From 2018 to 2019, Delta saw several significant increases in each of their accounts.
Abigail Kilgore
From 2018 to 2019, Delta saw several significant increases in each of their accounts. Their current Maturities of long-term debt increased by 51% on the balance sheet. Their operating Income increased by 26% on the income sheet. Their net cash used in financing activities increased by 67% on the statement of cash flows account. All accounts showed some growth except their prepaid expenses, which decrease by 10%. The increase in cash is related to the increase in maturities as they acquired a variety of notes payable. The increase in current maturities is from lowering their long-term leverage ratio and increasing their mix of 5- and 10-year notes. This allowed them to improve their financing activities as explored below. Operating income increased due to a decrease in their fuel expense. They were able to increase operating revenue by 6% with only a 3% increase in expenses. Part of this increase was also due to an improvement in their cancellations, allowing for additional revenue. The cash used in financing activities increased because Delta paid off a loan and used the net proceed of the term loan to accelerate an already planned repurchase of their share repurchase program. They used additional proceeds from a longer term note to acquire additional common shares. The biggest concern with increasing maturities is that if not paid down consistently, there could be years of lower income that can be harder to turn into profit if it is all being spent paying down liabilities. Delta’s data from 2020 and 2021 will provide a stronger outlook as the airline suffered extensively from the pandemic. If Delta was able to maintain a strong cash flow and assets during the pandemic, they will prove to be in a good position with the acquired debt from the year prior. It would be concerning to see operating income if the fuel prices had stayed the same or increased as the offset would cause a decrease in operating income. However, Delta did increase a 2% fuel efficiency improvement with the purchase of their new fleet. As Delta continues to evolve their fleet, they will see continuous benefits. They must stay close to the depreciation of their planes though to ensure no additional costs arise. This change reflects positively showing their investment of assets is paying off. Delta included an assessment of their investment ratings from three major credit rating agencies, and they all provided a stable outlook, indicating the increase in financing activities was a positive decision. If Delta were to utilize those funds to relieve current liabilities instead, they would not have seen as strong of an outlook for future investments. My overall assessment of the company has a positive outlook. They are ensuring a variety of short term and long-term liabilities along with managing inventory and cash at reasonable levels. The continued investment in their future for updated fleets and shareholders will continue to drive profits and keep shareholders happy.
Answer preview to from 2018 to 2019, Delta saw several significant increases in each of their accounts.
APA
310 words