Despite third-quarter business travel being nothing like the levels seen before the coronavirus, Delta says that some of its corporate business travel has returned. After posting another multibillion-dollar net loss yesterday after the peak summer travel season fell victim to the coronavirus, Delta executives remained upbeat.
Slowly travelers are starting to return as they get more comfortable with flying, yet Delta still says it could take years to recover to levels seen pre-COVID-19. The Atlanta-based carrier reported that it had made $3.1 billion in operating revenue in the third quarter. While that was still down 76% on the same period last year, it was up compared to the $1.5 billion it took during the second quarter of 2020.
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Delta expects a better fourth quarter
During an earnings call, Business Travel News Europe (BTNE) reports Delta CEO Ed Bastian saying that it was a “steady improvement” from the second quarter when revenue was just 10% of what it was a year earlier. Bastian went on to say that this trend will continue into the fourth quarter and predicted that the airline could reach around a third of 2019 levels.
When speaking during the call, Delta Air Lines President Glen Hauenstein said that business travel was 15% of 2019 levels but that it was “trending up across all industries” and expected to continue rising.
Similar to what Southwest Airlines said last week, Bastian said that 90% of Delta’s main corporate customers “do have travelers who are traveling … in small numbers, but they are getting a new sense of the travel experience.”
The 63-year-old airline executive added that business travelers that are flying again are buoyed by the way airlines have handled the COVID-19 pandemic.
“With over one billion air travelers worldwide in 2020, there have only been 44 documented cases of suspected Covid transmission onboard an aircraft, and virtually all of them were in the early months of the pandemic before masks, and revised safety protocols came into existence,” he said, citing data from the International Air Transport Association (IATA).
“We carry at Delta over one million people a week and have had no documented transmission onboard any of our aircraft.”
Delta could stop blocking middle seats
As confidence in flying starts to return, Bastian is confident that Delta will be able to change its current policy of blocking the middle seat within the first half of 2021.
Delta Air Lines reported a net loss of $5.4 billion for the last quarter compared to a net income of $1.5 for the same period in 2019. Delta’s cash burn during the third quarter averaged $24 million per day. Still, according to Delta CFO Paul Jacobson, that figure should be somewhere between $10 million and $12 million by the year’s end.
Delta was hoping to be breaking even by the end of 2020
In a research note cited by BTNE, Cowen analyst Helane Becker said that Delta Air Lines had hoped to be breaking even by the end of 2020 but was not surprised to see that target slip given the slowdown in demand for air travel.
While the demand for air travel slowly starts to return, Delta and every other American carrier will be hoping for a strong Thanksgiving and holiday season.
What do you think of Delta’s optimism? Are things starting to pick up, or do you believe that a second wave of the pandemic will slow down the recovery? Please tell us what you think in the comments.
