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Delta posts $398 million profit, aided by US pay support

Delta Air Lines became the first major carrier to record a return to annual profit as it reported a pre-tax profit of $398 million for 2021 and profits after tax of $280 million.

The result was despite Delta recording a loss of $395 million in the final quarter of the year and marked a turn around from a $4.5 billion net loss in 2020.

However, the turnaround would not have occurred without $3.8 billion received through the US government’s Payroll Support Programmes (PSP), US equivalent of the UK furlough programme. Excluding this, the airline reported an ‘adjusted’ pre-tax loss of $3.4 billion.

The final profit for the year also contrasts with a $4.8 billion pre-Covid profit in 2019 – or $6.2 billion before tax.

The improvement came overwhelmingly in the third quarter of the year with Delta recording a pre-tax profit of $1.1 billion for the second half of 2021 despite the fourth-quarter loss.

The carrier reported operating revenue of just under $30 billion for 2021, 36% down on 2019. Passenger revenue for the year was 53% of the 2019 level at $22.5 billion.

Delta chief executive Ed Bastian said: “2021 was a year like no other, with significant progress in our recovery enabling us to be the only major US airline to deliver profitability across the second half of the year.

“While the rapidly spreading Omicron variant has significantly impacted staffing levels and disrupted travel, Delta’s operation stablised over the last week. Omicron is expected to temporarily delay the demand recovery [by] 60 days, but we’re confident in a strong spring and summer travel season.”

The airline reported domestic passenger revenue reached 78% of pre-Covid levels in the final quarter of 2021, but international revenue remained at only 50% of the 2019 level. Transatlantic capacity was at 58% of the 2019 level in the fourth quarter, Latin America capacity at 92%, but trans-Pacific capacity just 31% reflecting the continuing restrictions in China and Southeast Asia.

Bastian forecast Delta would operate 83%-85% of capacity through the first three months of this year.

 

Glen Hauenstein, Delta’s president, added: “We ended December with revenues nearly 80% recovered to 2019 levels on strong demand and pricing during the holiday period.

“We saw encouraging trends in business and international travel.

“The recent rise in Covid cases associated with the omicron variant is expected to impact the pace of demand recovery early in the quarter, with recovery momentum resuming from President’s Day weekend forward [February 21].

“We expect total March quarter revenue to recover to 72-76% of 2019 levels, compared to 74% in the December quarter.”

Picture by NextNewMedia/Shutterstock.com 

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