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Delta Air Lines Announces Second Quarter 2020 Pre-Tax Loss of $7 Billion on Revenue of $1.5 Billion

Delta Air Lines announced on Tuesday a second quarter 2020 pre-tax loss of $7.0 billion or $9.01 per share on an $11.0 billion revenue decline to $1.5 billion. The carrier reported an adjusted pre-tax loss of $3.9 billion or $4.43/share on an adjusted revenue of $1.2 billion.

Delta Air Lines Airbus A321 - Courtesy Delta Air Lines

Today (July 14, 2020), Delta Air Lines (NYSE: DAL) was the first major U.S. carrier to announce their second quarter financial results. The airline reported a quarterly pre-tax loss of $7.01 billion or ($9.01) per share on an over $11.0 billion revenue decline to $1.5 billion. Delta’s second quarter adjusted pre-tax loss was reported at $3.9 billion or ($4.43)/share on an adjusted revenue of $1.2 billion. The carrier’s adjusted pre-tax loss of $3.9 billion does not include $3.2 billion in items related directly to the impact of COVID-19 and the airline’s response including fleet restructuring, equity investment write-downs and a second quarter CARES Act grant benefit. Delta's adjusted quarterly revenue of $1.2 billion (excluding refinery sales) declined 91% year-over-year on a capacity reduction of 85 percent. The company's adjusted operating expenses for the quarter decreased $5.5 billion or 53 percent versus last year. In Tuesday’s announcement, Delta Air Lines’ Chief Executive Officer, Ed Bastian said,

“A $3.9 billion adjusted pre-tax loss for the June quarter on a more than $11 billion decline in revenue over last year, illustrates a truly staggering impact of the COVID-19 pandemic on our business. In the face of this challenge, our people have acted quickly and decisively to protect our customers and our company, reducing our average daily cash burn by more than 70 percent since late March to $27 million in the month of June. Given the combined effects of the pandemic and 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. In this difficult environment, the strengths that are core to Delta’s business – our people, our brand, our network and our operational reliability – guide every decision we make, differentiating Delta with our customers and positioning us to succeed when demand returns.”

Delta Air Lines Reports Second Quarter 2020 Financial Results - Courtesy Delta Air Lines

Delta Air Lines ended the second quarter with $15.7 billion in liquidity. The company raised nearly $15 billion since early March at a blended interest rate of 5.5 percent, including unsecured funds received as part of the U.S. CARES Act Payroll Support Program (PSP) provision. The company expects to reduce their cash burn to “breakeven” by the end of the year and has extended maturities of $1.3 billion of revolving credit borrowings from 2021 to 2022. Delta Air Lines continues to evaluate financing opportunities by leveraging unencumbered assets and is eligible for secured loans of up to $4.6 billion under the CARES Act. The company has until September 30, 2020 to decide if they will participate in the secured lending program. At the end of the June quarter, the company had total debt and finance lease obligations of $24.6 billion and an adjusted net debt of $13.9 billion.

Delta is also simplifying their fleet with the accelerated retirement of their entire MD-88/90, Boeing 777 and 737-700 fleets as well as some 767-300ERs and Airbus A320s in 2020. Taking advantage of the reduced demand environment, the carrier has accelerated airport construction projects in Los Angeles, New York-LaGuardia and Salt Lake City to shorten timelines and reduce costs. Additionally, Delta is proactively managing their headcount through early retirement programs which include cash severance, fully paid health coverage and enhanced retiree healthcare and travel privileges for eligible participants.

In trading Tuesday morning, shares in Delta Air Lines, Inc. (NYSE: DAL) were down 2.95 percent at $26.03/share (11:09 AM EDT).

Source: Delta Air Lines


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