Delta posts $5.38 billion 3Q loss as pandemic hammers travel
The summer travel season was even worse than expected for Delta Air Lines, which lost $5.38 billion in the third quarter as people hunkered down at home during the pandemic.
Most of the loss stemmed from the cost of paying people to quit and writing down the value of assets including planes destined for resale or the scrap yard. The rest was linked to a 76% plunge in revenue.
Delta, the first U.S. airline to release third-quarter numbers, said that passenger revenue fell less sharply than in the second quarter, when compared with a year-earlier profit of $1.5 billion, and CEO Ed Bastian predicted further improvement the rest of the year.
'œIt's slow, but it's steady - week by week, they are coming back,'ť Bastian said of passengers.
The number of people screened at U.S. airports is down more than 65% this month, compared with last October. Still, that's better than the 68% decline in September and the 71% drop in August.
Still, the loss comes on top of a previous loss of nearly $5.7 billion in the second quarter, when the pandemic brought air travel to a near standstill. Since then, Delta has concentrated on hoarding cash - it raised $9 billion by mortgaging its frequent-flyer program - and cutting costs.
Delta reduced its cash-burn rate to $18.4 million a day in September from $26.1 million in July and August, and Bastian predicted it could reach break-even cash flow by spring. Investors are watching cash as a gauge for how long carriers can last in the industry's current depressed state.
The slower cash burn comes with a human price, however: It is possible in part because Delta has fewer than half the active staff of 91,000 it had in January. About 40,000 are taking unpaid leave and nearly 20,000 others took buyouts or early retirement.
The large number of voluntary departures has let Delta avoid layoffs, in sharp contrast to American Airlines, which furloughed 19,000 employees this month, and United Airlines, which cut 13,000.
Delta could still furlough 1,700 pilots next month if the union doesn't agree to contract concessions or if Congress and the White House don't provide more aid for the airline industry.