conditions that we ever remember experiencing. I am incredibly appreciative of the great work that our frontline team has done and continue to do to help our customers get to where they need to be as safely and quickly as possible, no matter the circumstances. Our teams have faced these difficulties head on, while also managing the impact of the virus in their own lives. And I want to thank every member of the Delta team for your work during a very challenging period. To our customers who have been affected, we appreciate your patience and your understanding. The good news is that over the past seven days, our operation has stabilized with Omicron-related cancellations impacting only about 1% of our flights. And since Sunday, the number of Omicron-affected cancellations are around 20 a day, out of nearly 4,000 daily flights. And in fact, yesterday, we only had two Omicron-related mainline cancellations. So, while the new variant is not done, it appears that the worst maybe behind us. Based on how quickly the case counts have risen, our medical team expects cases to peak in the U.S. over the next few days, followed by a steep decline in…

Thank you, Ed and good morning everyone. Like Ed, I couldn’t be prouder of what the Delta people accomplished during 2021. And I want to congratulate our people on their much deserved special profit sharing payout they will be receiving later next month. During the December quarter, we generated $8.4 billion of revenue. This was above our expectations at the onset of the quarter, driven by strong consumer demand over the holidays. Total RASM was up 6% from the September quarter on a 7% improvement in yield. For the quarter, capacity was 79% restored versus 2019, 5 points below the industry as we maintained a disciplined approach to restoring our capacity. The strengths we have talked about last month at Capital Markets Day are evident in our December quarter results. First, we saw a very strong demand during the holiday period. Domestic results were particularly strong, with holiday PRASM finishing up 8% versus 2019 and with passenger revenue more than 90% recovered. Second, long-haul international trends were positive in October and November as borders reopened and restrictions lifted. This momentum stalled in the second half of December as the Omicron variant resulted in more stringent restrictions and impacted our bookings. Third, we saw continued progression of business travel, with domestic volumes approaching 60% restored during the December quarter. Fourth, our premium products continued to perform well. Domestic premium revenue was 84% recovered versus December quarter ‘19, 9 points better than Main Cabin. Fifth, our diverse revenue streams remain resilient. Amex remuneration during the quarter was more than 110% restored and cargo revenue was more than 160% of 2019 levels. We also continued to see very strong consumer engagement with another record quarter for Fly Delta app downloads and sign-ups for our loyalty program. In the December quarter, we added 1.5…

Great. Glen, thank you. The Delta team executed well in 2021 in an environment that remains very dynamic, I want to thank our people for their hard work, congratulate them on a well-earned special profit sharing payment. So, let me start with the highlights from the December quarter. We delivered a profitable fourth quarter, reporting earnings of $0.22 per share, representing a pre-tax income of $170 million and a 2% margin on total revenue of $8.4 billion. While it was a strong close to the year, operational disruptions during the last 2 weeks of the quarter impacted our pre-tax results by $80 million. Total fourth quarter operating expenses were $8.1 billion, a 3% increase from the third quarter, driven by both fuel and non-fuel costs from the continued restoration of the airline. Fuel expense of $1.6 billion increased 4% sequentially as fuel prices per gallon increased to $2.10. Total fuel expense included a $0.24 per gallon benefit from the refinery. Embedded in fuel cost is a continued benefit from our fleet renewal, which supported a 4.3% improvement in fuel efficiency compared to 2019. Non-fuel CASM was up 8.3% compared to 2019. This included a 1.2% impact primarily due to lower capacity from cancellations during the last 2 weeks of the quarter. Now, turning to cash flows and the balance sheet, we generated operating cash flow of $518 million. We invested $948 million into the business and we repaid $1.1 billion of debt in the December quarter. We ended the year with $14.2 billion of liquidity and adjusted net debt of $20.6 billion. Now, on to the current environment and the March quarter outlook, as Ed and Glen noted, the variant is magnifying normal seasonality in the March quarter, which is our seasonally weakest of the year. The operational challenges has…

Thanks, Dan. Cody, can you please remind the analysts how to queue up for a question and go to our first question?

Absolutely. Thank you. [Operator Instructions] And we’ll take our first question from Savi Syth with Raymond James. Please go ahead.

Hey, good morning, everyone. And maybe it is for Glen just early January is a fairly important time for booking into the rest of the year. I was curious if there is an – the impact on some of the forward-looking trends, Omicron is just maybe only impacting kind of close-in bookings. And also, just if there is any color on how it’s impacting kind of the different – the four different entities here?

