27.41 +1.30 (4.98%)
After hours: 8:00PM EDT
|Bid||27.45 x 800|
|Ask||27.39 x 900|
|Day's range||25.46 - 26.75|
|52-week range||17.51 - 63.44|
|Beta (5Y monthly)||1.25|
|PE ratio (TTM)||4.81|
|Earnings date||08 Oct 2020 - 12 Oct 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||19 Feb 2020|
|1y target est||36.20|
DAL earnings call for the period ending June 30, 2020.
Shares of Delta Air Lines (NYSE: DAL) plunged more than 5% in early trading on Tuesday before clawing their way back to about a 2.6% loss at the close, as the company reported Q2 earnings. Rivals United Airlines Holdings was almost even on the day, and American Airlines Group was down only a fraction of 1%, but neither company reported earnings. Good news first: Delta is making headway in extinguishing cash burn that approached $100 million a day in the early days of the pandemic.
(Bloomberg) -- Delta Air Lines Inc. slashed plans to restore some service after a resurgence in U.S. coronavirus cases squelched a fledgling recovery in travel demand.The airline will add back no more than 500 flights in August instead of the 1,000 it had planned. It doesn’t see adding much more through year-end.“Demand growth has largely stalled,” Chief Executive Officer Ed Bastian said in an interview. “The pace of improvement from this point is going to depend on consumers’ confidence in flying.”The CEO’s caution underscored the risk for airlines that surging Covid-19 cases will upend their efforts to coax customers back onto planes after an unprecedented collapse in demand earlier this year. United Airlines Holdings Inc. warned last week that it was seeing a sharp drop in bookings.Delta’s earnings report led the way for major carriers for the first full quarter affected by the pandemic. The carrier posted a record quarterly adjusted loss of $2.8 billion after revenue collapsed by 91% in the three months through June.No further reductions to its daily cash burn are expected in July, which would mark the end of a string of monthly improvements that brought the rate to $27 million a day last month from $100 million in March. The second-quarter average was $43 million.Retirements, FurloughsOperating expenses were reduced 53% by parking some planes, retiring others and reducing labor expenses, thanks in part to 45,000 workers taking voluntary unpaid leave, the Atlanta-based airline said in a statement.At least 17,000 workers have signed up for early retirement or voluntary separation packages. The figure doesn’t include pilots, who have another week to decide. The results could help reduce or eliminate the need for furloughs later this year.Delta’s adjusted results exclude write-downs totaling $2.5 billion in restructuring charges, mostly for aircraft retirements, and nearly $2.1 billion on Delta’s investments in Latam Airlines, bankrupt Grupo Aeromexico and Virgin Atlantic Airways.Read more: Virgin Atlantic Seals $1.5 Billion Rescue Led by DavidsonDelta dropped 2.6% to $26.12 at 1:23 p.m. in New York. The stock had tumbled 54% this year through Monday, in line with other big U.S. carriers, but much worse than the 2.3% drop registered by the S&P 500.The quarterly results “illustrate the truly staggering impact of this pandemic on our business,” Chief Financial Officer Paul Jacobson said on a conference call. Delta expects it will take more than two years to reach a sustainable recovery, with leisure travel rebuilding ahead of lucrative business traffic, which normally accounts for 50% of revenue.Cash BurnDespite the setback, Delta still expects to reduce cash burn to zero by year-end and to return to “profitability, marginally,” by spring, Bastian said. “Not a lot, but that’s the hope.” The cash burn target largely will depend on a rebound in business demand, he said.Credit Suisse analyst Joe Caiado was skeptical. “The June exit rate also suggests that our projected $29 million average daily cash burn for Q3 is too pessimistic, though break-even by year-end still seems optimistic without material increases in flying,” he said in a note to investors.Third-Quarter OutlookThird-quarter revenue will be 20% to 25% of year-ago levels, Delta said. Seats available for sale, which accounts for the carrier’s decision to block middle seats, also will be 20% to 25% of what it was in the same period of 2019.