On Tuesday, Delta Air Lines posted its Q2 financial report. As to be expected, it makes for pretty grim reading in terms of results. The Atlanta-based carrier announced an adjusted loss of $3.9 billion for the second-quarter with passenger traffic down by 93%. However, daily cash-burn has been reduced to $27 million in June.
Delta’s adjusted pre-tax loss for Q2 2020 is $3.9 billion. The airline’s operating revenue came in at $1.18 billion, down by 91% from the previous year. Passenger revenue was down by 94%, and the carrier operated at an 85% lower capacity.
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Average daily cash-burn of $43 million
When the excruciating impact of the pandemic was first making itself known back in March, Delta had a daily cash-burn rate of about $100 million. That has now been reduced to $27 million per day for the month of June, which means it averaged $43 million for the whole quarter.
“A $3.9 billion adjusted pre-tax loss for the June quarter on a more than $11 billion decline in revenue over last year, illustrates the truly staggering impact of the COVID-19 pandemic on our business,” said Ed Bastian, Delta’s CEO.
“Given the combined effects of the pandemic and associated financial impact on the global economy, we continue to believe that it will be more than two years before we see a sustainable recovery.”
The airline closed the quarter with a reported $15.7 billion in liquidity. It also stated it had provided customers with over $2.2 billion in cash refunds since the beginning of the year.
As COVID-19 cases are still surging in the US, Delta will also be adding fewer flights to its August schedule than first intended.
Smaller airline means fleet retirements
The carrier briefly shared its plans for a post-pandemic recovery path. These entail positioning Delta to be a smaller, more efficient airline over the next several years. This will be achieved by ramping up its fleet simplification and retiring its entire MD-88, MD-90, Boeing 777, and 737-700 fleets, as well as the partial retirement of its 767-300s and A320s in 2020.
Furthermore, Delta said it would be taking advantage of the slump in demand to accelerate airport construction projects in Los Angeles, New York-La Guardia, and Salt Lake City. Doing so would allow it to shorten the time-frame for the projects, in turn equaling lower costs.
Smaller airline means fewer employees
Of course, one way the airline is attempting to save cash is through voluntary separation and severance package schemes for staff. Just earlier today, reports came in that Delta has received a very positive response to the package from its employees, with as many as 15,000 applying for it.
This could mean the carrier may entirely avoid involuntary lay-offs, something that is bound to be an issue for most US carriers ad their staff once the conditions of the CARES payroll scheme expire on October 1st.