Good morning, everyone, and welcome to the Delta Air Lines September Quarter Financial Results Conference Call. My name is Jake, 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 will be recorded. I would now like to turn the conference over to Jill Greer, Vice President of Investor Relations. Please go ahead.

Thanks, Jake. Good morning, everyone, and thanks for joining us for our September quarter call. Joining us from Atlanta today are Delta’s CEO, Ed Bastian; our President, Glen Hauenstein; and our CFO, Paul Jacobson. Our entire leadership team is 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 the 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’ll 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 Investors Relations page at ir.delta.com. And with that, Ed.

Thanks, Jill. Good morning, everyone. We appreciate you joining us today. Demand for the Delta product is as strong as ever, and our powerful brand unmatched competitive strengths and pipeline of initiatives are driving earnings growth, margin expansion, and solid returns for our owners. Earlier today, Delta reported the September quarter pretax profit of $2 billion, which is up $350 million from last year. Our EPS increased 30% to $2.32 per share with operating margins expanding by 2.5 points. Importantly, we’ve already generated $4 billion in free cash flow year-to-date. Our employees continued to deliver the very best operational reliability and service for our customers, even against the summer’s backdrop of record passenger volumes, airport construction projects, and difficult weather. We’ve now had 123 days without a single cancellation across the entire Delta system this year, a 23% improvement over last year’s record performance. This unprecedented level of reliability combined with great service from our team continued to drive higher customer satisfaction and growing brand affinity for Delta. Year-to-date, our domestic net promoter score has improved more than 5 points over the prior year, and we’re also seeing positive momentum in international net promoter scores with opportunity for further improvement as we continue to upgrade cabin interiors and enhance our customer experience. Stronger customer satisfaction is translating into higher revenues. Revenues grew 6.5% to a record $12.6 billion in the quarter, and we now expect to achieve approximately 7% top-line growth for the full year. I want to thank the entire Delta team for producing one of the best quarters in our history. You are the force behind the Delta brand. And to recognize your efforts through a challenging summer, we have accrued another $517 million towards next February’s profit sharing. This brings the total for the year to nearly…

Thanks, Ed, and good morning. First, I’d like to thank the entire Delta team for their hard work during our busiest summer ever. In the quarter, we ran record load factors and carried 3.3 million more passengers than last year, up 6%. The exceptional operational performance and unmatched service our people provide are the foundation for improving customer satisfaction and the reason why more customers than ever are choosing to fly Delta. When combined with the solid demand backdrop and progress against our commercial initiatives, we delivered a record quarterly revenue of $12.6 billion, up 6.5% over last year. This marks the ninth consecutive quarter of top line growth at a level more than 2 times GDP. We also continue to diversify our business with 52% of our revenue generated by premium products, loyalty, and other non-ticket revenue sources. Premium product revenue grew 9% in the quarter to $4 billion on top of last year's growth of 13%. Momentum is expected to continue from the modernization of our fleet and improved ability to sell these products. Total loyalty revenues grew 16% to $1.2 billion, driven by double-digit increases in mileage redemptions, co-brand spend, new card acquisitions, and roughly 100 million benefit from the new contract with American Express. Enhancing our customer loyalty and trust is at the heart of our business. And together with American Express, we are finding new and innovative ways to reward our customers for their loyalty. We are on track to achieve another record year of card acquisitions in 2019. Our redesigned card offerings will deliver rich rewards and support continued growth in our membership base in the years ahead. We are making SkyMiles more valuable by offering members more ways to use Miles on Delta. Miles as currency launched last December and customer response has…

