Delta Halves Fourth Quarter Cash Consumption, Cuts Losses to Cap Worst Year in History

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Delta Air Lines plane lands at Los Angeles International Airport

Mario Tama | Getty Images

Delta Air Lines said Thursday it cut its cash consumption in half and cut its losses in the fourth quarter, with the coronavirus pandemic leading the carrier to its worst year in history.

The Atlanta-based airline posted a net loss of nearly $ 12.39 billion in 2020 – a record, according to FactSet data.

Here is how Delta performed during the quarter, compared to what Wall Street expected, based on average estimates compiled by Refinitiv:

  • Adjusted earnings per share: a loss of $ 2.53 vs. an expected loss of $ 2.50
  • Total revenue: $ 3.97 billion vs. $ 3.59 billion expected revenue

Delta reached a net loss of $ 755 million in the fourth quarter, down from a profit of $ 1.1 billion a year earlier. Total revenue fell 65%, from $ 11.44 billion in the fourth quarter of 2019 to $ 3.97 billion. The company’s revenues were increased by $ 441 million through sales of refineries to third parties. On an adjusted basis, Delta recorded a loss per share of $ 2.53, compared to analysts’ estimates for a loss of $ 2.50 per share.

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The carrier’s cash consumption averaged $ 12 million per day in the quarter ended Dec.31, down by half from its average consumption of $ 24 million per day in the third quarter. Delta said it expects to achieve positive cash flow by the spring.

Delta shares rose 2.7% in pre-market trading after Delta announced its results.

The airline will face tough months ahead, but is eyeing a recovery in 2021 as Covid vaccines are administered across the country, CEO Ed Bastian said.

“While our challenges continue into 2021, I am optimistic that this will be a year of recovery and a turning point that will result in an even stronger Delta that will return to revenue growth, profitability and free cash generation. “Bastian said.

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Delta said it expects revenues to drop 60% to 65% in the first quarter of the year from a year earlier, just as the pandemic is starting. It’s worse than analysts’ estimates for a 48% year-over-year drop.

The pandemic has devastated travel demand as concerns about the virus, quarantines, travel restrictions and breaks on business trips have held millions of potential customers home. The Transportation Security Administration only screened 324 million travelers last year, up from 824 million in 2019.

Airlines executives hoped the vaccine rollout would provide some relief, but have repeatedly warned that it will not be immediate.

“The start of the year will be characterized by an unstable recovery in demand and a reservation curve that remains compressed, followed by an inflection point, and finally a sustained recovery in demand as customer confidence is gaining momentum, vaccinations become more widespread and offices reopen, ”Delta President Glen Hauenstein said in the results release.

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Delta said it ended the fourth quarter with $ 16.7 billion in cash. Delta raised billions in debt last year, including a record $ 9 billion debt sale backed by its SkyMiles loyalty program.

The carrier and its rivals are also receiving additional federal funds to help weather the crisis. Late last year, Congress approved an additional $ 15 billion in federal aid for airlines to pay workers, on top of the $ 25 billion in government payroll assistance they have. received under the CARES law of March.

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