“I don’t want anyone to get the sense that we’ve got a gloomy forecast on demand growth or revenue; not at all,” Bastian said on the call. “We said at the start of this pandemic that this is going to be choppy; it’s going to be unpredictable. It’s going to be driven by factors outside of our control.”The executive said he was optimistic going through late summer and into fall, when he expects to see significant improvement. However, “I don’t think we’ll ever get back entirely to where we were in 2019 on the volume of business traffic,” Bastian said, in part as businesses pull back on inefficient trips better conducted by videoconferencing.The airline is in talks with Airbus SE about minimizing deliveries of ordered aircraft over the next 18 to 24 months, although no agreement has been reached. The carrier parked 700 planes when demand collapsed in March and April and has permanently retired more than 100.Delta ended the second quarter with $15.7 billion in liquidity through a combination of government and other financing, and is considering whether to take an additional $4.7 billion federal loan.The carrier reported an adjusted per-share loss of $4.43, while analysts expected $4.22, based on the average of estimates compiled by Bloomberg. Operating revenue tumbled to $1.18 billion, while analysts projected $1.43 billion.Delta’s net loss was $5.7 billion, or $9.01 a share.The carrier’s air-traffic liability, representing tickets sold for future travel and estimated credits to be used, totaled $5 billion.(Updates with third-quarter outlook in 14th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Richard Branson has spent decades cultivating an image as a daredevil entrepreneur, glorifying risk with stunts such as sky-diving or hot-air ballooning across the ocean to promote everything from soda to space travel. Now, less than a week shy of his 70th birthday, Branson is taking one of the biggest gambles ever to save his flagship airline from the ravages of the coronavirus outbreak.With trans-Atlantic travel largely grounded for the foreseeable future, the company most responsible for building his global brand -- Virgin Atlantic Airways Ltd. -- was being pushed to the brink of collapse. After begging a reluctant British government for a bailout, Branson concluded his best option for raising money was to sell shares in Virgin Galactic Holdings Inc., the orbital tourism venture that has become his obsession in recent years.On Tuesday, Virgin announced a 1.2 billion-pound ($1.5 billion) rescue package that includes about 170 million pounds from U.S. hedge fund Davidson Kempner Capital Management and 200 million pounds that Branson got from diluting his stake in Virgin Galactic.“It’s the ticket to our continuing journey, and hopefully it also means a better birthday for Richard,” said Shai Weiss, Virgin Atlantic’s chief executive officer. “He’s put in 200 million, but we’ve helped wrap it up for him.”Bitter BlowOn March 24, when the news came through that U.K. Chancellor of the Exchequer Rishi Sunak had rejected an industry bailout, Branson was on Necker Island, the Caribbean redoubt from which he pilots his global empire. The decision came as a bitter blow, as Transport Secretary Grant Shapps had hinted he’d consider a rescue just days before.After leaving open the possibility of a broader package, the government decided that only companies with investment-grade debt would be allowed to access the Bank of England’s 330 billion-pound Covid Corporate Financing Facility. While Virgin Atlantic’s credit score isn’t public, it’s believed to be deemed junk by the three major ratings companies.Read more:Branson Wins Out With $1.5 Billion Virgin Atlantic RescueEU Resists Further Travel Opening With New Virus Wave a RiskU.S.