Thanks, Glen. Good morning, everyone, and thank you all for joining us. We’re delivering against our Investor Day plan to drive top line growth, margin expansion and consistent returns to our owners. Year-to-date, our top-line has grown 8%, operating margins have expanded by over 200 basis points, and we’ve grown earnings per share by 30%, driven by strong core fundamentals in our extended Amex agreement. We’ve also generated $4 billion of free cash flow, meeting our full year target in the first three quarters of the year, while also reinvesting in the business. Our investments continue to drive strong returns, supporting the long-term growth potential of the business. Our after-tax return on invested capital on a trailing 12-month basis is 15.9%. This represents more than 300 basis points of improvement since 2017, while our invested capital base has increased by nearly $2 billion. Turning to September quarter results. We delivered solid performance in the quarter with pretax income of $2 billion and a pretax margin of 15.7%, 2 points higher than last year. Fuel was volatile during the quarter, but average prices remained below prior year levels. Total fuel expense decreased $249 million on 18% lower market fuel prices, including a $49 million benefit from the refinery during the quarter. Our refleeting initiatives drove a 2.1% improvement in fuel efficiency during the quarter, keeping us on track to deliver a 2% fuel efficiency gain for the full year. While non-fuel unit costs in the quarter were up 2.4%, total unit costs were down 2%, as a result of those fuel prices. During the September quarter, we announced a pay increase for eligible ground and flight attendant employees effective October 1st. This had a modest impact on the September quarter, and has about a 1 point impact on CASM-Ex in the…

Thanks. And before we go to the Q&A, if we can just -- that time of year when we announce our December Investor Day this year, please mark your calendars for December 11th and 12th. We'll be back here in our hometown of Atlanta. For now, just mark your calendars, we'll send out more information as the date gets closer. So, with that, Jake, if we can have the instructions for the analysts on how to join the queue?

[Operator Instructions] We'll hear first from Michael Linenberg with Deutsche Bank.

Hey. Thanks, yes. Hey. Good morning, everybody. I guess, maybe this is a question to Ed. If you can just give us an update on kind of where things, to the best of your knowledge, stand with respect to the tariff situation and the potential impact to Delta? And is it new aircraft orders; is it order aircraft as they deliver? Any color around this topic would be great. Thanks.

Thanks, Mike. It’s aircraft as they are being delivered, which we have expressed our concerns that this is kind of a retrospective tariff on decisions taken in the past. That said, we’re evaluating all of our options. We do not expect the cost to incur -- any cost of tariffs through the end of this year. We are expecting some deliveries out of Mobile in terms of 321s and those do not carry a tariff. And looking forward, we’re examining our options next year to make sure that we mitigate any increase to the prices that we’ve already negotiated with Airbus. So, at this point, yes, we’re looking at our options, and I am not going to into any details around the options since it’s still pretty fluid at the moment, but we do not expect this is going to be a material cost to Delta, certainly not in the near term.

Okay, great. And then, just a quick follow-up to Paul. I just -- I'm not sure if I heard it right. You talked about the CapEx associated with the LATAM A350s, and maybe that was just an amount that hits in 2019. Did you say $100 million or did I hear that right?

Mike, you heard that correct. That’s expected in the fourth quarter of ‘19.

Okay. Thanks, everyone.

[Operator Instructions] Moving on to Duane Pfennigwerth with Evercore.

Hey, thanks. So, just playing back the summer, it feels like you’ve tried to flex up and respond to the environment, and that has obviously driven some expense, some over time, some airport costs. Can you comment on the quality of the incremental traffic that you picked up? Was it high quality or was it low yielding? And is this something that you plan to repeat in 2020? If not, why isn’t it a tailwind to the 2020 cost outlook?

Hey, Duane. This is Ed. I’ve said a number of times, second quarter as well as the third quarter, we certainly were a beneficiary of the MAX not operating. That said, we don’t believe we’ve got -- we’ve got a significant amount of new incremental growth coming from that. The majority of the growth clearly was the strength of our own brand, strength of our product and services, which continues to outperform anything that we’ve seen historically, and the costs that we talk about are not just due to the high demand. Remember, we ran a load factor of 90% from April all the way through August pretty much. But we also had an incredibly volatile weather pattern this summer that gave us very limited recovery option. So, the heightened load factor expectations, the fact that MAX was not out, the weather, all created an environment that we’ve got to reinvest to make certain that next year, because I expect the share -- any share we picked up are going to retain going forward, we’re better prepared to handle the volumes in 2020.