Sure. I think if we could pick a period of time for an Omicron variant to surge, we would probably pick this time of year, because I think it’s got two components that are unique to this time of the year. One is these five weeks that it’s impacting are five of the lightest weeks in terms of business travel. And two, as you indicated, it has really impacted more the close-in demand than the further out demand. And we believe we have plenty of time to recover those deferral of vacation bookings for summer. If they don’t come in the third or fourth week of January, it’s easy for them to come in sometime in February, March, so really not concerned yet about spring or summer. We feel that we will have a very, very robust demand profile for spring and summer. And while some of the bookings have been slightly delayed, we are still seeing much – the biggest magnitude of the impact impacting the next few weeks here. On a regional perspective, for all intents and purposes, Asia remains very constrained. We expect that to continue. And our restoration of Asia through the summer is very minimal. Europe, we’ve seen some countries imposing more restrictions. And at the same time, we’ve seen some countries trying to lift restrictions. Of course, you saw in the UK, restrictions were added, and they were removed. We’re anticipating even further loosening of those restrictions over the next few weeks to the UK. Ireland has come out with much less restrictions. So I think everybody is preparing at this point for the Omicron to be in the rearview mirror, and that travel will be much more restored for the summer than it was for any of the last two summers, and that will lead to really what we think should be very, very strong and healthy demands for transatlantic leisure travel this summer. And then Latin America has continued to be more resilient. Those restrictions have come off in a lot of those countries. And clearly, the short-haul Latin markets are performing well and long haul are continuing to improve. So hopefully, that gives you the color you need.

That’s super helpful, Glen. And I think you alluded to this as well that maybe kind of some of the operational issues should ease up heading into the summer. I know you’ve been hiring a lot of kind of employees and especially pilot and flight attendants since kind of the second half of last year. I just wondering if you could help provide some color on just how much like Slack is being built into with these hirings as you go into the summer because your capacity levels are also coming up into the summer as well.

How much Slack? What do you mean by Slack, Savi?

In the sense that, I guess, I don’t know if it’s like employee per aircraft or just like – you are hiring, but you’re also increasing your capacity. So just curious if we come into the summer and if we get another variant or something like that, if we will have a little bit more kind of, I guess, reserve ratios or something like that to handle kind of the next peak period.

So we’re getting better positioned on staffing. We did hire a lot of people in ‘21 because we had a lot of people leave in ‘20. We’re looking at hiring several thousand people in ‘22. A lot of those are more longer term flight attendants. Pilots take a while to get in the pipeline and include the airline over time. But I think I’m very comfortable with our staffing levels. Yes, there is – you can’t plan in advance for something that comes up overnight like Omicron there, where the world decides to shut down for 60 days. And we’re going to get through this really quick. And we’re going to be glad we have the staffing in place because I think it’s going to be in the bookings. Your earlier question, the bookings look very good post President’s Day looking forward and really haven’t seen a major impact at all relative to ‘19 expectations in that. So we think it’s going to be a quick rebound.

Make sense. Thank you.

Thank you. We will take our next question from Andrew Didora with Bank of America.

Hi, good morning, everyone. And maybe as a follow-up to Savi’s hiring question, I guess we’re beginning to hear a little chatter from the regional airlines that it’s becoming a bit more difficult to attract and hire new pilots. I know these airlines often feed pilots into your airline and others. But can you maybe give a little bit of color on how many pilots you need to hire over, say, the next three years to kind of hit your capacity plans? And if regionals start to have a hard time finding new pilots in 2022, when do you think it would start to impact your and your other mainline carriers ability to hire, if at all?

Thanks, Andrew. We’re hiring at the mainline somewhere between 100 to 200 a month presently and we expect that pace to continue for some period of time, certainly through ‘22 and into ‘23. We don’t want to get too far ahead of ourselves, but that’s the pace that we’re hiring at. And everyone else in the industry is hiring, too. So it’s not just Delta. We are not having any problem at all at Delta hiring and getting great pools of candidates. That’s viewed as the premium airline that employees in general, but particularly pilots want to come work for, which we’re thrilled about. But it is having the impact at the regionals, as you mentioned. We are down flying in the first half of the year on some of the regional carriers given some of the staffing challenges we’re facing, primarily because of pilot hiring. The largest regional is our own that we work with, which is Endeavor. So we’re working closely with them to help to mitigate some of the disruption and the churn that’s going on through the process. But I think this is a normal period of time. It’s – the next order of the crisis that we’ve all been through is pulling through, and it’s actually going to be good. It’s going to enable us to make sure that we pay good attention to the regional carriers and meet their needs. But at the same time, I’d much rather have the issue down there than at the mainline.

