Delta posts US$5.7 billion quarterly loss as it cuts projected flight increases by 50%

As the COVID-19 pandemic shows no sign of receding and numbers of reported cases increasing in over 35 U.S. states, the uncertain demand for future air travel has seen Delta Air Lines (Delta) halve its anticipated 1,000 flight increase for the month of August to just 500 flights.

Having posted a net quarterly loss of US$5.8 billion, it’s worst result since 2008, and currently operating at a cash burn rate of approximately US$27 million on a daily basis, the U.S. carrier, which is the world’s second-largest carrier by number of scheduled passengers carried, revenue passenger-kilometers flown and fleet size, had 19 months of liquidity and US$15.7 billion at the end of the second quarter. Normal daily cash burn for the carrier stood at approximately US$100 million.

“Demand has stalled as the virus has grown, particularly down here in the South, across the Sun Belt, coupled with the quarantine measures that are going in place in many of the Northern states,” CEO Ed Bastian told CNBC’s ‘Squawk Box.’ “Those two factors are causing consumers to pause.” On the subject of corporate travel, which Delta heavily relies on, Bastien doesn’t anticipate that: “we’ll ever get back entirely to where we were in 2019 on the volume of business traffic.,” adding: “I do think there’s a lot of inefficiency, which we can all appreciate in business travel,” he said. “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, and you’d certainly be much easily better accommodated over a video call.”

Delta’s revenue in the quarter ended in June fell 88% from a year earlier to US$1.47 billion, marginally above analysts’ estimates. While the US$25 billion of federal coronavirus aid prohibits Delta from laying off any employees before October, already 17,000 employees have signed up for voluntary redundancy as the carrier looks for ways to reduce its payroll. The carrier has also been badly hit with both Aeromexico and LATAM, airlines in which Delta has substantial stakes of US$770 million and US$1.1 billion respectively, recently filing for bankruptcy protection.