| | | Delta posts nearly $1.2 billion quarterly loss, expects to break even in June as bookings improve
By Leslie Josephs - APR 15 20219:58 AM EDT
* Delta says domestic leisure bookings have recovered to 85% of 2019 levels.
* The airline expects to break even in June but still expects to post a pretax loss of up to $1.5 billion in the second quarter.
* Delta’s cash burn turned positive in March, generating $4 million a day.
Delta Air Lines on Thursday reported another quarterly loss but said it will likely break even in June as travel demand rebounds from a deep pandemic slump.
Delta and its competitors continue to lose money but have grown upbeat about an improvement in bookings as more travelers are vaccinated, travel restrictions lift and more attractions reopen. The airline said domestic leisure bookings recovered to about 85% of 2019 levels, though international and business travel remain depressed.
The Atlanta-based carrier posted a net loss of $1.18 billion on $4.15 billion in revenue for the first quarter, topping analyst estimates for sales of $3.91 billion. Revenue was down 60% compared with the $10.47 billion Delta generated in the first quarter of 2019. On an adjusted basis, Delta posted a loss of $3.55 a share compared with a forecast of $3.17 per share.
Delta’s shares were down more than 2% in morning trading.
Bookings in March doubled f rom January, CEO Ed Bastian told CNBC’s ? Squawk on the Street.” However, he added that corporate travel demand is just 20% of the norm for this time of year.
“When I look at the first quarter, what’s been clear to us is that our business has made a turn,” Bastian said. “We’ve seen a huge surge in bookings just over the last couple of months.”
Bastian said in an earnings release the company expects “positive cash generation for the June quarter and see a path to return to profitability in the September quarter as the demand recovery progresses.”
Here’s how Delta performed in the first quarter compared with what Wall Street expected, based on average estimates compiled by Refinitiv:
Adjusted results per share: a loss of $3.55 versus an expected loss of $3.17 a share
Total revenue: $4.15 billion versus expected $3.91 billion in revenue
Delta forecast its second-quarter revenue to be 50% to 55% lower than the same period of 2019 on scheduled capacity that’s a third lower than two years ago. Its expenses, stripping out the cost of fuel, will be up 6% to 9% this quarter, it said.
The carrier is the last U.S. airline to block middle seats, a practice that began earlier in the pandemic to help customers feel more comfortable flying. Next month, Delta will abandon that practice.
A Centers for Disease Control and Prevention study published Wednesday said that laboratory modeling that physically distancing passengers on board could reduce exposure to the virus that causes Covid-19 by up to 57%. The study didn’t account for facemasks, which are federally required on flights.
Bastian defended the decision to sell all seats on Delta’s planes and dismissed the study’s conclusions because researchers didn’t take pandemic safety protocols into effect.
“Our experts tell us that with vaccination rates where they’re at and demand being as strong as it is it’s absolutely safe to sit in that middle seat,” he said.
The carrier’s executives will hold a call with analysts to discuss results at 10 a.m. ET.
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