Delta Looks to Improve Margins, Cut Debt as Travel Rebounds


Dan Janki,

the finance chief of

Delta Air Lines Inc.,

had to navigate a host of pressures in his first year in the airline industry as travel demand remained below the levels seen before the Covid-19 pandemic.

Now, with demand surging, he faces a new set of challenges as airlines struggle with capacity issues, rising costs, high debt levels and concerns about an economic downturn.

The executive, who spent nearly three decades at industrial conglomerate General Electric Co., said his approach is to focus on things that are within his control, such as cutting debt and improving margins while also allocating funds for increasing inventory and reducing time buffers.

Mr. Janki had no airline experience before joining Atlanta-based Delta as chief financial officer in July 2021, unlike his peers at

American Airlines Group Inc.


United Airlines Holdings Inc.

Regardless of their professional backgrounds, the CFOs at those carriers are facing many of the same challenges, including capacity constraints after routes and jobs were slashed during the early days of the pandemic in 2020.

Delta has been holding more spare plane parts to make sure crucial pieces aren’t missing when needed, as well as adding time before and after flights, Mr. Janki said. Combined with the self-imposed capacity restrictions, these moves have kept the company’s unit costs higher than they were before the pandemic. Excluding fuel, Delta spent 12.76 cents per available seat-mile—a metric used to measure unit costs—during the second quarter, up from 11.42 cents a year ago but down from 41.96 cents during the second quarter of 2020, when pandemic lockdowns were in full force. That compares with 10.47 cents in the second quarter of 2019, before Covid-19.

The buffers have helped Delta improve service in July and August, after it hit a low in June, and they should continue to do so as the year progresses, Mr. Janki said. “It’s still not at the level we want, but it will continue to get better,” he said, sitting in his office near Hartsfield-Jackson Atlanta International Airport from where he can see planes take off and land. Delta in recent months also cut the number of flights it operates. September has been off to a good start, Mr. Janki said at a conference last week.

Consumer demand remains strong and corporate travel—an important income generator for Delta before the pandemic—is recovering, Mr. Janki said. Slower economic growth could actually help the airline’s corporate segment as more companies might decide to send their sales and other executives to see clients in person, Mr. Janki said.

Apart from improving the company’s overall financials, Mr. Janki is focusing on bringing down debt. Delta had $22.9 billion in net debt at the end of the second quarter, down from $24.5 billion at the end of 2021, according to data provider S&P Global Market Intelligence. “We are keenly focused on continuing to strengthen the balance sheet and drive debt down,” Mr. Janki said.

Delta CFO And Janki


Delta Air Lines Inc.

The company is targeting adjusted net debt of $15 billion by 2024, which would mean a reduction of $5 billion in adjusted net debt between now and then. Adjusted net debt stood at $19.6 billion at the end of the second quarter, Delta said. The airline is looking to opportunistically pay down debt and doesn’t see a big impact on its financing costs from rising interest rates, as 85% of its debt is fixed rate, Mr. Janki said.

Delta relied more on debt to shore up liquidity than competitors with weaker balance sheets that used a combination of debt and equity, said Savanthi Syth, an analyst at financial-services firm

Raymond James Financial Inc.

The airline is somewhat limited in terms of what it can do with its capital, as it received emergency funds from the government during the onset of the pandemic. Those restrictions will fall away next month, but restoring the dividend or buying back shares will have to wait, Mr. Janki said.

New labor agreements with Delta’s pilots—currently under negotiation—will add to the company’s cost base going forward, analysts said. “The U.S. airline industry has some big tackling to do,” said Ms. Syth. “You have these cost headwinds when you have the consumer and the economy softening.”

Mr. Janki said he is working to reduce Delta’s unit costs. Part of that endeavor will be to bring nine aircraft back into service that are currently parked, and training new employees. “As we get a stable operation and you build that experience, you can start to get the efficiencies of those teams,” Mr. Janki said.

Mr. Janki held various roles while at


such as divisional CFO and CEO of business units, including president and CEO of GE’s power portfolio. “It wasn’t just one business,” Mr. Janki said, adding that going from business to business at GE helped him get his head around “a new business that I had no prior experience with.”

To familiarize himself with Delta, Mr. Janki said he attended morning meetings, inspected the engine shop, visited the wing operations and spent some time in the reservations department. “Those types of things really give you a sense of the operation,” he said.

More than a year into the new role, Mr. Janki has made some changes, for example around how the company closes out its quarter. The focus has been to bring insights and analytics earlier into the earnings process to improve efficiency, Delta said. Mr. Janki also attends a weekly commercial meeting held by President

Glen Hauenstein,

which previously wasn’t a regular responsibility for the CFO.

Delta uses a rolling forecast, Mr. Janki said, which allows the company to update its spending plans on a regular basis, instead of sticking with a fixed annual budget. “We’re looking within a month, within a quarter, daily, weekly,” Mr. Janki said. The company, which reported earnings per share under U.S. generally accepted accounting principles of $1.15 during the second quarter and $1.44 in non-GAAP EPS, is guiding investors to an operating margin in the midteens, more than $4 billion in free cash and non-GAAP EPS in excess of $7 in 2024. That compares with an operating margin of 11% and $1.6 billion in free cash at the end of June.

Colleagues said Mr. Janki is sometimes seen at 6 a.m. at the cafe opposite his office, reading materials. “One of his strengths is, he is a learner,” said

John Krenicki,

the former vice chairman of GE and CEO of GE Energy to whom Mr. Janki reported to as divisional CFO.

Mr. Janki was known for his detailed knowledge of GE. “It was not unusual for me to just ring him up and ask him what he thought about this or that option,” said

Larry Culp,

the company’s chairman and CEO, speaking generally. GE is currently in the process of splitting its business into three parts. “He was comfortable in his own skin to tell me what he was thinking, instead of trying to guess what I was thinking,” Mr. Culp said. Delta is a customer of GE’s aircraft engine business.

Mr. Janki in his early days took part in GE’s corporate audit staff program, a rigorous multiyear rotation through various divisions that the conglomerate used to groom future leaders until it decided to disband it in 2020. “He accumulated the parts throughout his career that got him the big chair,” said

Peter Crist,

the chairman of executive recruitment firm Crist Kolder Associates.

Mr. Janki wants his 600-people strong finance team to rely more on data and improve its systems, including streamlining information in the cloud. Part of that effort will be to combine fuel and operating data, as well as information about employees, crew expenses and spending on maintenance, he said.

Write to Nina Trentmann at

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