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Delta Air Lines closed the books on a disastrous 2020 with a relatively small loss in the fourth quarter, and executives expect a few more difficult months before – they hope – widespread coronavirus vaccinations and testing could save something for the upcoming summer travel season.
Delta on Thursday reported a quarterly loss of $ 755 million and $ 12.4 billion in losses for all of 2020. This is the largest annual loss in the history of the airline. , which dates back to the 1920s, and the global pandemic ended a decade in which Delta reversed a profit each year.
Fourth-quarter numbers would likely have been worse without an increase in air travel in December which likely contributed to another rise in viral infections as millions of people crossed the United States to spend time with family and friends during the holidays.
Delta is the first major U.S. airline to release year-end financial results and the numbers suggest larger losses to come as other carriers post quarterly results. Air travel to the United States in the fourth quarter fell by more than 60% from the previous year, as travel restrictions and fear of contracting the virus kept most travelers on the ground.
Much like most of last year, the 2021 outlook for Delta and other airlines is tied to how quickly the United States and other countries can vaccinate enough of its citizens against the coronavirus so that restrictions travel can be relaxed.
Delta predicts that first quarter revenue will fall 60% to 65% from the same period in 2019 – almost the same as the 65% drop in the fourth quarter. He expects to lose $ 10 million to $ 15 million a day over the next three months. After that, however, Delta sees it right.
CEO Ed Bastian is sticking to a prediction that Delta will break even in the second quarter.
“Hopefully the vaccines will be distributed at a much higher level, the virus will be much more contained and people will be ready to move on with their lives,” Bastian said.
People will be planning a summer vacation soon, and, Bastian said in an interview, Delta expects reservations to “start opening again.”
However, international travel and business travel, two lucrative sources of revenue for the Atlanta airline and its rivals, are expected to recover more slowly than less profitable domestic leisure travel.
Bastian said he expects international travel this summer to be better than 2020, “a very low bar,” but it will take another 12 to 18 months to fully recover. And in the second half of this year, business travel will still be only 25-50% of what it used to be, he said.
So far in January, air travel to the United States is down almost 60% from a year ago. While this is a huge improvement from last April, when travel fell 95%, public health officials are once again asking people to avoid travel.
The Christmas and New Years gatherings may have contributed to a recent increase in reported cases of COVID-19. The seven-day moving average of daily new cases in the United States has risen over the past two weeks from around 182,000 to 249,000, according to data from Johns Hopkins University.
Excluding some one-time gains, Delta’s fourth quarter loss was $ 2.53 per share. It was close to Wall Street expectations. Analysts polled by FactSet were looking for a loss per share of $ 2.50.
Revenue fell to $ 3.97 billion from $ 11.44 billion a year earlier, as the pandemic barely began to affect travel to the United States. The figure was $ 30 million more than predicted in the FactSet survey. Services between the United States and Asia and Europe were particularly hard hit, down nearly 90%.
The average flight was 42% full in the last quarter, up from 86% a year earlier.
Delta cut its flight schedule, saving it $ 1.3 billion on fuel. The buybacks and early retirements allowed the company to reduce its spending on salaries and benefits by $ 1 billion.
Despite all the grim travel statistics since the start of the pandemic, there has been less talk of possible bankruptcy filings by US carriers recently. Aided by two rounds of government aid and additional billions from issuing new debt, Delta ended 2020 with $ 16.7 billion in cash.
Delta shares were up nearly four percent at the opening bell.
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