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Delta Drops $15.6 Billion Over Year Lost to COVID-19

Delta Drops $15.6 Billion Over Year Lost to COVID-19
Joe Cortez

Delta Air Lines is the first major American carrier to announce their financial results from 2020 – and the truth is as bad as we expected. The Atlanta-based carrier posted a $15.6 billion GAAP pre-tax loss on total revenue of $17.1 billion, and is now looking towards a three-phase recovery.

The COVID-19 pandemic forced airlines around the world to effectively give up on the year and hope for recovery once it comes to an end. With Delta Air Lines being the first to announce their total results, flyers are now getting a look at how bad it was for airlines. The Atlanta-based carrier announced a total GAAP pre-tax loss of $15.6 billion for 2020, with hopes that 2021 will bring a three-phase recovery plan.

Losses Directly Tied to COVID-19 Pandemic and Lack of Passengers

Looking at the entirety of 2020, Delta says $6.6 billion of their spending was primarily related to the impact of, and their response to, the COVID-19 pandemic. While the spending cut into their bottom line, it was the lack of passengers that hurt the most. The adjusted operating revenue of $15.9 billion declined 66 percent compared to 2019, while the airline had 61 percent lower sellable capacity.

Even their loyalty business, which Delta touted as one of their strongest units, suffered under the weight of the novel Coronavirus. Loyalty-based revenues were cut in half compared to 2019, while “American Express remuneration declined 30 percent compared to prior year to $2.9 billion.”

Moving forward into what the world hopes is the sunset of the pandemic, Delta says they are looking forward to a three-phase recovery this year. While the beginning of the year will be questionable in overall demand, the carrier hopes that passengers will come back to travel in time for the holiday season.

“The early part of the year will be characterized 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,” Glen Hauenstein, Delta’s president, said in the press release. “For each phase, Delta has the levers to pull to successfully react to the emerging demand environment, including tightly matching our sellable capacity to expected demand.”

For all the difficulty of the past year, Delta still found some positives in their performance. The airline avoided employee furloughs through voluntary separation packages, early retirement options and job sharing, while offering pay protections programs for workers exposed to or diagnosed with COVID-19. Delta also doubled their spending with Black-owned businesses, and have the goal of increasing the number of Black officers and directors by 2025.

First Quarter 2021 Projected for 35 Percent Reduced Capacity and Up to $15 Million Daily Cash Burn

Looking ahead to the opening three months of 2021, the airline expects to have their scheduled capacity down by 35 percent, with sellable capacity down by half compared to the same period in 2019. Revenue is expected to be cut by up to 65 percent, while the average daily cash burn is expected to land between $10 million and $15 million.

View Comments (4)

4 Comments

  1. Jack Simpson

    January 15, 2021 at 5:26 am

    More consolidation on the horizon?

  2. Podcat

    January 15, 2021 at 10:16 am

    Wow – $2 lost for every $1 in, $15 million cash burned daily.
    And yet stocks just go up and up.

  3. AsiaTravel2019

    January 15, 2021 at 4:59 pm

    I believe we will see a wave of mergers. JetBlue/Alaska, Southwest maybe Hawaiiian. Also Spirit/Frontier/Allegiant/Sun Country.

    Not sure who will merger with who, but in a Covid world, we have too many airlines.

  4. edgewood49

    January 16, 2021 at 6:50 am

    Podcat I am not sure that DL’s stock and those of others will continue to go up there is a day of reckoning coming with the incoming administration I think your going to see massive .gov spending which is generally the way Democrats operate. I say this as someone that grew up in the DC area went to school there and stayed there professionally for a great deal of my life.

    The other thought is airlines as a whole are / have shrunk their systems how much of that comes back is left to be seen. Does international travel come back, of course it will but to what extent that is the question. All things considered until the greater part of the world population is vaccinated we are at risk.

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