‘Growth has stalled’: Surge in US infections hits Delta
Delta Air Lines lost $5.7 billion during a brutal three-month stretch in which the coronavirus pandemic brought travel to a near standstill, and any hoped-for recovery has been smothered by a resurgence of infected Americans.
“Growth has stalled,” Delta CEO Ed Bastian said. “It was growing at a pretty nice clip through June. The virus, unfortunately, was also growing.”
Bastian said it will take more than two years for the airline to make “sustainable” recovery.
Delta is the first U.S. airline to report financial results for the May-through-June quarter, and the numbers were ugly.
Passengers boarding Delta planes tumbled 93% from a year earlier, revenue plummeted 88%, and the company’s losses were worse than anticipated.
Airlines are expected to furlough thousands of workers when federal aid to help cover payroll expenses runs out on Oct 1. Bastian held out hope that Delta might avoid those cuts because 17,000 of its 91,000 employees have accepted early retirement. Another 35,000 are taking unpaid leave in July.
The most important financial measure in the airline business right now is cash burn, which determines how long carriers can keep flying while travel remains severely depressed.
Delta has about 19 months worth of cash and short-term investments at its current burn rate of $27 million a day. Back in March, Delta was blazing through nearly $100 million a day.