Delta Air Lines estimates total revenues for the quarter ended June 30 fell 90% from last year, offering a preview of what will likely be the biggest loss-making quarter in airline industry history.
The second quarter is expected to be the year’s worst, reflecting the near-complete collapse of passenger demand in April, when the coronavirus pandemic caused most of North America to shut down large swathes of the economy.
U.S. airlines carried 96% fewer passengers that month from a year ago, the largest annual decrease on record, according to new data from the Bureau of Transportation Statistics.
Atlanta-based Delta is on track to reduce its daily cash burn rate to $40 million by the end of June from roughly $100 million in March, the airline reported June 10, driven by a 50% reduction in operating costs, improvement in recent net bookings and stabilization in refund requests.
The company expects daily cash outflows will drop to zero by year end, aided by a modest continued demand recovery, in addition to further cost cutting.
Hundreds of flights have been added back into Delta’s summer schedule, with plans to operate roughly 38% of last year’s domestic capacity in July. That amount is less than American Airlines (55%), but more than United Airlines (30%).
The market update came as Delta sold $1.25 billion of five-year unsecured bonds that will yield 7.375%, the latest step in its effort to bolster liquidity while demand remains just a small fraction of normal levels. Since March, the airline has raised more than $10 billion, including $3.8 billion in CARES Act payroll support, bringing its total liquidity to $14 billion in June, a figure expected to drop to $10 billion by year end.
Delta also established its first Global Cleanliness division on June 10, a new department situated within its Customer Experience organization, responsible for “innovating and evolving Delta’s already-high cleanliness standards” in light of COVID-19. Leading the organization will be Mike Medeiros, officially named VP-Global Cleanliness.
The new department will further develop and execute Delta’s cleanliness standards, methods and quality management “to ensure a consistently safe and sanitized experience across our facilities and aircraft for employees and customers, alike,” the carrier said.
“This team will bring the same focus and rigor to cleanliness that we’re known for in transforming customer expectations for on-time, completion and baggage performance—so that customers can feel confident when choosing to fly with us,” said Delta chief customer experience executive Bill Lentsch.
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