-EU Discord Imperils Rebound in Prime Trans-Atlantic FlightsThe funds were later tapped by British Airways, EasyJet Plc and Jet2, and even Ireland’s Ryanair Holdings Plc and Wizz Air Holdings Plc of Hungary. Government officials told Virgin it might still qualify for assistance, but opposition was mounting in the U.K., with some politicians and newspapers arguing that Branson’s residency in the British Virgin Islands-- where there are no income or capital-gains taxes -- should preclude government aid.Branson’s insistence that he had always plowed his profits back into new businesses, and that his companies pay taxes in countries worldwide, did little to sway opinions. The government never definitively said no, but indicated money for Virgin would only be available if it had exhausted all other possible avenues, including lending from private institutions and funds from existing shareholders. Delta Air Lines Inc., which holds 49% of the carrier, was busy grappling with the pandemic in the U.S., and the outbreak had sapped the interest of most mainstream lenders.That left Branson, who holds 51% of the carrier, to come up with the cash or risk the failure of the airline he’d founded in 1984 as a foil to mighty British Airways. Since the billionaire’s fortune rested largely on the value of his companies, Branson had little choice other than selling less vulnerable assets to save the airline.Virgin Atlantic had suffered after Europe’s airline industry sorted itself into three megagroups, leaving Branson out in the cold. The Delta invstment, followed by Weiss’s appointment as CEO in January 2019, revitalized the carrier. Virgin soon ordered new aircraft and added destinations such as Tel Aviv and Mumbai, celebrated by glitzy launches featuring Branson schmoozing with passengers and laying on the charm for local grandees. Branson was so bullish on Virgin’s prospects that in December he pulled the plug on a deal to sell 31% of the carrier to Delta ally Air France-KLM.Courting InvestorsAfter Sunak’s March announcement, Weiss reached out to about 100 financial institutions seeking support. In May, at the height of the pandemic, he held a conference call from his west London home with about a dozen potential investors. The pitch focused on the recovery plan for Virgin Atlantic and a strategy for profitable growth in the medium term.A handful of firms came back with funding proposals, leading to a contest between Davidson Kempner and Elliott Management Corp. to provide a loan. While the breakthrough promised to raise substantial cash, it remained well short of the 500 million pounds Virgin Atlantic had originally asked the state to underwrite.So Branson ordered the sale of a chunk of Virgin Galactic, his most valuable listed asset, while indicating he was even prepared to mortgage his Necker Island bolt-hole. The share sale raised more than $450 million, of which Branson is committing a bit less than half to Virgin Atlantic. (He says he’ll use the rest to shore up other businesses.) The airline has asked creditors to defer some 450 million pounds in payments, and Delta has contributed with a delay of several years on bills for services such as IT and marketing.“We were excited to see the recapitalization come about,” Delta CEO Ed Bastian said on a conference call Tuesday. “It’s been an extremely difficult few months pulling that together. All stakeholders have made contributions to allow Virgin to fly again.”Employees will pay a heavy price, with more than 3,000 set to lose their jobs as Virgin shrinks to adapt to what could be years of reduced demand for long-haul flights. The carrier’s most profitable links -- from London to big American cities -- are all but shut down with the accelerating pandemic in the U.S. That leaves it dependent on less lucrative routes such as Israel and the Caribbean.Despite the cloudy outlook, John Strickland of airline advisory firm JLS Consulting says Branson had to save the carrier to protect his other interests, even if it meant loosening his grip on the space venture.“It wouldn’t have looked good to let it go,” Strickland said. Virgin Atlantic “shows his colors literally around the world, and airlines are much more of a topic for public discussion than something like Virgin Galactic, however cutting edge it may be.