Okay, thanks. And then just for my follow-up, I wanted to ask you maybe a longer-term question about South Florida. How do you think about the growth prospects for that market longer term and potential connecting opportunities with the LATAM partnership? Is this about getting a bigger presence in South Florida for Delta or is it about building out from Atlanta to point South? Thanks for taking the questions.

Thanks for the questions, Duane. It’s a little bit of both. I think, if you think about improving the connectivity to the existing LATAM infrastructure in South Florida, there is a little bit we probably have to add to replace some of the flows that’s existing today on American, but we’re not creating a new hub; we're not creating a new giant connecting complex. We're doing selective adds. So, think of it, if you think about Miami as a hub and you think about our size in Dallas or Denver or Chicago, it probably looks a lot more like that to make sure we have key fleets that will go over Miami and then really work with LATAM once we get ATI to continue to develop Atlanta and our other U.S. gateways as the primary connecting points for the South America traffic. So, I think we have a pretty good plan that takes the best of both, that’s connecting complexes in the U.S. and best service within the local markets, and I think that’s going to be a great platform for growth moving forward.

We will now move to the next question, and that will come from Helane Becker with Cowen.

So, I think this might be a question for Paul. As I look at those actuarial assumptions you changed, you mentioned that it doesn’t flow through to next year. But, I think you are also spending some money to bring your pension plans into closed or funded status. So, I was just wondering if it's possible for you to give us an update on that.

Good morning, Helane. Those two issues are somewhat unrelated. The actuarial changes relate to the long-term disability program, and this is actuarial tables that are updated every few years and we’d seen a little bit of an increase in trends. So, we have to markup that liability one time. It hits that P&L, and that’s why it's not expected to repeat this year -- or next year. As to the pension, we continue to strive to target 80% funded status by the end of 2020. And so far, the assets are on strong trajectory this year with strong returns. Our pension expense, as we cited on in the prepared remarks is really a function of last year's returns as that gets spread over a full year. So, as we head into 2020 and we get those updates both on the funding as well as the investment returns, we’ll have more detail at Investor Day on 2020.

We will now move to the next caller. And that will come from Joe Caiado with Credit Suisse.

Paul, maybe just picking off where Helane left off there on 2020. I’m not asking for explicit cash flow guidance for 2020, obviously, but just hoping you could walk us through some of the puts and takes in operating cash flow for next year, things like cash taxes, you just touched on the pension there, but any other moving pieces that we should be aware of?

Good morning, Joe. Not materially. Obviously, we see growth in the business, we see growth in the Amex portfolio as we continue to work our way up to nearly $7 billion by 2023. Those are some good sides in the business. We have articulated a belief that we’ll be a cash taxpayer in 2020. That’s not expected to be a huge headwind for us. So, we see consistent cash flow generation in 2020 at this point. And we’ll provide those details at Investor Day as well.

Okay. I appreciate it. And my second question on free Wi-Fi, whoever wants to take this. It’s obviously something that your business travelers demand. So, that’s an important box for you to check. But, it also feels like it’s a consumer data play. I was hoping you could talk a little bit about maybe the second derivative commercial opportunity from that initiative, if you will, just perhaps in terms of what it can do for merchandising or just learning more about every passenger and every seat. In other words, how do you monetize free Wi-Fi over time?

Hey, Joe. This is Ed. I’ve again been vocal on this. I think, it’s something that our customers not just demand but deserve. I think, the main benefit to me is the connection that they will continue to have to the brand and the strength of the brand and our selling proposition. But then, you’re right, there’s a second derivative order with respect to any commercial opportunities that we could create around that surface. We’re not ready to talk into detail yet. We’re still a ways off from announcing the exact start date. We’re learning a lot on the technical capacity that we currently have and any additional changes we need to make. But, we’re on the path to getting there and I'm excited by it. I think it’s going to be a great new service to our customers when we get there.