Understood. And then just one other question for me, I just wanted to – you mentioned a little bit, you talked a little bit about this at the Capital Markets Day. But back in December, you did announce that you were putting about $1 billion of new equity capital into three of your international partners. Just wanted to get your thoughts, why do you – why is it so important to Delta to have such a large equity investment as opposed to maybe a smaller one or none at all? Why is there such a focus there? Just curious on why you think other airlines don’t follow a similar strategy. Thanks.

Well, I can’t speak for other airlines. You’d have to ask them that question. But I know for us, it’s the right strategy. Long-term, our opportunity is international. And when you think about growth, when you think about expansion, when you think about the natural opportunities that Delta has for the future, it’s going to sit in the international arena, and working very closely with that. International is hard. International, the competitive set is very difficult. And it’s hard to do it on your own, to go out there and try to advance a U.S. airline in international borders unless you had some really good, strong partners in the international marketplace. We’re fortunate we have great partners in the international marketplace, The Virgin Atlantic, and Air France, KLM, and AeroMexico, LATAM, Korean Air, et cetera. But we also know that those airlines have their own objectives and they have their own desires. And we have found over time that it’s very, very difficult through solely joint ventures or contractual means to try to enhance the customer experience and provide the very best quality of service if you’re just trying to do it as – through a contract as compared to being in the room, a seat inside the head of the company, if you will, influencing the decision to ensure that we’re putting our customer interest at the center of what – because it’s on – the growth is going to be based on customer preference. And just as you’ve seen, everything that we’ve done here domestically to grow customer preference, big opportunities for us to grow customer preference now sit in the international market. So we’re thrilled with the investments we’re making. We’ve made certain that each one of those investments pencil out on paper. If they are good financial investments as well, we expect to generate significant returns. And candidly, given the fact that we’ve already made significant investments in the past, it’s going to actually allow us to recoup some of that past investment easier by staying invested in the companies.

Great. Thank you for that, Ed.

Thank you. We will take our next question from David Vernon with Bernstein.

Hi, good morning, guys, and thanks for taking the question. Happy New Year. Glen, can you talk a little bit about what you’re seeing sort of sequentially in terms of yields on the business in the leisure front as you kind of moved through the quarter and into the first quarter? And then specifically, kind of you look out past Presidents’ Day, how booking activities shaping up there?

We usually don’t comment on future yields, but I can say that through the past quarter, while the bottom of the business yield was about minus 25, which was in the September time frame, and then that moved up to being down low single digits. And I think we talked about that at our Investor Day, and we were pleased with where the structure was sitting as we move forward, and I don’t think anything has really changed since then. So I think that’s the outlook I would give you, is that we think the structure is fine now. We need the traffic back.

Okay. And then do you have any updates on discussions with business travelers about their plans for budgeting travel for the remainder of the year? Is there anything you can share on that front?

Yes, absolutely. As you know, we check the pulse our corporate clients very often. And we did it right before Investor Day and we did it right before this call. And what we saw was that the percentage of customers who thought in the first quarter that they would travel the same or more went down slightly. But it was still 80% of the corporate travel survey respondents thought they would travel the same or more in the first quarter than they did in fourth quarter. Office reopenings have been pushed out, as you know. But we are expecting, as Ed indicated, when we get to spring and summer, that we will see a robust demand for business travel as people get back into the regular routine and feel safe traveling. So really optimistic about those results and optimistic about where we think this is going to head in the not-too-distant future.

David, this is Ed. The business travel, I’d say the best way to characterize I read is kind of a wait and see. They are trying to understand what’s going on with Omicron. They are trying to understand when their offices – if they are not back, when they are going to open. And they are all making those decisions here. And the good news is that, as we’re watching the case counts start to crest and peak here in our country and declining in certain early parts of the country that had the variant hit first, that’s giving them encouragement to realize that they are going to be able to get back and get their people in, open their offices sooner than maybe they were thinking when first news of Omicron came. So we’re in a pretty good place. When you think about the trajectory we saw over the fourth quarter, we saw a really nice growth in business, both small business as well as big corporates. And small businesses, as we pointed out at the Investor Day, is something we haven’t talked as much about historically, but it’s just a big pool as the corporate space is for us. And then when those offices open starting in the spring, we think it’s going to pick up where we left off in December and grow from there.

Great. Thanks, Ed.

Thank you. We will take our next question from Ravi Shanker with Morgan Stanley.

Thanks. Good morning, everyone. So just to kind of pick up on that last point. I mean, hopefully, the next few weeks is the last real disruption from the pandemic, especially with kind of availability of boosters and therapeutics and herd immunity and everything else. So if there is like genuinely like light – like real light at the end of the tunnel, are you having conversations with the regulators on when we can fly without masks on planes and time line, like full service being restored in the aircraft? Do you have a – has a big guess on kind of the timing of that?

