Home Aviation Delta ends June quarter 2020 with $15.7 billion in liquidity

Delta ends June quarter 2020 with $15.7 billion in liquidity

by timenews
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Delta Air Lines has reported financial results for the June quarter
2020 and outlined its continued response to the COVID-19 global
pandemic.
Delta’s Chief Executive officer, Ed Bastian, said: “A $3.9 billion
adjusted pre-tax loss for the June quarter on a more than $11 billion
decline in revenue over last year, illustrates the truly staggering
impact of the COVID-19 pandemic on our business. In the face of this
challenge, our people have acted quickly and decisively to protect our
customers and our company, reducing our average daily cash burn by
more than 70 percent since late March to $27 million in the month of
June.
“Given the combined effects of the pandemic and associated financial
impact on the global economy, we continue to believe that it will be
more than two years before we see a sustainable recovery. In this
difficult environment, the strengths that are core to Delta’s business
– our people, our brand, our network and our operational reliability –
guide every decision we make, differentiating Delta with our customers
and positioning us to succeed when demand returns.”
June Quarter Financial Results
“Adjusted pre-tax loss of $3.9 billion excludes $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 $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 $4.1 billion over prior year. Total
adjusted operating expense decreased $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 $15.7 billion in
liquidity,” he stated.
Update on COVID-19 Response
In response to the COVID-19 pandemic, the Company said it has
prioritised the safety of customers and employees, the preservation of
financial liquidity and ensuring it is well positioned for recovery.
Actions under these priorities include: protecting the health and
safety of employees and customers, adoption of new cleaning procedures
on all flights, including disinfectant electrostatic spraying on
aircraft and sanitising high-touch areas before each flight.
It also includes taking steps to help employees and customers practice
social distancing and stay safe, including requiring employees and
customers to wear masks, blocking middle seats and capping load factor
at 60 percent and modifying boarding and deplaning process; installing
plexiglass shields at all Delta check-in counters, Delta Sky Clubs and
gate counters, adding social distance markers in the check-in lobby,
Delta Sky Clubs, at gate areas and in jet bridges; launching a Global
Cleanliness organisation dedicated to evolving Delta’s already high
cleanliness standards, seeking to bring the same focus and rigor that
has underpinned Delta’s reputation for unmatched operational
reliability; providing COVID-19 testing for employees in partnership
with the Mayo Clinic and Quest Diagnostics and giving customers
flexibility to plan, re-book and travel including extending expiration
on travel credits through September 2022. “Delta has provided more
than $2.2 billion in cash refunds in 2020,” the Airline said.
During the June quarter, the Company said it made the decision to
retire the entire MD-90, 777 and 737-700 fleets and portions of its
767-300ER and A320 fleets by late 2020. This is in addition to the
decision in the March quarter to accelerate retirement of its MD-88
fleet from December 2020 to June 2020. The Company also cancelled its
purchase commitment for four A350 aircraft from LATAM. Primarily as a
result of these decisions, the Company reported a record of $2.5
billion in fleet-related and other charges, which are reflected in
“Restructuring charges” on the Consolidated Statement of Operations.
During the June quarter the company recorded a write-down of $1.1
billion in its investment in LATAM Airlines and a $770 million
write-down in its investment in AeroMexico following their financial
losses and separate Chapter 11 bankruptcy filings. Delta said it also
wrote down its investment in Virgin Atlantic during the quarter,
resulting in a $200 million charge. Write-downs related to equity
partners are reflected as “Impairments and equity method losses” on
the Consolidated Statement of Operations.

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