And now, moving on to the next caller, and that will come from Savi Syth with Raymond James. Savi, you may be muted. Please unmute.

Good morning. Sorry about that. I know it’s early stages, but I was wondering if you could help me understand a little bit more on the 2020 cost outlook. It seems that you kind of -- it almost seems that you’re indicating that you over-earned this year because the cost is about catching up your current market share, but you also had a lot of cost by paying kind of over time for your current -- for all your crusades to meet the capacity needs this time. So, kind of wondering how it adds that incremental 1 point and how should we think about that cost outlook for next year?

Good morning, Savi, and thanks for the question. The pressure that you cited and certainly what we’ve called out going back to some conferences this fall was real. And as I articulated, we felt a little bit like bursting at the seams with all the passenger loads and some of the weather pressures that we saw. And undoubtedly, some of the staffing investments that we’ll make will help mitigate some of that. But it’s really about arming our people with the tools and resources they need to serve our customers in an expanding base. Our total revenues are up 15% over the last couple of years, and there is investments in that process that we need to continue to make in order to drive the quality that our customers are used to, to continue to earn that revenue. So, it goes beyond that. And as we said, we’ll give more details at Investor Day.

Savi, this is Ed, if I could add to that. We’ve given a long-term trajectory on non-fuel cost of being around 2%. And when we can go below that, we do as we’ve been I think for the last couple of years. That means occasionally, it might be above that. But I think our long-term trend line is -- 2% is a good target for us. I would not say that we over-earned this year. We certainly had that cost both in Q3 and Q4, related to the high volumes that we had. I think, this is about as much infrastructure investments that continue to better serve the growth, whether it be in airports and technology and in our people, and our service providers as it is dealing with the secure volumes of a very busy summer. So, this is a long-term investment that I’m confident is going to have long-term returns.

That makes sense. If I might just ask a smaller cost question on 4Q, just on Trainer, just expectations there? I might have missed it.

Sorry, Savi. On Trainer?

Yes.

Trainer is expected to have a slight loss for the quarter that’s built into our fuel price guidance. We have some scheduled maintenance on a couple of units that’s going on now that's expected to be completed in early November. But overall, the refinery continues to operate well.

And next, we’ll hear from Hunter Keay with Wolfe Research.

Ed or Glen, when we think back to simple fares in 2005, I’m wondering why that failed. And at its core, this is really a loyalty question. Is there a thought to maybe trying something like that again, given such clear product distinctions between their types and the segmentation era?

Hunter, I think simple fares might have been too simple, and maybe as an industry we weren’t ready for it. We didn’t have the sophistication to really manage it well. And I think that’s really the infrastructures we're putting in place now and how we see the evolution of pricing occurring over the next year. One of the things that you would have to admit about the industry in general is it’s transactional and it's not really trusted very well. And I think we learned that because sometimes you go look and the flight you want to take on a Monday morning is $500 and sometimes it’s $1200 and sometimes it's yet another number. And I think, what we're doing with all of the data that we’re collecting is we're trying to bring more stability to that pricing model over time. And it's not really simple fares but it's more reliable fares. And it's not a revolution, it's an evolution. So, we're on a journey on this and we're trying to be less transactional and more customer-driven. And we’re not at our destination yet and it will take several more years for us to get there. But I love the question because I do think it's a sense of how do we become a better consumer brand. And I think one of the things that we have to do is to have trust from our consumers.

That's great. Thank you, Glen. And then, Ed, maybe for you. The third runway Heathrow, is that a done deal? And how can you leverage the airport work that you've been doing here in the U.S. with your ownership stake in Virgin and maybe have a seat at the table for how that extension -- how that looks over there as it happens? Thanks.

I don't believe it's a done deal. I think, it's certainly something that's needed. I think, there is a lot of work going into the termination of the cost, the long-term impact to the city. We're going to provide certainly through Virgin our perspective on a build there, but we are a relatively small share of overall Heathrow. So, I’m not sure we're going to have much of a voice in that process.

