Delta reports near $16bn loss but forecasts ‘year of recovery’

Delta Air Lines has reported a full-year pre-tax loss of $15.6 billion for 2020 and net loss of $12.4 billion, having made a net profit of almost $4.8 billion in 2019.

However, Delta chief executive Ed Bastian insisted: “I’m optimistic this will be a year of recovery and a turning point.”

The carrier reported a full-year ‘adjusted’ loss before tax of $9 billion, excluding $6.6 billion in costs “related to the impact of and response to Covid-19”, following and adjusted loss of $2.1 billion in the final quarter of 2020

Delta ended the year with $16.7 billion in liquidity – including cash and equivalents and undrawn credit – and expects to receive an additional $3 billion from the US Treasury in the current quarter.

The airline’s total debt ballooned to $29 billion although its ‘adjusted debt’ was lower at just under $19 billion – $8.3 billion up year on year.

Delta reported its scheduled capacity would be 35% down year on year in the first quarter of this year and capacity on sale down 55% as the airline continues to keep all centre row seats empty. Capacity for sale in the final quarter of last year was down 62%.

Delta president Glen Hauenstein said: “We see three distinct phases in 2021.

“The early part of the year will be characterised by choppy demand recovery and a booking curve that remains compressed, followed by an inflection point, and finally a sustained demand recovery as customer confidence gains momentum, vaccinations become widespread and offices re-open.

He said: “For each phase, Delta has the levers to pull to successfully react to the emerging demand environment, including tightly matching sellable capacity to expected demand.”

Delta owed $4.5 billion in refunds to customers for cancelled flights at the end of the year, with about 65% comprising ‘travel credits’.

The airline refunded “more than $3 billion to customers” in 2020 and has extended the validity of travel credits through to December 2022.

Bastian reported a 20% reduction in Delta’s workforce over the year, with almost 18,000 employees departing, but wage costs were cut 34% due to reduced hours and unpaid leave.

The carrier’s operating expenses fell 40% year on year, with average daily cash burn reduced to $12 million a day in the final quarter of 2020, down from $24 million in the third quarter and almost 90% down on March 2020.

Interim co-chief financial officer Gary Chase forecast the carrier would reach “cash break even in the spring”.

Share article

View Comments

Jacobs Media Group is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.