Published on : Saturday, January 16, 2021
Delta Air Lines recently reported a pre-tax loss of $15.6 billion for financial 2020, representing a loss per share of $19.49 on total revenue of $17.1 billion. In the December quarter alone, the carrier saw pre-tax losses of $1.1 billion. Total operating expenses at Delta, including $4.3 billion of COVID-19 related and other items, decreased $10.8 billion in 2020 over the prior year.
However, the carrier said it ended the December quarter with $16.7 billion in liquidity. Cash used in operations during the quarter was $1.3 billion. Daily cash burn averaged $12 million for the quarter, down from $24 million per day in the September quarter. Ed Bastian, Chief Executive, Delta Airlines said in a statement that the December quarter results capped the toughest year in Delta’s history.
Gary Chase, Interim Co-Chief Financial Officer, Delta added that while the challenges continue in 2021, he is optimistic that it will be a year of recovery and a turning point that will result in an even stronger Delta returning to revenue growth, profitability and free cash generation. He shared that the airline has reduced its average daily cash burn to $12 million in the December quarter, a reduction of nearly 90 per cent since the early days of the pandemic in March, as it progresses towards achieving cash break in the spring.
He also mentioned that the remaining agile and discipline with cost structure will be the key to the carrier’s success, and when combined with an improving demand environment, it will allow returning to the free cash flow generation needed for debt reduction. Glen Hauenstein, President, Delta Air Lines shared that three distinct phases can be seen in 2021.
He stated that for the early part of the year will be characterised by choppy demand recovery and a booking curve that remains compressed, followed by an inflection point, and finally a sustained demand recovery as customer confidence gains momentum, vaccinations become widespread and offices re-open. He also mentioned that for each phase, Delta has the levers to pull to successfully react to the emerging demand environment, including tightly matching the sellable capacity to expected demand.