Delta Air Lines reports USD 3.9bn pre-tax loss in June quarter

Delta Air Lines (NYSE:DAL) has reported a pre-tax loss of USD 3.9 billion and adjusted loss per share of USD 4.43 on adjusted revenue of USD 1.2 billion in the June quarter 2020, the company said.

June quarter 2020 GAAP pre-tax loss was USD 7.0 billion and loss per share was USD 9.01 on total revenue of USD 1.5 billion.

A USD 3.9 billion adjusted pre-tax loss for the June quarter on a more than USD 11 billion decline in revenue over last year, illustrates impact of the COVID-19 pandemic on the business.

The company has reduced daily cash burn by more than 70 percent since late March to USD 27 million in the month of June.

June quarter financial results

-Adjusted pre-tax loss of USD 3.9 billion excludes USD 3.2 billion of items directly related to the impact of COVID-19 and the company´s response, including fleet-related restructuring charges, write-downs related to certain of Delta´s equity investments, and the benefit of the CARES Act grant recognized in the quarter
-Total adjusted revenue of USD 1.2 billion, which excludes refinery sales, declined 91 percent versus prior year on system capacity reduction of 85 percent compared to the prior year
-Total operating expense decreased USD 4.1 billion over prior year. Total adjusted operating expense decreased USD 5.5 billion or 53 percent in the June quarter compared to the prior year, driven by lower capacity- and revenue-related expenses and strong cost management throughout the business
-At the end of the June quarter, the company had USD 15.7 billion in liquidity

In response to the COVID-19 pandemic, the company has prioritized the safety of customers and employees, the preservation of financial liquidity and ensuring it is well positioned for recovery.

To preserve financial liquidity, the company is:

-Raising nearly USD 15 billion in financing transactions since early March, at a blended average interest rate of 5.5 percent, including the unsecured loan portion received under the CARES Act payroll support program
-Reducing cash burn throughout the June quarter with target to achieve breakeven cash burn by year end
-Amending credit facilities to replace all fixed charge coverage ratio covenants with liquidity-based covenants
-Extending maturities of USD 1.3 billion of borrowings under revolving credit facilities from 2021 to 2022
-Managing costs through lower capacity, reduced fuel expense and cost initiatives including reduced work schedules and voluntary employee leaves of absence, parking aircraft, consolidating facilities and eliminating nearly all discretionary spend
-Obtaining USD 5.4 billion of grant funds and unsecured loans through the PSP of the CARES Act to be paid in installments through July 2020
-Continuing to evaluate future financing opportunities by leveraging unencumbered assets.

Total adjusted operating expense for the June quarter decreased USD 5.5 billion or 53 percent versus the prior year quarter, excluding a USD 1.3 billion CARES Act benefit, and USD 2.5 billion in restructuring charges from fleet-related decisions and other charges.