Now, we will go to a question from Jamie Baker with JP Morgan.

For Glen, the 10% PRASM premium, that's driven by about 20% domestically and basically flattish on the international, if I’m correct. Why don’t you think you get a RASM premium on international?

I think it depends on the entity. Of course, each international entity is different. We get a premium in the transatlantic. We have not gotten our premium historically in Latin America, and I think that's one of the reasons that we are so excited about the LATAM transaction as our offering really wasn't what it needed to be to drive revenue premiums being the number four carrier. So, I think that was one of the things that we thought we needed to have a structural improvement in our offering in Latin America in order ultimately to drive significant premiums. And I think we achieve that in the long run, not today, but over the long run by securing LATAM. And then, in the Pacific, there is a lot of different -- it's a small entity for us and we have made significant improvements there. But, our stage length is really working against us. And I think, as we transition through to Haneda next year, we've told our investors we’re on a multiyear transformation. And one of the things we'll talk about at our Investor Day is we’re arriving at our destination finally in Asia, and that will give us the building blocks I think to drive premium with the products that will drive premium and with the introduction of the Delta One suites and the premium economy. I think, we're well-positioned to drive premiums in the Pacific as well over time.

And second on loyalty, maybe for Paul, maybe for Ed. I think, everyone recognizes that loyalty represents a moat around the business. But, it's not clear to me how some of your Amex assumptions, the path towards that $7 billion figure, how that gets altered by a U.S. recession? I've got all the data on what happens to air travel demand. But, what are your recessionary assumptions in terms of quarterly mileage sales, card openings, consumer spending? I mean, I know loyalty is more durable than air travel, but I still don't know how durable.

Well, Jamie, I'll take that. Obviously, we don't know what the economic outlook over the next five years. And the $7 billion number that we have disclosed is our target together with Amex, over this timeframe. It doesn't necessarily indicate that's recession proof. I mean, certainly, it's sensitive to spend, probably the single biggest element that we have in there. But, we also have modeled what happened in 2009 and how quickly spend did return. It's one of the reasons why we're creating not just greater loyalty through the card and the brand portfolio but also getting avenues for currency to be used as dollars, and the technology work that we have. And I think it's actually been one of the real nice innovations we brought to the market this year is that we're giving alternative use for currency, and people can spend and conserve cash. So, I would say it's our target. Could there be bumps along that way? Certainly. It's not a flat guarantee. But, I think it's our best estimate together with Amex what we expect to see over the next five years. And at the same time, even through the process, this year while you have some economic concerns, I wouldn't say significant concerns in terms of consumer spend, we're still seeing growth on the card portfolio at double digits.

Is there a quarterly minimum in terms of what Amex is obligated to purchase in terms of miles or is there a scenario where spend was soft enough, they would have enough miles and they could just drop to zero for a period for Delta?

We're not going to get into any details of the contract, Jamie, as you can appreciate.

Okay. Fair enough. Thank you, everyone.

Rajeev Lalwani with Morgan Stanley will have the next question.

Ed, Paul, a question for you. You've provided some good color on costs into next year. But, as we think about just over the next several years, how do we get comfortable with your ability to bring those costs back down to that target 2% or below level when you've got a pilot deal that's out there and you are likely going to be decelerating some of that capacity growth back to more normalized levels, if you will?

Rajeev, I'll take that. The 2% number is what we've given you in the past and we continue to see that hold. One of the -- we'll provide a lot more color when we get to Investor Day as to how we see the 2020 cost outlook. But, one of the pressure points we're also facing in 2020 is that our gauge in 2020 is actually going to be relatively flat year-over-year, and that's been certainly a source of productivity for us on unit cost. We expect to see that pick up again in ‘21. So, that's going to be another pressure that we're facing in the short term. But, we'll give you our perspective on that when we give you the details. But, we have faced our labor pressures in the past. We expect that whatever deal is cut with the pilots is going to be within the frame we talked about it.

