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Delta posts worst loss since 2008 and cuts flights

Delta Air Lines posted a nearly $6 billion loss for the past three months, its worst loss since 2008, and warned that bookings are declining as Covid-19 cases rise.

Delta had planned to add 1,000 flights a day to its August schedule as it and other airlines reported a modest pickup in bookings for June and July. Although Delta initially added 1,000 flights a day to its August schedule, CEO Ed Bastian confirmed it will now add only 500 as rising coronavirus cases in southern states and quarantine rules on travelers to the Northeast were put in place.

“The recovery will be choppy waves,” Bastian said during Delta’s earnings call Tuesday. “There isn’t a clear timeline when international borders will open for us travelers. So, it’s against that uncertain backdrop that we are taking the industry’s most conservative approach to capacity.”

Bastian added that Delta is focused on “creating a new, stronger Delta — albeit one that will need to be smaller for the next several years.”

The airline posted an adjusted net loss of $2.8 billion. Though, that figure “excludes several items directly related to the impact from Covid-19 and our response,” said Paul Jacobson, Delta’s chief financial officer, such as a $2.5 billion impairment charge and $2.1 billion in writedowns.

Including those items, Delta’s net loss came to $5.7 billion.

It’s the worst loss since Delta took $6 billion in charges in 2008 in the wake of its bankrutpcy. But this was far worse than that non-cash accounting loss. It burned through $43 million of cash a day during the course of the quarter.

Bastian referred to it as the worst quarter in the company’s history.

“Given the combined effects of the pandemic and associated financial impact on the global economy, we continue to believe that it will be more than two years before we see a sustainable recovery,” he said in the company’s earnings statement.

Revenue plunged 91%, as demand for air travel across the industry essentially came to a halt early in the quarter. Bastian said he expects summer travel to be 20% to 25% of normal levels.

Business travel, Bastian added, may never return to previous levels now that companies are growing more efficient at using web-based meetings.

“I do think there’s a lot of inefficiency, which we can all appreciate in business travel,” Bastian told investors. “The international trips that we’ve all been on — where we’ve flown over to Europe for a two-hour meeting and flown back that does nothing but beat you up — can certainly be much easily better accommodated over a video call.”

Bastian also said that 17,000 Delta employees, nearly 20% of its staff, had taken buyouts and early retirement packages, raising hopes that the airline will be able to get by without involuntary layoffs later this year. But Bastian said it is too soon to say if it will be able to avoid job cuts. US airlines are not allowed to have involuntary furloughs or layoffs before October 1 under terms of the federal bailout they received.

Most other US airlines are due to report results next week in what is expected to be a historically bad quarter for the industry.

—CNN’s Jackie Wattles contributed reporting.

Correction: An earlier version of this story incorrectly reported the year of Delta’s previous loss of this size. Additionally, the story and headline have been updated to better reflect the scope of the airline’s losses.

CNN

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