Well, I think it’s premature, Ravi, to speculate on masks on planes. Obviously, that’s going to be driven by the medical experts and not by the airlines. And we will follow their guidance. But in terms of restoring service on planes, yes, we’re doing that pretty aggressively. And over the course of the next 2 to 3 months, you’re going to see our service patterns largely restored from where we were in 2019 and continue to make the improvements. And when I say restored, restored is not the right word, it’s going to be improved from where we were in ‘19. And we’ve taken the opportunity during the pandemic to make substantial changes to the whole catering spec, who’s providing it. Took ownership positions in terms of kitchens and really big change that customers are going to be delighted when they start traveling again back in the springtime, particularly internationally. It’s going to be good. The thing you were mentioning about the rapid move of the variant, I agree with you. I think that there is a real silver lining here, is that since this thing is moving so fast, it’s so infectious, so many people are getting it, it’s going to push the pandemic into us – into all of a normalized environment here sooner than we would have liked. So while we were together at Capital Markets Day, we talked about the uncertainty that Omicron presents. Good news is that the uncertainty is going to be short-lived. And the path to normalization, I think we’re even more confident in it when we think about our ‘22 numbers and travel patterns. So it’s not all negative. That’s for sure.

Understood. And just a follow-up, forgive me if I missed this, but is there an update on what premium cabin would look like relative to main cabin in the fourth quarter? I think in the past, you’ve said it was running 10 percentage points ahead. And how do you expect that to trend through the year, especially as COVID and the national come back? Thanks.

Well, yes. So we’re very excited about the fourth quarter results. I think it was in the comments that it was 9 points ahead of main cabin for the entire fourth quarter, and we see those trends continuing. We – the headline for us is that premium leisure, we believe, is here to stay. And that’s something that we want to continue to exploit as we think about we service our customers moving forward and how we lay out the plans and what products and services we offer.

Great. Thank you.

Thank you. Our next question comes from Mike Linenberg with Deutsche Bank.

Hey, good morning, everyone. Hey, just two quick – one quick one for Glen. On the refinery, the revenue piece for the March quarter. I know normally you don’t give guidance there, but it is – it’s been a big number. It was $1 billion this last quarter. Should we assume, just given where crack spreads are, that March quarter refinery sales will maybe be of a similar magnitude?

Yes, I think that’s the right way to think about it. Our jet consumption will be about the same in the refinery output. So keep it consistent, yes.

Okay. Very good. And then second question to Ed here. Ed, I think if you look across the industry right now, I think most airlines, their pilot contracts have now been opened. They are at an amendable point. Yours included. I think one of your competitors is trying to do a quick sort of 2-year type extension. Can you just give us an update of where you are? And I guess, within the context, I mean, you didn’t furlough anybody during the pandemic, so you’re sort of maybe approaching this from a different perspective. Thank you.

Thanks, Mike. We did not furlough any employee during the pandemic. Pilots included. Yes, we’re in a similar position, I guess, and some of our large competitors are as well, particularly relative to the pilot contract. During the pandemic, it was very difficult for any of the airlines to – or the union for that matter to feel confident in projecting the future. So I think all talks across the industry have probably put on hold. But we’re now getting ready to reengage, and we will see where that goes. But no, we’re not trying to do an expedited anything. We’re trying to get a real contract with our people.

Very good. Thank you.

Thank you. We will take our next question from Jamie Baker with JPMorgan.

Hey, good morning. First question for Glen, could you expand on your answer to Savi’s question that you anticipate transborder testing impediments to ease during the quarter? For example, as a move from a 1-day back to a 3-day testing requirement for U.S. reentering, is that specifically in your forecast? Is the guidance assume that we get back to November eight levels of sort of testing impediments? I’m only asking because as these headlines do improve, we’re going to be asked whether that’s incremental to the guide or not?

Well, I think what we’ve seen and – a little more color on that is we’ve seen that initially, everybody reacted by putting in some pretty onerous testing requirements. Since countries that are further along with us like the UK, who’s now on the backside of the Omicron, has now started relaxing those restrictions, and we’ve seen other countries like Ireland relax. We’ve seen Israel relax on the margin. So I think that’s what we would expect. I don’t think for a customer who’s traveling that the 1-day testing requirement that the U.S. has imposed is that all. It’s pretty easy to take a proctored test with you when you travel overseas. So I couldn’t speak to whether the U.S. government was going to go back to the previous policy. But in general, I think once governments feel comfortable that they have a handle on the variant, that they have backed off and started easing the restrictions again, I think that would be something that the whole world is looking towards as we move forward here.

