Delta Air Lines posted its worst loss since 2008, and it warned that bookings are declining as Covid-19 cases rise, forcing the airline to trim its schedule again.
The company had planned to add 1,000 flights a day to its August schedule as Delta and other airlines reported a modest pickup in bookings for June and July. Although Delta initially added 1,000 flights a day to its August schedule, CEO Ed Bastian confirmed it will now add only 500 as rising coronavirus cases in southern states and quarantine rules on travelers to the Northeast were put in place.
“Those factors are causing consumers to pause,” he said in an interview on CNBC. “At the start of the pandemic we said this recovery was going to be choppy. Indeed it’s been choppy. Demand has stalled as the virus has grown.”
The airline said it lost $2.8 billion, excluding special items. Including those items, Delta’s net loss came to $5.7 billion.
It’s the worst loss since Delta took $6 billion in charges in 2008 in the wake of its bankrutpcy. But this was far worse than that non-cash accounting loss. It burned through $43 million of cash a day during the course of the quarter. Bastian referred to it as the worst quarter in the company’s history.
“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,” he said in the company’s earnings statement.
Revenue plunged 91%, as demand for air travel across the industry essentially came to a halt early in the quarter. Bastian said he expects summer travel to be 20% to 25% of normal levels.
Bastian also said that 17,000 Delta employees, nearly 20% of its staff, had taken buyouts and early retirement packages, raising hopes that the airline will be able to get by without involuntary layoffs later this year. But Bastian said it is too soon to say if it will be able to avoid job cuts.US airlines are not allowed to have involuntary furloughs or layoffs before October 1 under terms of the federal bailout they received.
Most other US airlines are due to report results next week in what is expected to be a historically bad quarter for the industry.