Delta Expects To Break Even in June After Quarterly Loss of Nearly $1.2 Billion
Atlanta-based carrier Delta Air Lines announced Thursday a bigger-than-expected loss of nearly $1.2 billion for the first quarter of 2021.
Delta and other airlines have felt the effects of the COVID-19 pandemic, but are remaining hopeful that vaccination rollouts and lifted restrictions will encourage more people to travel. “A year after the onset of the pandemic, travelers are gaining confidence and beginning to reclaim their lives,” said Delta CEO Ed Bastian.
The airline said it will stop blocking middle seats on May 1, which could result in improved revenue for the second half of 2021. “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,” Bastian said, as reported by CNBC.
Delta expects a positive cash generation for the second quarter, with adjusted revenue for the period to fall between 50% and 55% from 2019. The carrier also reported an average cash burn of $11 million per day for the first quarter, which turned positive in March with cash generation of $4 million per day. This marks a significant improvement compared to March 2020 when Delta experienced a cash burn of $100 million per day.
Bookings in March doubled compared to January; however, corporate travel demand is just 20% of the average for this time of the year, Bastian told CNBC.
“We expect positive cash generation for the June quarter and see a path to return to profitability in the September quarter as the demand recovery progresses,” Bastian stated in the March quarter earnings release.
Delta anticipates receiving $2.7 billion in June from the U.S. Treasury under the third extension of the Payroll Support Program, which provides federal aid to maintain employment in the airline industry. The carrier ended the March quarter with $16.6 billion in liquidity, including $2.6 billion in undrawn revolver capacity.
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