Okay. And then for Dan, the flat air traffic liability from third quarter to fourth quarter, that’s pretty unusual. Ordinarily, there is about a $700 million sequential decline even in 2020. We saw a few hundred million of decline. What should we read into that other than strong bookings? I mean has there been any change in how you are accounting for travel credits? And on a side note, having recently bought a Delta ticket and having forgotten to apply some existing credits, I can’t believe I’m the only passenger to experience this. I’m just trying to think through any implications of credit travel breakage and how that might influence the ATL going forward? Any color there?

Well, one, no change, right? But I think we talked about this a little bit in the third quarter call that the – remind you that maybe historical seasonalities won’t apply as you’re restoring travel and the airline. And that proved to be the case in fourth quarter and what we saw. I think you’re going to see a similar dynamic in first quarter. Normally, that air traffic liability will grow. You’ve got to account for the additional restoration that you see as you progress towards second quarter that would – that changes of seasonal impacts. So just take that into consideration. I think fourth quarter is a good proof point that you just can’t take historical practices, but it’s not due to the underlying change in practice. It’s really just the dynamic that’s going on with the restoration of the airline and the growth.

Okay, okay, it’s perfect.

And to your question on – Jamie, this is Ed on – the question on credit. I don’t know if we announced it this week or not.

Yes, we did.

We did. Good news. So we extended the expiration date through the end of ‘23. So you’ll be fine.

You can use it, Jamie.

Okay. I wasn’t particularly worried about it. Thank you. I appreciate it. Thank you very much.

Thank you. We will take our next question from Duane Pfennigwerth with Evercore ISI.

Thanks. Maybe just to continue on Jamie’s line of questioning there, can you tell us what breakage as a percent of revenue was in the fourth quarter and kind of how those trends have changed over time?

Yes. The trends haven’t changed and they are consistent, but we don’t actually give breakage to report that.

Okay. And then just a broader question, as you look back at the business travel recovery you started to see in 4Q, do you think that return to office is as meaningful of a guidepost relative to your initial thinking? Have you seen any decoupling between return to office and business travel recovery? And it’s not a – that’s not a January 13 question. That’s a – the recovery you were seeing in the fourth quarter.

Yes. I think there is a correlation. A lot of business travel is triggered by going to visit companies. And the companies are closed, it makes it a little more difficult to do that. It’s not a one for one. But the fact that particularly the big corporates, the fact that our overall level of corporate demand, the volume return is actually fairly closely correlated, and maybe it’s coincidence or not, I don’t know, but the numbers are pretty tightly correlated to the amount of reopenings we’ve seen indicates there is a real cause and effect there, Duane.

Okay. I just wondered if we found travel has a higher utility than going back to an office, but I appreciate the thoughts.

Yes. No. We do have – office is not the only thing. We have a lot of people traveling that aren’t back into office yet. So we have a lot of noise probably in the numbers, and there is a lot of choppiness. As you – as we navigated the course, it felt like two or three pandemics over the course of 2021 with the various variants. But we are continuing to make good progress. The good news is that all of our corporates are saying they just can’t wait to get back to be with people and be with their own people, be with their customers, visit new opportunities and invest for the future. And I think this is going to be a strong spring and summer. They are just waiting for the all clear sign that you don’t have to worry about a variant as you are traveling.

It makes sense. Thank you.

Thank you. We will take our next question from Sheila Kahyaoglu with Jefferies.

Good morning guys. Thank you for your time. So, you talked about Q1 international capacity being 15 points to 20 points lower than the industry. Maybe can you talk about what metrics you would like to see for that path to ramp capacity back up, how your fleet plays into it and how you think about international capacity as we progress through the year?

Sure. I think we get a – gave a pretty good outline of how we expect international restoration to occur. And what I would say is we haven’t changed from where we think we will be in the summer yet. What we have changed is the low season, this – the winter IATA, the remainder of the winter IATA. We had some seasonal services starting up earlier than we would have otherwise done because we thought demand might be back early. And now we are taking that bed off and moving those start dates to later in the year. And I think we still remain very, very confident that once – as Ed said, once people feel that it’s safe to travel, that they will. And as we said in today’s comments and in all previous is we will remain agile. And if we don’t see that developing, we will pull it down. And if we see it coming faster, we have the ability to accelerate to a certain extent, some growth in international. So really, it’s a – we are still very optimistic about the summer. And we expect to be 85% to 90% restored in the transatlantic, probably less than 50% in the Pacific and largely restored in Latin America. And that’s what we outlined previously. We really haven’t deviated from that yet.