Okay. And then, Glen, actually a follow-up for you. You talked about a pretty strong demand environment. The supply backdrop seems pretty favorable from what we can tell. At the same time, you're pointing to RASM that's nearly flattish, once you take out the card benefit. I know there are some puts and takes there. But, can you just reconcile those two dynamics they seem to be odds with one another?

I think, we were trying to get to that in the call. So, I appreciate the question that our lift PRASM, which is what's coming off the tickets, is really very flat between 3Q and 4Q at about 1.5%. So, the TRASM decline between 3Q and 4Q is really a previous year accounting adjustments, which didn't occur this year. And so, that's what we were trying to say in the call. I'm sorry if we weren't clear enough. But, thanks for the question because I do want everybody to understand that the revenue coming off the tickets themselves is positive, it's consistent at about 1.5 up between 3Q and 4Q.

Now, moving onto Joseph DeNardi with Stifel. And Joseph, please go ahead with your question.

[Technical Difficulty]

I am sorry. Joseph, we’re not hearing your question clearly.

Is that better?

Yes. Please continue.

[Technical Difficulty] at the Amex partnership a lot more that you used do. Analysts asked about it a lot more. I still think investor don't know what to [Technical Difficulty] on the valuation of the company. So, it suggests that [Technical Difficulty]. So, I'm wondering when do you think you'd be in a position to consider [Technical Difficulty] so investors can see profitability from a financial standpoint? Thank you.

Joe, you were still breaking up. If I understood your question, it's along the lines of, are we prepared to increase the segment disclosure relative to the American Express loyalty component of our business. Is that right?

Yes. That's right.

Yes. We're always evaluating how we provide the best insight for our investors into the drivers of our opportunities for the future. We've improved some of the disclosure. And certainly while we have to work within the confines of our contractual obligations to Amex, the confidentiality provisions, yes, I think it's a valid question, it's a fair question. It's something we need to continue to think about how we get greater visibility. It's an very important source of revenue for us today, it's certainly a growing source, probably growing faster than most other revenue components we have in the business, and it's certainly margin accretive. We can debate how you want to cost those miles, but it's certainly highly accretive to us. So, I think it's a fair question. I don't have an answer for you quite yet, but we're going to keep looking at.

And then, Ed, given the value of the Amex agreement and how valuable you think it can be, why isn't Sandeep's role a C level position?

Did Sandeep ask you to ask that question? Sandeep and the loyalty team are incredible contributors and highly valued. And I wouldn't go on title or definition. I've got great visibility to Sandeep and I see him just about every week on it. So, he’s a great asset to the Company as well as his entire team.

Thank you.

And now, we'll move to a question from Catherine O'Brien with Goldman Sachs. Catherine O’Brien: So, year-to-date, you've been seeing some nice growth in your -- some of your non-ticket revenue categories like travel related services and, of course, loyalty revenue with the new Amex deal. Could you maybe walk us through some of the puts and takes on these non-ticket revenue streams into next year? Is there still room left to add some more products or should we expect to see growth accelerate in some of your ancillary businesses? Thanks.

Well, I'll talk a little bit about premium products and maybe turn that over to Gil for some of the ancillaries like the MRO. Clearly, we see room for growth there. And that's been on a different trajectory than base ticket fares. And as you saw, we grew premium products by 9% in the quarter, which was above the, of course, average of the total revenue growth at 6.5%. So, we continue to see that moving forward. And it's really, we think, our ability to a, price those products, given the increasing demand that we see from consumers on them, but b, also continuing to increase the number of channels we distribute them through. And as you know, we've been working to do that more on our digital channels but also through -- there are travel management companies and our partnerships and through the OTAs. And we're seeing some great early results on that. But, it's got ways to go over the next years -- months and years. So, we continue to see that as -- being able to grow even through maybe a challenging economic environment.

