Delta Air Lines has reported an adjusted pre-tax loss of $2.9 billion for the March quarter 2021 on adjusted operating revenue of $3.6 billion – a decline of 65% on 55% lower sellable capacity compared to the march 2019 quarter.
The pre-tax loss figure excludes $1.2 billion of benefit related to the first payroll support program extension (PSP2), which is partially offset among other items by the debt extinguishment charges incurred when prepaying the airline’s $1.5 billion slots, gates and routes term loan.
Total operating expense, which includes the $1.2 billion benefit related to PSP2, decreased $3.9 billion over the March quarter 2019. Adjusted for the benefit related to PSP2 and third-party refinery sales, total operating expense decreased $3.1 billion or 33 percent in the March quarter compared to March quarter 2019, driven by capacity- and revenue-related expense reductions, lower salaries and related costs and strong cost management across the business
During the March quarter, cash burn averaged $11 million per day and turned positive in the month of March with cash generation of $4 million per day.
"A year after the onset of the pandemic, travelers are gaining confidence and beginning to reclaim their lives. Delta is accelerating into the recovery with our brand stronger and more trusted than ever before," said Ed Bastian, Delta's chief executive officer. "Thanks to the incredible efforts of our people, we achieved positive daily cash generation in the month of March, a remarkable accomplishment considering our middle seat block and the low level of demand for business and international travel. If recovery trends hold, we expect positive cash generation for the June quarter and see a path to return to profitability in the September quarter as the demand recovery progresses."
At the end of the March quarter, Delta had $16.6 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit facilities. The company had total debt and finance lease obligations of $29.0 billion with adjusted net debt of $19.1 billion, which was higher than prior guidance as a result of aircraft financing decisions
"Recent demand trends are encouraging with rising confidence in air travel as vaccination rates improve and travel restrictions ease, with current domestic leisure bookings 85% recovered to 2019 levels," said Glen Hauenstein, Delta's president. "In the June quarter, we expect significant sequential improvement in revenue as leisure demand accelerates into the peak summer period and we add capacity efficiently with the removal of our seat block May 1 with revenues recovering to 45 to 50 percent of 2019."
"With our cash flow and earnings close to inflection, we have begun our journey of de-levering," said Gary Chase, Delta's interim co-chief financial officer. "By the end of the June quarter, we will have reduced financial obligations by nearly $10 billion in a combination of paying down debt and accelerating pension funding since last fall. This reflects an unprecedented turnaround in the health of our pension plans over the last decade, securing the future of our retirees."
At the end of the March quarter, the company had total debt and finance lease obligations of $29.0 billion with adjusted net debt of $19.1 billion, $8.6 billion higher than December 2019. The company's total debt had a weighted average interest rate of 4.5 percent at March quarter-end. During the quarter, Delta prepaid its $1.5 billion slots, gates and routes term loan. By the end of the June quarter, total debt repaid and pension funding since the end of September quarter 2020 is expected to total nearly $10 billion.