Okay. And maybe just a follow-on for that. In the domestic market, you are seeing additional capacity come on with a recent order from a low-cost carrier. How do you think about the risks of supply coming into the U.S. market?

We have competed with ULCCs for many, many years. And I think that’s really where we came to a couple of different strategies, including our premium strategy. And I would like to say that some of our highest return markets historically have been straight up against LCCs and ULCCs. So, I think we are really not afraid to compete in those markets. And we think our products stand on their own. And it is a very different product and a very different customer than they are going after.

Okay. Thank you.

Thank you. We will hear next from Conor Cunningham with MKM Partners.

Hi everyone. Thanks for the time. One point from your Capital Markets Day that I found interesting was just the domestic share gains on the corporate side during the pandemic. In the past, those gains have been somewhat minimal year-over-year, but you clearly used the pandemic advantage. I was just curious, is there a gating factor to you growing share from here? And if there isn’t, what’s your expectations over the next couple of years for your share there? Thanks.

Conor, this is Ed. Yes, you are right. We did have a meaningful and an outsized share gain. And that’s amongst the big corporates as our corporates really focused on premium. They appreciated the work we did around blocking the middle seats for the entire length of the pandemic while it was quite active. And what we find is when companies come to Delta or customers come to Delta, they tend not to leave, which is a good thing. And so the share tends to be sticky, and we work really hard to ensure that we maintain that. We have had good share gains in the past. Don’t get me wrong. We have it. We kind of had plateaued at a level pre-pandemic. And we are significantly higher in share than our natural seat share is in those markets. So, I think we are going to work hard to make sure we maintain. And if we can grow it, we will. But I wouldn’t expect you to see additional growth, not at that level for the next couple of years.

Okay. Great. That was a big move. And then just maybe to take the other side of Ravi’s question. I assume that there is actually going to be another wave of cases at some point. Each wave has been different. But could you just speak to lessons learned during this current wave? The reason why I ask is it just seems like your ability to work directly with your workforce actually benefited your operation relative to some of your competitors as you turned around pretty quickly. Thanks again for the time.

Yes. Thanks, Conor. I am proud of our team, and it was hellacious three weeks that – so yes, there are definitely some learnings in there. But the good news is we recovered quickly. We got the operational integrity of the airline back to where it needs to be. It was not easy to do. But the fact that we have a very, very direct and strong and flexible workforce that will do whatever they need to do to ensure customers are being well taken care of and served was important, and that’s shown through. One of the things that to me was really interesting about the last few weeks of this Omicron surge is that demand was really strong. I mean of course, it was built prior to that as it was going into the holidays, but we didn’t see cancellations. Cancellations were taking is because we couldn’t staff the planes. But – so the resilience of customers and their willingness and interest in getting into travel once things clear, I think is going to be that much stronger. And each – as each successive wave occurs, I think people are getting more used to, the fact that we are having – this is the virus we are going to have to manage and live with over time, and it’s going to be a seasonal virus. It’s not going to be a pandemic. And that’s what the doctors all believe and that’s what I think we are going to wind up seeing here. And we have got all the tools and the technologies, and the capability and the confidence that we can manage just that.

Okay. Thanks, Ed.

Thank you. Our next question comes from Myles Walton with UBS.

Thanks. Good morning. I was just wondering, maybe Ed, how do you think the zero COVID case policy in China plays out through the course of the year with respect to your business? I know it’s a smaller piece. But just curious what you think can make them move to endemic because clearly zero COVID case policy would still be in the pandemic mode?

That’s a question, Myles, is way above my pay grade, national policy in China. It’s been interesting as we have watched a lot of the nations around the world all manage it seemingly somewhat differently. As it relates to us, you are right. China is not a big part of our network. We would like it to be a bigger part, but it historically hasn’t been. It’s going to be a pretty small part of our network at least for the next couple of years and we will see beyond that. One of the things we do is we look at where we put our metal is demand. And there is not strong demand going up between the U.S. and China now. So, I don’t think it’s a situation that’s alarming to us. But hopefully, Asia and it’s not just Japan, but it’s – or China, but Japan and other office, Hong Kong and Singapore, they are all going to need to figure out how to move to that seasonal virus that I just talked about. And they got the tools and the technologies to manage it. I think it’s just going to be a longer road. We have a very downward feel as to growth rates in Asia for some time here. And fortunately, we have got a great partner in Korea that can do that flying in the meantime for us.

Okay. And just follow-up, Dan, on the other expense, non-operating other expense for 2022. Anything to throw out there space, whether it’s interest or pension moving parts?

