Delta Reports $534 Million Loss For First Quarter And Details Grim Outlook

With the coronavirus pandemic bring air travel to a near halt, Delta Air Lines
DAL
swung to a loss in the first quarter, and the company described a host of measures its taken to prepare for the tough months that lie ahead.

With its business tailing off significantly in March, revenue fell 18% to $8.59 billion from the same period last year, it reported Wednesday morning, and it lost $534 million, down from a profit of $730 million a year ago.

It will be even worse this quarter: The world’s largest airline by revenue has drawn down its schedule by 85% for the second quarter and it expects revenue to plummet 90%.

The company has boosted its capital by $5.4 billion since early March, it said, while cutting costs in a myriad of ways.

About 37,000 of Delta’s 80,000 employees have volunteered to take unpaid leave. It’s frozen hiring and reduced planned capital spending by $3 billion, including delaying aircraft deliveries. Its reduced work schedules, consolidated airport facilities and closed Delta Sky Clubs.

Delta has grounded 650 aircraft, 71% of its total fleet and many of those may never fly for it again. The Atlanta-based airline could retire as many as 313 aircraft that are over the age of 20 years in its mainline fleet and operated by regional partners, Cowen analyst Helane Becker estimates. That would result in substantial job losses, which would come after Sept. 30, when federal restriction on layoffs and salary cuts expire that are conditions of aid that the airline will receive.

Delta will receive $5.4 billion, including a $1.6 billion loan, to cover workers’ salaries from a $25 billion fund established in the $2.1 trillion economic stimulus package passed by Congress last month. In return it will give the Treasury Department warrants to acquire roughly 1% of Delta stock at a price of $24.39 per share over five years.

Last month CEO Ed Bastian committed to forgo his salary for six months. All of Delta’s other C-suite executives will take a 50% pay cut through June 30 and directors and managing directors will take a 25% cut.

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