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- The bad news is that people still have very little interest in flying in the middle of a pandemic. But the silver lining — for investors at least — is that at least some airlines are accepting and adapting to that reality.Delta Air Lines Inc. said Tuesday it would add back only about 500 flights in August, down from an earlier plan to add 1,000 trips in the final leg of summer. The carrier had previously said it would likely limit its flight schedule after Labor Day amid a dearth of interest in business and international travel, but now even the nascent rebound in domestic trips is fizzling out as coronavirus cases rise across the Sun Belt. “Demand growth has largely stalled,” Chief Executive Officer Ed Bastian said in an interview with Bloomberg News’s Mary Schlangenstein. “The pace of improvement from this point is going to depend on consumers’ confidence in flying.”Delta was the first of the major carriers to report results for the second quarter and the numbers were even uglier than expected. The company lost $2.8 billion on an adjusted basis in the period and burned through an average of $27 million of cash per day in the month of June, despite steady efforts to rein in costs. There’s no way to spin those kinds of numbers as a positive. Delta’s best-case scenario is to become marginally profitable again by the spring of 2021, Bastian said. That bodes poorly for the thousands of people it employs and for the thousands more working in the aerospace industry that supplies and services its planes. Indeed, while Bastian expressed optimism that the carrier could avoid more aggressive layoffs this fall after at least 15,000 workers signed up for early retirement packages, Delta's rivals have warned of drastic job cuts without a more meaningful uptick in flying. But for shareholders that have been burned repeatedly in the past by airlines' misplaced optimism, there is some comfort in carriers' hard-nosed assessment of the current environment.“Airlines have announced intentions to put capacity back into the system faster than we’d like and there has been somewhat of a domino effect with each airline’s add-back announcement seemingly intended to outdo the last,” Vertical Research Partners analyst Darryl Genovesi wrote in a report last week. The result is that heading into this earnings season, July and August domestic capacity was set to decline by less than 50% versus a year earlier, compared with what Genovesi estimates to be a 70% decline in demand over the third quarter.While airline shares were buoyed in early June by those capacity announcements, that simply set them up for a fall as the outbreak expanded in the U.S. and forced carriers to reconsider their plans. Delta rival United Airlines Holdings Inc. dialed back its August flight schedule last week, announcing it would operate at 35% of last year’s capacity compared with a plan announced mere days earlier to fly roughly 40% of the flights it operated a year ago. The carrier expects its schedule for the rest of the year to look similar to August, warning that any recovery in air travel will not “follow a linear path.” Trimming capacity is the right thing to do if demand doesn’t support it and over the longer term, it speaks to the discipline that made airlines a more interesting investment in the pre-virus times. Airlines spent the better part of the last decade swearing up and down that things had changed in the industry and that consolidation had made the fare wars that exacerbated the boom-and-bust cycle to the point of bankruptcies a thing of the past. It was enough to convince even Warren Buffett to abandon his aversion to investing in airlines. In hindsight, these arguments had a gaping, coronavirus-sized hole that scared Buffett off from the sector yet again. But it’s encouraging that even amidst the current, unprecedented crisis, some airlines haven’t entirely forgotten their recently discovered religion on capacity expansion. It’s something. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Delta Air Lines (DAL) performs dismally in Q2, mainly due to shrinking passenger revenues.
Earnings season has officially begun, and investors can expect the stock market to see increased volatility as companies start to tell the tale of how the second quarter of 2020 went for them. Big banks are among the first companies to report their results each quarter, and the news from the financial industry was mixed Tuesday morning. Meanwhile, airline giant Delta Air Lines (NYSE: DAL) also weighed in with its latest figures.
CEO: "...we continue to believe that it will be more than two years before we see a sustainable recovery."
Delta Air Lines reported an 88.2% decline in revenues on Tuesday, warning that bookings have stalled due to the growing pandemic.
