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  • Joe Breitfeller

Delta Air Lines Reports Third Quarter 2020 Pre-tax Loss of $6.9 Billion on Revenue of $3.1 Billion

The carrier reported an adjusted pre-tax loss of $2.6 billion or $3.30 per share on an adjusted revenue of $2.6 billion. Delta Air Lines closed the third quarter with a total of $21.6 billion in liquidity.

Delta Air Lines Airbus A330-900 - Courtesy Airbus

On Tuesday (October 13, 2020), Delta Air Lines reported a third quarter 2020 GAAP pre-tax loss of $6.9 billion or $8.47/share on a total revenue of $3.1 billion. The airline’s adjusted pre-tax loss was $2.6 billion or $3.30/share on an adjusted revenue of $2.6 billion. The adjusted pre-tax loss excludes $4.0 billion in items directly related to the impact of the global COVID-19 pandemic including fleet restructuring charges, voluntary separation and early retirement programs, which were partially offset by a U.S. Cares Act grant. Delta’s total adjusted revenue of $2.6 billion declined year-over-year by 79 percent on 63 percent lower capacity.

Operating expenses, including $4.0 billion in COVID-19 related items declined $1.0 billion compared to the same period last year. Total adjusted operating expenses, including COVID-19 related items and third party refinery sales, decreased $5.5 billion or 52 percent versus Q3 2019, on lower capacity and revenue related expenses, as well as strict cost management. The carrier’s expense performance was driven by a 78 percent reduction in fuel expenses, a 75 percent reduction in maintenance expenses and a 32 percent reduction of salary and benefit expenses, attributable to the separation of approximately 18,000 employees. In Tuesday’s announcement, Delta Air Lines’ Chief Executive, Ed Bastian, said,

“While our September quarter results demonstrate the magnitude of the pandemic on our business, we have been encouraged as more customers travel and we are seeing a path of progressive improvement in our revenues, financial results and daily cash burn. The actions we are taking now to take care of our people, simplify our fleet, improve the customer experience, and strengthen our brand will allow Delta to accelerate into a post-COVID recovery.”

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

Delta Air Lines ended the third quarter with $21.6 billion in liquidity. During the quarter, the carrier expended $2.6 billion for operations with an average daily cash burn of $24 million, reduced to $18 million/day during September 2020. Delta ended the third quarter $34.9 billion in total debt and finance lease obligations and an adjusted net debt of $17.0 billion, an increase of $6.4 billion versus the close of the fourth quarter 2019. The company raised $9.0 billion in Q3 through the largest debt offering in aviation history by leveraging their SkyMiles loyalty program. The blended average interest rate for the transaction is 4.75 percent. Additionally, Delta borrowed $1.5 billion at a blended yield of 4.4 percent with the issuance of tax-exempt bonds to finance their LaGuardia Airport project.

Estimated Fleet Retirement Schedule - Courtesy Delta Air Lines

Before the end of the quarter, Delta repaid a $3 billion 364-day term loan originated in March, increasing their unencumbered asset base to $9 to $10 billion of aircraft, engines and spare parts. The airline also repaid $2.6 billion drawn dawn in March under their revolving credit facilities, reducing their remaining debt amortization and maturities to $2.3 billion through 2021. During the third quarter Delta made the decision to retire their Boeing 717-200 fleet, the remainder of their 767-300ER fleet by 2025 and its CRJ-200 fleet by 2023, which resulted in a fleet-related restructuring charge of $2.2 billion. The carrier also recorded a restructuring charge of $3.1 billion associated with programs related to the separation of approximately 18,000 employees.

Delta Air Lines is the U.S. global airline leader in safety, innovation, reliability and guest experience, driven by their worldwide workforce. Since the onset of the global COVID-19 pandemic the carrier has transformed the industry standard of clean, while offering guests more space through the blocking of middle seats. The airline’s mission is to connect people and cultures around the world to help foster understanding and serve as a force for social good. In trading Tuesday morning (October 13, 2020), shares in Delta Air Lines, Inc. (NYSE: DAL) were 2.54% lower at $31.81/share (11:17 AM EDT).

Source: Delta Air Lines