No. I think you – when you look at the total year for 2021, it was just around $900 million when you take the interest expense with the pension. It’s going to be about that level, slightly above actually. You are going to have a little less pension income. And then that interest expense line will start to really move down in ‘23 and ‘24 as you see that adjusted net debt coming down to our $15 billion target.

Okay. Thank you.

Cody, we have time for one more analyst question before then moving to media Q&A.

Thank you. I will take our final question on the analyst side from Hunter Keay with Wolfe Research.

Hey. Good morning. Thank you. A couple for me. Glen, I think it for Glen. I know you had a need, obviously, with Sandeep leaving. But how can Scott Laurence help your team? And what is it about him that you like the most when you interviewed him?

Listen, we don’t comment on individual performance or individual reasons. But I think Scott is a very well seasoned industry executive. And I think he is going to bring us some additional value over time. We will see when he gets here, starting next week, I believe.

Okay. And then do your capacity planners talk to Dr. Tang when you plan the schedule?

Every day. Every schedule is now Tang approved.

Got it. Thank you very much.

Thank you, Hunter.

That will wrap the analyst portion of the call. I will now turn it over to Tim Mapes, our Chief Marketing and Communications Officer, to start the media questions.

Julie, we have about 12 minutes for conversations with members of the media. If you would, please remind everyone the process to get in the queue for that. And I would remind everybody that we are going to try to keep this moving and do one question with one follow-up and end about 10 minutes after the hour, please.

[Operator Instructions] I will take our first question from Mary Schlangenstein with Bloomberg News.

Hi. Good morning. I wanted to see if you could comment of the passengers who had canceled flights during December, how many of those – what percentage of those were able to actually complete that travel, rebook or whatever, and complete that travel during the holidays? Can you talk about that percentage?

Hi Mary, this is Ed. I don’t have the numbers in front of me. But the vast majority of the customers that had to be rebooked, we had space that we were able to accommodate on other flights to get them to their destinations. So, it’s not something that we enjoy doing, but we were able to get people to where they need to be for the holidays.

Okay. So, no notable or noteworthy amount of lost revenue through that?

Well, there was flying, and some customers decided not to travel. So, that’s – at least we estimated there was a $70 million hit for that. But no, there is not a substantial. If customers wanted to travel on Delta, we may certainly, we got them there.

Okay. Thank you very much.

Thank you. We will take our next question from Alison Sider with Wall Street Journal.

Hi. Thanks so much. You talked about sort of pandemic entering this new phase where it’s becoming more seasonal, and it doesn’t necessarily impact people’s willingness to travel all that much. How does that change kind of the way you plan and staff for peak periods? If there is going to be a future brief, but dramatic flare up like we just saw, would you have a smaller peak holiday schedule, or how does that change kind of your planning process?

Well, our goal, Ali, is to ensure that we are meeting customer demand. And so I don’t know that we can change customers’ demand and interest in traveling during peak periods or holidays. And that’s when they go, and we need to make sure we are there to serve them. There are learnings from Omicron, as I mentioned on the analyst call. But probably the most important learning that I saw was that, even with Omicron being the headline throughout the country and the disruption that the airline industry was experiencing from people getting sick from Omicron, travelers are still traveling. And they were determined to travel. They were resilient. We didn’t see mass cancellations. We didn’t see people deciding it wasn’t – didn’t feel right. And so I think that this was another phase that we have passed through. And who knows, is there going to be another pandemic type virus awaiting us, there is no – we don’t know what it is, but we are also humbled by the fact we don’t know what we don’t know yet in this environment. But we do really believe that we are going to enter a nice period of being able to manage and create a set of normalcy around travel behaviors, particularly, but hopefully, life in general. And this virus will become very similar to what we have with the flu right now and move into a seasonal category with tools and technologies to manage. Flu is a pretty significant cause of death historically. In our country, I think we are seeing a lot less of that over the last couple of years because of the new tools and mitigations that we have learned to live with. And I think you are going to see people may be wearing masks and then doing different things and having technologies and antivirals that they can take to help manage to – in order to keep themselves moving. We are getting to a point where I think, Ali, we are going to focus our efforts on the small percent of people that are immunocompromised that are at most at risk. But the general population is learning and willing and exhibiting an interest to live with this risk.

Thanks.

Thank you. We will hear next from Leslie Josephs with CNBC.

Hi, good morning everyone. Just a question on hiring, can you just update us on the number of people that you want to hire? And is there any detail on perks or increased salaries that you are offering to attract workers? And if there is anywhere that you are having problems attracting workers, either work group or geography, I would love to hear that. Thanks.

