Delta Air Lines (DAL) reported a sharp drop in second-quarter revenue and profit on Tuesday as the COVID-19 pandemic affecting the travel industry devastated the company’s results.
These were the main results of the report, compared to the consensus estimates compiled by Bloomberg:
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Revenue: $ 1.2 billion vs. $ 1.43 billion expected
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Adjusted loss per share: $ 4.43 vs. $ 4.22 expected
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Adjusted loss before tax: $ 3.9 billion
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Loss of adjusted net income: $ 2.81 billion vs. $ 2.66 billion expected
With global travel demand crushed by the coronavirus pandemic, Delta CEO Ed Bastian said in a statement that the quarterly results “illustrate the truly amazing impact of the COVID-19 pandemic on our business.”
Over the past year, the company lost more than $ 11 billion in revenue, but raised nearly $ 15 billion in financing, including $ 5.4 billion in loans and grants from the United States Treasury under the Aid Act, Relief and Economic Security (CARES) of Coronavirus. In exchange, Delta agreed not to suspend employees, if necessary, until October 1.
Delta says it had $ 15.7 billion in liquidity at the end of the second quarter, with the option to borrow an additional $ 4.6 billion from US taxpayers.
However, the airline posted total adjusted revenue of $ 1.2 billion, representing a staggering 91% drop from the same period last year, as Delta was forced to reduce capacity by 85%. Still, the company intends to join other airlines by spending more on anti-coronavirus cleanup protocols.
Meanwhile, passenger traffic decreased 93% in the second quarter compared to the same period last year. As a result, Delta intends to withdraw its fleet of MD 88, MD 90, 777, and 737-700 aircraft.
The airline reduced its total operating expenses by $ 5.5 billion during the quarter, as more than 40,000 employees took voluntary leave protected by the CARES agreement. Delta also parked more than 700 aircraft, helping it reduce its average daily cash consumption from $ 100 million to $ 43 million. In June it fell to $ 27 million.
Like other major airlines, Delta has resorted to extraordinary measures to survive coronavirus blockages. Last week, United Airlines cut plans to add 25,000 flights to its schedule in late August. United (UAL) also warned that it may have to lay off as many as 36,000 employees.
Bastian told Yahoo Finance last month that he planned to add just 1,000 flights by the end of August, and that he would do everything possible to avoid layoffs, adding that the “signal signal” will arrive on October 1.
“That’s when permitting restrictions will be removed and my goal, at Delta, is to avoid permits in any way we can,” Bastian said.
Passenger traffic at the nation’s airports continued to improve last week, but the TSA says the improvement grew at a slower rate, 8%, than the previous two weeks when it grew 12%. General traffic through TSA checkpoints decreased 73% year-over-year.
Meanwhile, the resurgence of coronavirus infections has not helped at all. Raymond analyst James Savanthi Syth told clients in his latest note that the slowdown in demand “is indicative of … recent increases in COVID-19 in selected states.”
Bastian reiterated his warning that Delta will be a smaller airline after the pandemic. “Given the combined effects of the pandemic and the associated financial impact on the global economy, we continue to believe that it will be more than two years before we see a sustainable recovery.”
The company’s shares, which have halved in the past year, traded around xxx in pre-market stock. Delta lost 1% to close Monday’s session around $ 26.82.