Yes. Hi. This is Gil. I would just add -- first, just a shout out to our tech ops team for -- I mean, they are the best in the business. But the MRO business for us year-to-date is up about $120 million year-over-year, about 23%. So, we're seeing strong growth in the current year. As you look forward, some of the investments that we've made in terms of capacity for new generation engines, in particular the Rolls-Royce Trent engine and the Pratt & Whitney geared turbofan, those volumes start to ramp next year as well, albeit those will mature in three or four years. But, we'll benefit from some of that tailwind as well in the MRO business as we move forward. Catherine O’Brien: That's great. Thanks. And then, maybe just one quick follow-up on costs. And I think, you already alluded to this Ed, but I just want to make sure I've got it right. In your 2020 CASM outlook, the 2% to 3%, there is a potential new pilot deal that is contemplated in that number. Is that correct?

Katie, I'll take that. We are not going to comment to pilot deal or in any nature. 2% to 3% is our best estimate where our cost will be next year. We're not going to get into the details relative to our negotiations. Catherine O’Brien: Okay, understood. Thank you very much.

And Jake, we're going to have time for one more question from the analyst.

Great. And that last analyst question will come from David Vernon with Bernstein.

Hi. This is Ran Yang speaking on behalf of David Vernon. So, just to clarify talk go back to the CASM-Ex guide into 2020. The one point step up, is that something that you can potentially offset with other cost initiatives, like One Delta?

One Delta continues to pay big dividends for us. And while we expect the level of investment back into the product and the infrastructure as Ed articulated, we're always striving to find some of that productivity. And as we've said before, we'll detail more about the 2020 cost outlook at Investor Day in December.

Got it. Thank you.

That's going to wrap up the analyst portion of the phone call. I will now turn it over to Tim Mapes, our Chief Communications Officer for the analysts -- or the media portion.

Good morning, everybody, and thank you to the members of the media for holding on. We have a little bit under 10 minutes of time to take questions. I'll just remind everybody, as we said earlier with analysts, please if you would limit your questions to one and so we can get through as many of these as quickly as possible.

[Operator Instructions] And we'll hear first from Elliott Blackburn with Argus Media.

Good morning. Thanks for taking my question. Curious how the Trainer refinery is going to adjust to the higher renewable fuel blending requirements that the Trump administration is proposing begin next year?

Good morning, Elliot. This is Paul. We are in a full compliance with our RINs requirements under the RFS standard and have done a good job of managing through that volatility that we've seen over the last several years. And I'm confidence that the team will be able to continue to address that. We continue to advocate on behalf of small and independent refiners that long-term solutions have to be identified. But, we’re managing through that in the short term.

So, do you think that this -- it doesn't sound like you are concerned that this added cost is going to affect the refinery’s kind of viability long term?

We certainly think that it can result in added costs. We don't believe necessarily that it affects the full viability. But, it does have an economic impact to the region and our ability to continue to drive those results at the refinery.

And now, we'll move to the next question and that will come from David Koenig with Associated Press.

Hey. Good morning. This is for Ed. You gave a figure on TV for hiring this year and next year. Can you go over those targets and how many will be pilots for example? And then, overall, how much of that hiring is just replacing people who retire or leave and how much of it is actually pure growth?

Sure, David. We haven't given out the specifics by job classification for next year. But, we've been hiring at a rate of about 6,000 new employees coming into the Company for the last couple of years, and we expect again going forward, next year, at a similar level. Pilots are going to be increasing in numbers due to retirements. The retirement age really starts to ramp up in the next two to three years. And so, those numbers are going to grow as well as to accommodate some of the growth that we've seen in the business. And one of the things that we'll be doing a bit differently than we did this past year is we're going to be hiring earlier in the year and continue to keep the hiring going through the year rather than have it in more discrete period. So, we'll have all of our new hires in position hopefully ready to handle as much of the new volume that's going to be coming in next year, not the [indiscernible]. In total, I'd say the -- probably at least half of the 6,000 we're talking about are retirement, replacement of workers that are retiring, half to two-thirds; and then, there is kind of some growth as well.

Okay. I'm a little unclear about pilots. Will you grow the overall number of pilots, or next summer you'll have more? Okay.