(Bloomberg Opinion) -- More than a decade ago Time magazine anointed “You” its person of the year, in recognition of our collective effort to create free content for social media.Today Virgin Atlantic Airways Ltd. owes a similar debt of gratitude to its long-suffering customers. The cash they’ve advanced the transatlantic airline for future bookings was every bit as important as that provided by billionaire founder Richard Branson and hedge fund Davidson Kempner Capital Management in saving it from collapse. Issuing customer refunds at a snail’s pace helped the airline preserve cash during the pandemic but unhappy customers will make Virgin Atlantic’s recovery that much tougher.Virgin Atlantic has confirmed that Davidson Kempner will inject 170 million pounds ($213 million) in secured debt as part of a 1.2 billion pounds rescue deal. That provides an external vote of confidence. The airline’s co-owners, Branson’s Virgin Group and Delta Air Lines Inc., will forgo 400 million pounds of fees owed. On top of that, Virgin Group injects 200 million pounds; in precisely what form isn’t specified. The deal must still be approved by a court. The rescue suggests the U.K. government was right to push Virgin Atlantic to exhaust other options before demanding a government bailout.Finding private money was a tall order because the carrier entered the pandemic with a lot of debt, a paucity of assets it could sell and a track record of losses. A strategic focus on the once lucrative North American market — the destination accounted for about 70% of group revenues — has become a vulnerability. The coronavirus is still ripping through the southern United States; those flying transatlantic face a fortnight in quarantine. It’s difficult to know when and to what extent demand will return.Branson, whose billionaire status and tax residency in the British Virgin Islands made a rescue politically unpalatable, has done the honorable thing by stumping up more of his own cash rather than relying on taxpayers. He also stays in control. Fortunately for him, monetizing part of his stake in space-tourism business Virgin Galactic Holdings Inc., hasn’t crimped its stratospheric valuation too much.Davidson Kempner is taking a risk because the value of the takeoff slots and aircraft against which its loan is secured is uncertain, but at least it has some fallback. It’s Virgin Atlantic’s customers who have gone the extra mile. Blaming the difficulty of processing such a high volume of refund requests, the airline has taken up to 120 days to give customers their money back when their flights were cancelled, thereby turning its passengers into unsecured creditors. At December 2018, the most recent date for which there are published accounts, Virgin Atlantic and the associated holidays operation held 520 million pounds of cash from forward sales. Since the crisis began, social media has been awash with complaints about poor customer service; the airline came near bottom of a recent consumer survey of the way travel companies have handled refund requests. Chief Executive Shai Weiss acknowledged that “we have not lived up to the high standards we set ourselves.”One sticking point in the rescue talks was apparently that credit card acquirers, which authorize and process card payments, threatened to withhold the cash that Virgin Atlantic generated from future bookings, instead of passing it on to the airline.You can understand why Lloyds Banking Group Plc’s Cardnet and Fiserv Inc.’s First Data may have been hesitant: They’d be on the hook if Virgin Atlantic went bust and customers claimed a refund via their bank. The company said Tuesday it has credit-card providers’ support.This rescue shows those already exposed to Virgin Atlantic, and some who aren’t, will give it another chance. But the carrier’s path back to profitability — targeted for 2022 — remains precarious. The $7 billion pre-tax quarterly loss that co-owner Delta just announced included a $200 million write-down on Virgin Atlantic and underscores the scale of the challenge now facing the aviation sector. Not only is Virgin Atlantic focused on a difficult route but its small size could be an impediment to operating efficiently: After retiring less efficient aircraft it expects to operate fewer than 40 planes. A plan to cut the workforce by one-third will deliver savings, but at what cost to service quality? Branson’s “child” lives to fly another day but the airline’s mission statement — to become “the most-loved travel company” — now requires urgent attention.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. He previously worked for the Financial Times.