Delta Air Lines lost $534 million in the first three months of the year, its first quarterly loss in more than five years. It became the first airline to report the financial blow caused by the outbreak of the coronavirus.
The airline said its loss, excluding special items, came in at $326 million, compared to a $639 million profit a year earlier. Revenue in the quarter fell $1.9 billion compared to a year ago, an 18% drop. The miles flown by paying passengers fell by 17%, and the amount that they paid to fly each of those miles fell by 13% as fares plunged at the end of the quarter. “The first quarter of 2020 has truly been like no other in our history,” CEO Ed Bastian said in comments to investors.
“We don’t know when it will happen, but we do know that Delta will be a smaller airline for some time, and we should be prepared for a choppy, sluggish recovery even after the virus is contained,” he wrote in a staff note. “I estimate the recovery period could take two to three years. I hope it’s sooner, but we need to be realistic in our planning.”
The airline spent the quarter shoring up cash and slashing expenses to combat the sharp drop in revenue. Delta’s is carrying about 5% of its normal passenger loads, Bastian told CNBC. The carrier burned through $100 million a day at the end of March, a rate it expects to halve by the end of the second quarter.
“The decade of work we put into the balance sheet to lower debt and build unencumbered assets has been crucial to our success in raising capital and we expect to end the June quarter with approximately $10 billion in liquidity,” Delta’s CFO Paul Jacobson said in a release.
Delta said it expects to get about $5.4 billion in the government payroll aid — $3.8 billion in grants and a $1.6-billion unsecured 10-year loan. It received the first installment on Monday. The $2.2 trillion in coronavirus relief Congress passed last month sets aside a separate $25 billion in loans for airlines. Delta said it considering applying and that it is likely eligible for about $4.6 billion.