Delta calls 2021 year of recovery after first loss in 11 years

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In this news, we discuss the Delta calls 2021 year of recovery after first loss in 11 years

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(Reuters) – Delta Air Lines CEO Ed Bastian expects 2021 to be ‘the year of recovery’ after the coronavirus pandemic slashes operating revenue by 64% and caused its first annual loss in 11 years.

“We don’t anticipate that by the summer travel will be back to a location close to where it was before, but it will be a significant improvement, enough to be able to generate profitability for us in the second half of the year, ”Bastian said. Reuters.

The strength of the recovery will depend on factors such as the pace of vaccine deployments and people’s appetites to fly after a year that has almost ended global travel.

In the first quarter, the Atlanta-based airline expects revenue to drop 60% to 65% from a year ago and its scheduled capacity to decline 35%.

As it continues to block middle seats at least until March 30, it expects actual capacity sold to decline by around 55%.

“When the demand for air travel increases due to confidence, that will indicate that we will start selling those middle seats,” Bastian said.

Business travel is expected to pick up in the second half of the year but remain silent for a while, he said.

A resumption of international travel, which has been hit hard by the travel bans, will take at least another year and Bastian said the airline will continue to burn between $ 10 million and $ 15 million a day in the first quarter.

It lost an average of $ 12 million a day in the fourth quarter, but remains on track to stop its cash consumption in the spring, the airline said.

The global airline industry body IATA estimates that a return to positive cash flow for the industry may not happen this year, Chief Economist Brian Pearce said Thursday, as a resurgence of lockdowns killed a fragile recovery in bookings.

Delta expects to have $ 18 billion to $ 19 billion in cash by the end of March, including an additional $ 3 billion in government payroll support, while carrying around $ 18 billion in net debt. billions of dollars.

He had $ 16.7 billion in cash in 2020 after a series of capital raises.

FIRST ANNUAL LOSS SINCE 2009

Delta, the first U.S. airline to post 2020 results, reported a loss of $ 12.4 billion – its first since 2009 – on operating revenue of $ 17 billion. It posted a profit of $ 4.8 billion a year earlier.

It lost $ 755 million in the fourth quarter, or $ 1.19 per share.

Delta recorded $ 1 billion in COVID-19 related charges during the quarter, although total adjusted operating expenses fell $ 4.6 billion or 47% due to lower fuel costs, maintenance and salary.

Delta avoided time off but said nearly 18,000 employees, or 20% of its workforce, had decided to leave the company in 2020.

He has no plans to lay off employees once the second round of government payroll support for airlines expires in March.

The company plans to withdraw nearly 400 jets by 2025, as it streamlines its fleet to nine families of aircraft.

Bastian has previously hinted at the possibility of purchasing the Boeing Co 737 MAX.

Hopefully the US government will lift its ban on foreign travel by spring or summer if the virus is contained, Bastian said.

Regarding disruption to recent U.S. flights by supporters of U.S. President Donald Trump, Bastian said Delta had placed passengers involved in incidents that targeted Senators Mitt Romney and Lindsey Graham on its no-fly list .

Reporting by Tracy Rucinski; edited by Jason Neely

Original © Thomson Reuters

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