A Delta Air Lines plane lands at Los Angeles International Airport
Mario Tama | Getty Images
Delta Air Lines cut its cash burn in half and narrowed its losses in the fourth quarter, as the coronavirus pandemic took the carrier to the worst year in its history, the company said on Thursday.
The Atlanta-based airline posted a net loss of nearly $ 12.39 billion in 2020, a record, according to data from FactSet.
See how Delta fared compared to what Wall Street expected, based on the average estimates compiled by Refinitiv:
- Adjusted EPS: a loss of $ 2.53 against an expected loss of $ 2.50
- Total revenue: $ 3.97 billion, adjusted to support sales of the $ 3.53 billion refinery
Delta posted a net loss of $ 755 million in the fourth quarter, compared with a profit of $ 1.1 billion the previous year. Total revenue fell 65% from $ 11.44 billion in the fourth quarter of 2019 to $ 3.97 billion. The company’s revenue increased by $ 441 million with sales from third-party refineries. On an adjusted basis, Delta had a loss per share of $ 2.53, compared with analysts’ estimates of a loss of $ 2.50 per share.
The operator’s cash burn was an average of $ 12 million a day in the quarter ended December 31, down by half from the average cash burn of $ 24 million a day in the third quarter. Delta said it expects positive cash flow in the spring.
Delta’s shares rose more than 2% in pre-market trading after Delta reported its results.
The airline will face tough months ahead, but expects a recovery in 2021, with Covid-19 vaccines administered across the country, said CEO Ed Bastian.
“As our challenges continue in 2021, I am optimistic that this will be a year of recovery and a turning point that will result in an even stronger Delta, returning to revenue growth, profitability and free cash generation,” said Bastian.
Delta said it expects revenue to drop 60% to 65% in the first quarter of the year, compared to the previous year, just when the pandemic was starting. This is below analysts’ estimates for a 48% drop year over year.
The pandemic has devastated travel demand as concerns about the virus, quarantines, travel restrictions and business travel breaks have kept millions of potential customers at home. The Transportation Security Administration screened just 324 million travelers last year, up from 824 million in 2019.
Airline executives hope that the launch of vaccines will provide some relief, but repeatedly warn that it will not be immediate.
“The first part of the year will be characterized by an unstable recovery in demand and a reserve curve that remains compressed, followed by an inflection point and, finally, a sustained recovery in demand as customer confidence gains momentum, vaccinations become widespread. and the offices reopen, “Delta President Glen Hauenstein said in a earnings statement.
Delta said it ended the fourth quarter with $ 16.7 billion in liquidity. Delta raised billions in debt last year, including a record $ 9 billion debt sale backed by its SkyMiles frequent flyer program.
The operator and its rivals are also receiving additional federal funds to help tackle the crisis. Congress approved late last year $ 15 billion in additional federal aid for airlines to pay workers, in addition to another $ 25 billion in support of the government payroll they received under the CARES Act in March.