Delta halves cash burn in the fourth quarter, narrows losses to cap worst year ever

Delta Air Lines halved its cash burn and narrowed its losses in the fourth quarter as the coronavirus pandemic drove the carrier to its worst year ever, the company said Thursday.

The Atlanta-based airline posted a net loss of nearly $12.39 billion in 2020, a record, according to FactSet data.

Here’s how Delta performed compared with what Wall Street expected, based on average estimates compiled by Refinitiv:

• Adjusted EPS: a loss of $2.53 versus an expected loss of $2.50
• Total revenue: $3.97 billion, adjusted to back out refinery sales $3.53 billion

Delta swung to a $755 million net loss in the fourth quarter compared with a $1.1 billion profit a year earlier. Total revenue fell 65% from $11.44 billion in the fourth-quarter of 2019 to $3.97 billion. The company’s revenue got a $441 million boost from third-party refinery sales. On an adjusted basis, Delta had a per-share loss of $2.53, compared with analyst estimates for a loss of $2.50 a share.

The carrier’s cash burn averaged $12 million a day in the quarter ended Dec. 31, down by half from its average cash burn of $24 million a day in the third quarter.

Delta shares were up more than 2% in premarket trading after Delta reported its results.

The airline will face difficult months ahead but is eyeing a recovery in 2021 as Covid-19 vaccines are administered around the country, CEO Ed Bastian said.

“While our challenges continue in 2021, I am optimistic this will be a year of recovery and a turning point that results in an even stronger Delta returning to revenue growth, profitability and free cash generation,” Bastian said.

Delta said it expects revenue to fall 60% to 65% in the first quarter of the year, from the year-earlier period, just as the pandemic was starting. That’s below analyst estimates for a 48% year-over-year drop.

The pandemic devastated travel demand as concerns over the virus, quarantines, travel restrictions and pauses on business travel kept millions of potential customers at home. The Transportation Security Administration screened just 324 million travelers last year, down from 824 million in 2019.

Airlines executives have been hopeful that the rollout of vaccines would provide some relief but have repeatedly warned it won’t be immediate.

“The early part of the year will be characterized by choppy demand recovery and a booking curve that remains compressed, followed by an inflection point, and finally a sustained demand recovery as customer confidence gains momentum, vaccinations become widespread and offices re-open,” said Delta’s president Glen Hauenstein in an earnings release.

Delta said it ended the fourth quarter with $16.7 billion in liquidity. Delta raised billions in debt last year, including a record $9 billion debt sale backed by its frequent flyer program SkyMiles.

The carrier and its rivals are also receiving additional federal funds to help weather the crisis. Congress late last year approved $15 billion in additional federal aid for airlines to pay workers, on top of another $25 billion in government payroll support they received under the March CARES Act.