Delta Air Lines Posts Record Loss of $12.4 Billion in 2020

Jan. 14—Delta Air Lines had a net loss of $12.4 billion last year as air travel plummeted due to the COVID-19 pandemic, marking the company's largest loss ever.

But its losses narrowed in the fourth quarter and Chief Executive Ed Bastian predicted the airline would return to profitability later this year.

"We expect by the spring as the vaccines continue to be distributed, the virus is in a more contained form, people are ready to start traveling again and feel more confident, that's when we'll be getting the added cash and revenues," Bastian said in an interview with The Atlanta Journal-Constitution.

Bastian hopes to see spring bookings for travel into summer and fall, noting that such advance bookings are a source of cash for the airlines.

Atlanta-based Delta expects to get another $3 billion from the federal government from an extension of CARES Act stimulus funding for airlines approved late last year. Bastian said he expects to get the first installment this month and the rest later in the first quarter, and said 30% of the total will be in the form of a loan with 1% interest payable over 10 years.

That will be another infusion of cash to bolster the company's coffers as it continues burning through $10 million to $15 million in cash a day. Delta has raised billions to last through the pandemic, including $9 billion in debt financing backed by its SkyMiles frequent flier program. It had about $16.7 billion in liquidity at the end of December.

That has helped the airline survive a 64% decline in revenue in 2020, including a 70% drop in passenger revenue and a 19% drop in cargo revenue.

Delta's operating revenue declined to $4 billion in the fourth quarter from $11.4 billion a year earlier, an improvement from $3 billion in the third quarter and $1.5 billion in the second quarter. Its quarterly net loss narrowed to $755 million in the fourth quarter from its $5.4 billion loss in the third quarter and $5.7 billion loss in the second quarter.

The company reduced its full-year operating expenses by 27% by reducing staff through voluntary unpaid leave, buyouts and early retirements, cutting ground workers' pay, flying less, retiring jets, trimming operations and other measures.

But the historic decline of air travel due to the coronavirus caused Delta to swing from a $4.8 billion profit that made it one of the world's most successful airlines in 2019 to its staggering $12.4 billion loss in 2020.

Bastian said health measures like quarantine and travel requirements under the Trump administration have been mostly left to the states, making it "very, very choppy, very confusing to customers." He added he hopes for "a stronger, more unified national approach toward managing the virus" under the incoming Biden administration, and that he has already had discussions with the incoming administration.

"I certainly hope as we recover from COVID that we get clearer directives that we can all work with, to open travel up over some period of time this year," Bastian said in the interview.

Delta continues to block middle seats through March for social distancing and expects its flying to be down 35% this quarter compared with a year ago, resulting in a 55% decline in sellable flight capacity.

"We see three distinct phases in 2021. 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 President Glen Hauenstein in a written statement.

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