Delta Airlines has reported financial results for the December quarter and full year 2020 showing adjusted pre-tax loss of $9.0 billion which excludes a net of $6.6 billion of items primarily related to the impact of, and its response to COVID-19.
This is also as the airline’s adjusted operating revenue of $15.9 billion declined 66 percent on 61 percent lower sellable capacity versus the prior year
The airline’s total operating expense, which includes $4.3 billion of COVID- related and other items, decreased $10.8 billion over the prior year. Adjusted for those items and third-party refinery sales, total operating expenses decreased $16.0 billion or 40 percent in 2020 compared to the prior year.
Delta’s adjusted operating revenue of $3.5 billion for the December quarter was down 69 percent versus the prior-year period, a 10-point improvement from September quarter 2020. Passenger revenues declined 74 percent on 62 percent lower sellable capacity. Non-ticket revenues outperformed passenger revenues, with cargo revenues up 10 percent versus the prior-year period and total loyalty revenues down 54 percent.
For the full year, adjusted operating revenue declined to $ 15.9 billion, down 66 percent versus 2019, as the global pandemic severely affected air travel.
Passenger revenues declined 70 percent on 61 percent lower sellable capacity. Total loyalty revenues were down 51 percent and American Express remuneration declined 30 percent compared to the prior year to $2.9 billion.
“We see three distinct phases in 2021. The early part of the year will be characterized by choppy demand recovery and a booking curve that remains compressed, followed by an inflexion point, and finally, a sustained demand recovery as customer confidence gains momentum, vaccinations become widespread and offices reopen,” said Glen Hauenstein, Delta’s president said.
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“For each phase, Delta has the levers to pull to successfully react to the emerging demand environment, including tightly matching our sellable capacity to expected demand,” Hauenstein added.
Total adjusted operating expense for the December quarter decreased $4.6 billion or 47 percent versus the prior-year period excluding items related to the company’s response to COVID-19 and the $1.4 billion CARES Act benefit, resulting in Delta’s consolidated CASM, adjusted being 4.5 percent lower than the prior-year period.
This performance was driven by a $1.3 billion, or 64 percent reduction in fuel expense versus the prior-year period, a 51 percent reduction in maintenance expense and lower volume- and revenue-related expenses.
Salaries and related costs were down 34 percent compared to the prior-year period as a result of approximately 20 percent of its workforce, or nearly 18,000 employees, electing to voluntarily depart the company, in addition to the impact of voluntary unpaid leaves, work- hour reductions and other costsaving initiatives.
The non- operating expense for the December quarter was up $ 248 million versus the prior- year period, driven primarily by higher interest expense from increased debt the company has incurred during the COVID-19 pandemic.
“We reduced our average daily cash burn to $12 million in the December quarter, a reduction of nearly 90 percent since the early days of the pandemic in March, as we progress to achieving cash break- even in the spring,” Gary Chase, Delta’s interim co-chief financial officer said.
“Remaining agile and disciplined with our cost structure will be key to our success, and when combined with an improving demand environment, will allow us to return to the free cash flow generation needed for debt reduction,” Chase added.
