Harsh Times: Delta Air Lines Reports $534 Million Q1 Loss

Delta has posted a loss of over half a billion dollars for the first quarter of 2020. A large portion of the US carrier’s loss will come from the effects of the unprecedented pandemic driven crisis.

Delta 777
Delta has reported a significant net loss in the first quarter of 2020. Photo: Getty Images

Airlines around the world have taken a hit from the current crisis affecting the global aviation industry. Delta Air Lines is no exception. The carrier posted a net loss of US$534 million for the first quarter of 2020. However, it doesn’t look set to get better anytime soon. The airline’s CEO, Ed Bastian, said that he expects the next quarter revenue to be down by 90%.

A considerable fall year on year

Delta’s latest figures represent a vast fall year on year. Just a year ago, the airline had posted a net income of $730 million. As such, the carrier has experienced a year on year fall of $1.264 billion, not a small amount.

Of course, it could’ve been worse too. Despite the fall in operating income, Delta’s fuel expenditure dropped. This was partially due to fewer and largely empty flights, meaning less fuel was used. However, the airline also benefited from lower average fuel prices. In the first quarter of 2019, the average fuel price per gallon of fuel was $2.06. This fell to $1.81 this year, meaning that total fuel expenditure fell from $1.98 billion to $1.6 billion.

Delta Air Lines, On Time Performance, Punctuality
Like most other airlines, the US carrier has noticed a significant impact from the current situation. Photo: Getty Images

Dealing with the crisis

In today’s guidance, the airline also detailed steps that it is taking, and will consider going forwards to deal with the current exceptional crisis. It broke this down into five distinct categories:

  • Network and Customer Experience;
  • Community Response;
  • Expense Management;
  • Balance Sheet, Cash, and Liquidity;
  • CARES Act Relief.

Let’s take a look at some of the more significant actions that the US airline is taking. For starters, Delta has drastically slashed its capacity for the current quarter. In total, capacity has been dropped by 85%. This has seen 90% of international flights cut, alongside 80% of domestic flights.

As part of its expense management program, Delta has parked more than 650 aircraft. Additionally, the airline has closed lounges and concourses to consolidate its airport operations. The airline is looking to cut salary expenses and to offer employees voluntary unpaid leave.

Delta Air Lines grounded planes
Delta Air Lines has parked more than 650 aircraft. This accounts for around 70% of the fleet. Photo: Getty Images

Discussing the results, Delta CEO Ed Bastian said:

“These are truly unprecedented times for all of us, including the airline industry. Government travel restrictions and stay-at-home orders have been effective in slowing the spread of the virus, but have also severely impacted near-term demand for air travel, reducing our expected June quarter revenues by 90 percent, compared to a year ago”

What do you make of Delta’s latest figures? Were you expecting such a large drop, or are you surprised by the amount of losses? Let us know your thoughts in the comments.