Sources and uses of funds
Delta (DAL) generated cash from operations of $4,365 million. This was ~29% higher than last year. However, the cash balance decreased by ~17% to $2,510 million as of September 30, 2014. This was due to higher investing and financing activities.
Even though Delta’s cash and marketable securities increased by ~9.7% to $4,362 million, cash and marketable securities as a percentage of sales was 39%. This is much lower than its peers.
American’s (AAL) was ~70%. United’s (UAL) was 52%. Southwest’s (LUV) was 74%. JetBlue’s (or JBLU) was 48%. The iShares Transportation Average ETF (IYT) and the PowerShares DWA Consumer Cyclicals Momentum Portfolio (or PEZ) have more than 3% of their holdings in Delta Air Lines.
During 3Q14, Delta used more than twice the amount in investments compared to 3Q13—despite the 28% year-over-year (or YoY) decline in capital expenditure. Capital expenditure decreased due to a 37% lower investment in flight equipment.
During the quarter, Delta had 22 aircraft delivered. It retired 34 aircraft. However, short-term investments increased by six times to $1,402 million—from $240 million. This led to 34% higher cash used in investing activities for the first nine months of 2014.
Delta made almost three times more debt and capital lease payments during the quarter. Debt payments increased to $1,008 million—compared to $347 million in 3Q13. Delta also raised $707 million in debt—compared to only $68 million in 3Q13. Delta had higher cash outflows related to dividend and stock repurchases. This led to a 28% higher cash outflow for financing activities.