Today, Delta Air Lines released its Q4 results and its annual results for one of the most difficult years in aviation history. Unsurprisingly, the results are not good. The airline posted a $755 million net loss in the fourth quarter and a massive $12.4 billion net loss for the whole year. According to statistics, that makes 2020 the worst year in the airline’s history.
A record-breaking loss
2020 was difficult for every airline around the world. Over the next few weeks, we will find out exactly how difficult it was. Delta Air Lines was one of the first to announce a record-breaking loss, but it certainly won’t be the last. The airline’s loss in the fourth quarter of 2020 was $755 million, while in 2019, it posted a profit of $1.1 billion. Revenues in the fourth quarter were still down 65% to $3.9 billion compared to last year’s $11.4 billion. Although revenues are slightly up compared to the $3 billion it declared in Q3 2020.
The airline’s liquidity stands at $16.7 billion at the end of 2020 after it raised capital through its loyalty program, trust certificates, aircraft sales, and loans. By the end of March, the airline has plans to increase this amount to over $18 billion. This will include support from the US government’s payroll initiative.
Signs of recovery
It wasn’t all bad news. The airline generally fared better than analysts had predicted. Its total revenues were almost $4 billion against an expected £3.5 billion. The airline was expected to announce a drop in share price of $2.50, and it narrowly missed this target with a drop of $2.53. The airline also managed to reduce its daily cash burn from $24 million in Q3 down it just $12 million a day in Q4.
The airline also said it plans to have eliminated this cash burn deficit by spring. As a result of the signs of recovery and Delta CEO Ed Bastian’s optimism, Delta shares went up by 2.7% on the stock market. In a statement Bastian said,
“Our December quarter results capped the toughest year in Delta’s history. I want to thank the Delta people who have risen to the occasion, focusing on delivering results for all of our stakeholders by putting our customers at the center of our recovery. 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.”
And of course, with so many flight cancellations, operating expenses fell through the fourth quarter by 47%. This is mainly due to lower fuel costs, maintenance costs, and salary cuts. While the airline hasn’t technically furloughed any staff, it says almost 20% of its staff chose to leave the airline over the course of the year. Of its operating costs across the year, $4.3 billion are COVID-19 related.
Looking ahead
While there are some recovery signs, including increased revenues from Q3 to Q4 and the slowed cash burn, Delta still expects Q1 2021 to be down compared to last year. The global pandemic only really started having a serious impact on airlines at the end of March. As such, Delta expects to see revenues for Q1 fall by around 65% compared to last year. Besides, the airline will continue to block the middle seat until March, meaning revenues will understandably be down compared to the same period last year.
Delta’s results are a sad reflection of a very challenging year. It will be interesting to see how the other airlines fared in comparison.