Yes. Leslie, as you know, we hired a substantial number of people in the past year. I think it was around 9,000. We are going to be hiring less people this year. But this number is still in the, say, 3,000 to 5,000 range depending on how demand shapes and comes back. We are not having any meaningful impact in terms of difficulty getting people to come work for this company. Regionally, yes, there are some pressure points in some of the higher cost markets, particularly in the Northeast. But no, we are doing a very, very good job of bringing the team together. And we are not having to put any unusual perks out there in order to attract talent.

Thanks.

The ability to travel free is a great perk and we have always had that at Delta.

Thank you. We will take our next question from Edward Russell with Skift.

Hi. Thank you. Following on what Leslie asked, in terms of the regional flying reductions that you are doing in the first half, what is Delta doing to mitigate that?

Well, we have taken about 20% to 25% of our regional flying down in the first part of the year. And that is – it stems really from flow-through pilots to the mainline as well as getting the right people and the right training seat at the regional carriers. And I think those are the two things that we are counting on as we get to the back half of the year to resolve themselves. So, I think one of the things is how many hours you have in seat, can you get trained, and can you get moved, we are working through all the details of how those transactions or transitions actually happen. And we are really pretty confident now that by the second half of this year, that the pipelines will be more full and we will be able to restore a lot of the small and medium-sized communities that we have had to pull down during the shortage in the first half of the year. So, we are meeting on this really daily and weekly to make sure that this actually can materialize. But right now, we feel very confident that we can catch back up again as we get to the back half of the year.

Okay. Thank you. And one follow-on. Have you had to park any regional aircraft as a result or exit any markets?

We have had to exit a handful of markets. Mostly those are on per seat. So, they weren’t directly scheduled by Delta. So, as of now, things that Delta had scheduled control over, we have not closed any stations, although our partners have. And what was the second part of that question?

Have you had to park any regional aircraft as a result?

There are parked regional airplanes right now. But we expect those to return back into the sky, as I said earlier, in the second half of the year.

Thank you very much.

Thank you. We will take our next question from David Slotnick with TPG.

Good morning. Thanks for taking the question. I wanted to talk a little bit more about premium leisure, which you mentioned at the Capital Markets Day and again today. What does that look like in the long-haul market particularly? Is that people who are able to pay for Delta One? Is that more affordable Delta One take? Is that a more widespread premium economy or something else?

Well, we have got big plans for our long-haul premium leisure sector. This year, we will be ubiquitous in introducing a new product, Delta Premium Select, to the transatlantic marketplace. And that is really designed specifically for higher-end leisure as well as corporate travelers whose travel policies don’t include the flatbed Delta One product. So, early returns on that are phenomenal, far above our expectations. And as we get to ubiquity, we will monitor that closely, and we will report back to you. But we are excited about that. We are excited about the enhancements that Ed talked about as we get to spring and summer on the existing premium products in the long haul. And we think we have over the years developed a great suite of products that fit a lot of needs for customers, whether or not it’s just basic transportation and getting there safely and on time, to really more of the luxury products, with the flatbed seats and the luxurious amenities that come with that. So, a wide spectrum. And if you think of where we started, we started with just a flatbed and a coach product. So, now we have a full suite of five products that we can offer in the transatlantic marketplace. And that will extend to all of our internationals by ‘23.

Cody, we have time for one final question, please, before we have Ed wrap it up.

Thank you. We will take our final question from Robert Silk with Travel Weekly.

Good morning guys. So, I think you said you expect the pilot shortage, or I guess the flow-through to sort of resolve itself as the year progresses. Explain to me how you expect that to happen to get more people just to get more pilots coming back into the system.

Really, there are no shortage of pilots wanting to come to us or really to our regional partners. It’s a matter of them getting through the training and getting into the right seat with the right number of hours. So, that’s what we are working through as we look to resolve the current staffing issues there, is how long does that take to really catch up and when we will be in a position to start growing those regional players again.

Okay. So, I guess that answers my question. Thank you.

Well, thank you, everyone. I want to wrap up here and appreciate your time this morning. Thank you for joining us. I particularly want to thank once again the Delta employees for the amazing work they have done over this course of this last year. Congratulate them on this special profit sharing payment, which we are thrilled to be able to award them with, and realize that we are making really good progress. Omicron has been a challenging period of time, but we have learned from it. There is new findings. And one of the most important findings is that we are going to move through this thing fastly – quickly and get to a point of stabilization in our views. So with that, being that we are in the State of Georgia, we have to over the – close of the go dogs, and congratulate them our employees, national champions. And thank you all for joining us today.

Thank you. That does conclude today’s conference. We do thank you all for your participation and you may now disconnect.