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Virgin Atlantic Airways Ltd. announced a 1.2 billion-pound ($1.5 billion) rescue in a major victory for Richard Branson, who snatched his U.K. airline from the brink of failure under the weight of the coronavirus crisis.U.S. hedge fund Davidson Kempner Capital Management will provide about 170 million pounds in secured financing, according to a statement Tuesday, while Branson will contribute 200 million pounds after raising money from space venture Virgin Galactic Holdings Inc.The plan also relies on creditor deferrals, with Virgin Atlantic planning to use a court-sanctioned process to overcome any dissenting minorities.Branson and his team, led by Chief Executive Officer Shai Weiss, secured the private bailout after Britain refused to contribute taxpayer funds when the carrier was grounded by the pandemic. After months of uncertainty, the mogul, who turns 70 this week, is set to retain control of a business he founded in 1984, though future prospects will hinge on the return of U.S. travel.“This doesn’t mean that we are out of the woods 100%. But it shows that people believe in the future of Virgin Atlantic and our business plan,” Weiss said in an interview. He predicted that the carrier will return to profit in 2022 as traffic gradually recovers to 2019 levels.The loan from Davidson Kempner will be secured against planes and aircraft slots, Weiss said. The New York firm, which has about $30 billion of assets under management, won the deal after offering more favorable terms than other potential backers, people familiar with the matter said on July 10.An alliance of Elliott Management Corp. and U.K. investment firm Greybull Capital declined to match it, while Centerbridge Partners stepped back after coming late to the process, the people said.The plan includes 450 million pounds of creditor deferrals, and 400 million pounds of payment delays or waivers from Branson’s Virgin Group and co-owner Delta Air Lines Inc.Delta’s contribution to the rescue involved “deferral of brand fees, as well as certain other joint venture fees we would typically earn,” Chief Executive Officer Ed Bastian said on a conference call Tuesday. He declined to provide additional details.Tax HavenBranson’s abode in British Virgin Islands -- where residents pay no income or capital-gains taxes -- made a state bailout politically difficult. The U.K. government earlier rejected his plea for a loan guarantee for Crawley, England-based Virgin Atlantic on the grounds that its credit rating was too low.The snub launched weeks of frenzied talks to save the stricken airline. Weiss pitched his recovery strategy to a dozen potential supporters in a virtual presentation in May.That led to interest from several parties, while Branson raised more than $400 million to help his companies by selling shares of Virgin Galactic.One of the thorniest issues involved freeing up credit-card payments withheld by settlement firms in case Virgin Atlantic went bust. That matter was resolved in the last few days, people familiar with the matter said.Court PlanAircraft-leasing firms have largely gone along with the proposals, while about 880 million pounds related to aircraft deliveries was re-phased and financed over the next five years. Weiss said the accord applies mainly to Airbus SE A350 jetliners.Cost cuts, including the elimination of more than 3,000 jobs, the closure of a base at London Gatwick airport, and the retirement of older jets, will save 280 million pounds each year.Delta, which owns 49% of Virgin Atlantic, had said it wouldn’t put in more cash. However, the U.S. airline will make a significant contribution by delaying outstanding marketing fees and other dues.Virgin Atlantic will launch a restructuring process in the U.K. to make its plan binding on all creditors if it gets support from 75% of them. Weiss said backing is “there or thereabouts” for each class of creditors, and that he was confident of clearing the court hurdle.Cheeky ChallengerBranson, then a 30-something music entrepreneur, started Virgin Atlantic after a trip to the Caribbean on a commercial airliner was canceled at the last minute. He chartered a plane on the spot, paying with his credit card, and sold seats to the other passengers whose flight had been bumped.In time, the company grew to become the only credible U.K. competitor to British Airways, inciting an intense rivalry that continues to this day. Branson’s airline operates mainly on trans-Atlantic routes between London and U.S. destinations like New York and Los Angeles. The fleet will be pared back to 37 planes from more than 40.The North Atlantic niche is normally the most profitable in the entire airline industry. But Virgin has had to park its fleet due to the coronavirus, and restrictions on flying between the U.S. and the U.K. have caused a continuing collapse in demand, even as other travel markets begin to open with the easing of lockdowns.On Tuesday, the EU recommended keeping its external borders shut to Americans and most other foreigners for at least two more weeks, Bloomberg News reported.EU Resists Further Travel Opening With New Virus Wave a RiskWeiss said the return may be a slow one but that it will be aided by the expansion of so-called air bridges between specific countries and later by health passports showing passengers are Covid-free.(Updates with comments from CEO starting in fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Delta (DAL) delivered earnings and revenue surprises of -11.59% and 4.80%, respectively, for the quarter ended June 2020. Do the numbers hold clues to what lies ahead for the stock?
