Cut your cash burn in half

Cut your cash burn in half

A Delta Airlines plane lands at Los Angeles International Airport

Mario Tama | Getty Images

Delta Airlines said on Thursday that Delta Airlines cut its cash burn in half and cut losses in the fourth quarter as the coronavirus pandemic drove the carrier into its worst year on record.

The Atlanta-based airline reported a net loss of about $ 12.39 billion in 2020, a record high, according to FactSet data.

Here’s how Delta performed compared to what Wall Street expected, based on average estimates compiled by Refinitiv:

  • Adjusted earnings per share: a loss of $ 2.53 versus an expected loss of $ 2.50
  • Total revenue: $ 3.97 billion, revised down from $ 3.53 billion in refinery sales

Delta swung to a $ 755 million net loss in the fourth quarter, compared to a $ 1.1 billion profit the previous year. Total revenue decreased 65% from $ 11.44 billion in the fourth quarter of 2019 to $ 3.97 billion. The company’s revenues received a payment of $ 441 million from overseas refinery sales. On a adjusted basis, Delta had a loss per share of $ 2.53, compared to analysts’ estimates of a loss of $ 2.50 per share.

The carrier averaged $ 12 million a day cash burn in the quarter ended Dec. 31, halving the average cash burn of $ 24 million a day in the third quarter. Delta said it expects to have positive cash flow by spring.

Delta shares rose more than 2% in pre-market trading after Delta announced its results.

Ed Bastian, chief executive of the airline, said the company will face tough months ahead, but is looking forward to a recovery in 2021 as Covid-19 vaccines are given across the country.

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

Delta said it expects revenue to drop 60% to 65% in the first quarter of the year, compared to the same period last year, just as the pandemic had started. This is lower than analysts’ estimates for a 48% year-on-year decline.

The pandemic has devastated travel demand as concerns about the virus, quarantines, travel restrictions and pauses in business travel keep millions of potential customers at home. The Transportation Security Administration screened only 324 million passengers last year, down from 824 million in 2019.

Airlines executives had hoped the launch of the vaccines would provide some relief, but have repeatedly warned that it would not be immediate.

“The first part of the year will be marked by a choppy rebound in demand and a reservation curve that will remain compressed, followed by an inflection point, and finally a steady recovery in demand as customer confidence gains momentum and vaccinations spread and offices reopen,” Delta Chairman Glenn Hounstein said in a earnings statement.

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

The carrier and its competitors are also receiving additional federal funds to help weather the crisis. Late last year Congress approved $ 15 billion in additional federal aid to airlines to pay workers’ salaries, in addition to another $ 25 billion in government payroll support they received under the CARES Act of March.

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