We just haven't given the number, but we're going to be growing our pilot hiring too. Yes.

Okay. Got it. Thank you.

And next, we'll hear from Ted Reed with Forbes.

I have two questions. First for Glen, if I look at what you're doing this quarter, it seems like you're growing at southern most major airport on the East Coast in Miami and then northern most in Boston. Is that a good way to look at it?

I don't think we've announced any plans to grow Miami yet. But, as I outlined in the earlier call, I think, we will add some key spokes into Miami. It won't be giant. But, I think we have had a successful growth in Boston. And as you know, this past quarter, we just took back our terminal. That terminal was constructed almost 15 years ago and opened, and this is the first time that we've occupied the terminal that was built for Delta. And I would assume that we will be the leading carrier in Boston in terms of revenue in 2020. So, yes, we've done a lot of growth in Boston.

Secondly for Ed. As you look at the impact of the tariffs, is your response -- your ability to respond going to be based on Mobile and taking more production from Mobile? And do you have any priority in getting the production from Mobile?

Well, certainly Mobile is going to be very important for us going forward. And that's -- yes, that's going to be the focus of our domestic strategy to be getting our 220s, our 321s via Mobile as Airbus continues to ramp up that production capability. I'm not going to get into any longer term ideas we have because obviously it doesn't necessarily help you on the wide bodies. But, we're evaluating options there. And as I said, our goal is to mitigate any potential tariff exposure.

Now, Leslie Josephs with CNBC, we'll have the next question.

Hi. Good morning. Thanks for taking my question. This is about basic economy. I've been noticing the fare differences between main cabin and basic seem to be going up, I mean across various routes when you guys started -- I know you started a long time ago. But, maybe a couple of years ago, it was like $30, $40, now seeing sometimes $100. Is that kind of across the board? What kind of benefit are you seeing from that?

Well, basic economy is not something that we want to grow. It's not really a premium product. And as we've outlined before, defensive product against ULCCs, we want to have best-in-class product whatever people's needs are. And for people who only care about the lowest fare possible, I think, we have by far the best offering. And the differential between that and the main cabin, it hasn't been an intentional shift in separating those out. But, I think what we're testing in many cases is what are people willing to pay for that. And sometimes in business markets, it's a bigger differential. And I think maybe that's what you're looking. At a market basket level of all markets, the difference has only been a couple of dollars different. But, I think at individual market levels, it may be greater.

Okay. When did that start, that larger gap? It was about $30, $40 just a couple of years ago.

Yes. I think you'd have to give us what markets you're looking at because each one of the markets is managed individually.

Okay. Like transcon, for example.

All right. Well, again, I think, we can get back to you with some more details. But, the intent has not been to move up the ladder significantly.

We'll take our final question today from John Biers with AFP.

Hi. Thank you for taking my call. We've seen a fair bit of data showing that there is weakness in the manufacturing sector in the U.S. right now. There is a strike that's been going on for weeks now in Detroit, which is one of your hubs. Are you seeing any weakness right now in your demand forecast looking forward for the U.S. in general? There's -- obviously we've had more talk about possible recession in the next couple of years. Any shift at all, any weakness compared with a few months ago?

John, this is Ed. No, not at all. We had a -- as we've mentioned a number of times on this call, we had record summer in terms of both volumes and revenues. So, all time high revenues for us. And the domestic system is what produced those records. Our domestic revenues were up 8% in the third quarter. And we continue to see advanced bookings, the domestic consumer being quite strong. We expect the holiday period to be a strong period. Looking ahead, we don't have a great view into 2020 since it's pretty early for us on our booking curve, but the -- our business is heavily levered to the U.S. consumer. And the U.S. consumer is doing quite well and is preferring Delta.

Thank you.

With that, we'll conclude today's call. As has been mentioned earlier, we look forward to seeing everybody on December 11th and 12th here in Atlanta. And we're grateful for your time today. Thank you.

And once again, ladies and gentlemen, this does conclude your conference for today. We do thank you for your participation. And you may now disconnect.