Earnings Season Begins with Mixed Results
Given the large turnout Delta (DAL) has received for its early buyout packages, the carrier might be able to avoid involuntary furloughs in the fall.
Delta Air Lines on Tuesday reported an adjusted pre-tax loss of $3.9 billion in the second quarter, as the COVID-19 pandemic that’s hammered the airline industry ravaged the company’s revenue.
Delta Air Lines is to shed 17,000 employees through early retirement, an uptake the company said would allow it to impose fewer furloughs than US rivals in a sector upended by the pandemic. Operating revenue tumbled 88 per cent from a year earlier to $1.5bn. The stock was down 2.8 per cent in midday trading at $26.07.
With majority of the fleet being still grounded or under-utilized due to the low demand scenario, fuel consumption in Q2 is likely to have been restrained at Delta (DAL).
Just one week after announcing it’ll add 1,000 flights in July, Delta Air Lines said Tuesday it’ll cut by half the flights it had planned to add in August. The carrier also warned that it’ll be more than two years before the industry sees a sustainable recovery. Delta said the fresh wave of coronavirus cases and quarantines hurt the demand it had seen build up over June for travel to vacation destinations. CEO Ed Bastian told Reuters, “We’re at a stall right now.” The airline also posted an adjusted quarterly loss of $2.8 billion. Passenger revenue nose-dived 94% in a season that some analysts call the worst in aviation history. It slowed its daily cash burn in June, ending the month with almost $16 billion in liquidity. Delta also said it may continue to block middle seats beyond September, unlike rivals American and United, which have added thousands of flights with all seats for sale. But it warned it can’t make money filling only three-fifths of its planes. American and United report their results next week.
Delta Airlines may be able to avoid involuntary furloughs in the fall. A source close to the matter says that's because 15,000 Delta employees have expressed interest in early buyout packages. That's even as other U.S. airlines have warned that jobs are at risk as meager demand for air travel batters the industry. Delta is among the large U.S. airlines that have tried to encourage workers to leave voluntarily before a government ban on forced job cuts expires on Sept. 30. Those airlines that can encourage more senior people to leave could face lower labor costs as they brace for a slow rebound. Meanwhile, United Airlines warned nearly half its frontline workers of potential furloughs last week. Sources say American is preparing to send warnings this week, along with early exit packages encouraging voluntary departures. And Southwest Chief Executive Gary Kelly told employees Monday (July 13) passenger numbers would need to triple by the end of the year to prevent job cuts. But even as airlines are grappling with overstaffing and burning through millions of dollars every day, they are also facing pressure to limit passengers on flights and allow for social distancing. Jetblue said Monday it would extend blocking seats on airplanes for another few months, while American and United are again booking flights to capacity, but informing customers if their flights will be full.
Market participants are bracing for the start of what will likely be the weakest corporate earnings season since the global financial crisis, as the coronavirus pandemic and measures to contain it hit business activity especially hard in the second quarter.
Spirit Airlines (NYSE: SAVE) is leading the sector higher on Friday, up 9% as of noon EDT, while shares of American Airlines Group (NASDAQ: AAL), United Airlines Holdings (NASDAQ: UAL), and JetBlue Airways (NASDAQ: JBLU) are all up more than 5% apiece and shares of other carriers including Southwest Airlines (NYSE: LUV) and Delta Air Lines (NYSE: DAL) are not far behind. Airline stocks have been volatile since the pandemic began.
United Airlines Holdings (NASDAQ: UAL) late Thursday reached a tentative agreement with its pilots union for voluntary furloughs and early retirement offers, part of the airline's effort to limit layoffs this fall as the industry adjusts schedules based on falling demand. The airline is hopeful not to need to cut that many people, but carriers are planning for significant layoffs in the months to come as COVID-19 continues to slow travel. Prohibitions on layoffs included in the CARES Act expire on Sept. 30, and the industry is expected to make significant cuts after that date.