By Alison Sider 

Delta Air Lines Inc. reported its first quarterly loss in over five years, as the coronavirus pandemic ravaged the travel industry.

With much of the world subject to travel restrictions and government orders to stay home, air travel has largely ceased. Passenger volumes have plummeted 95% in the U.S., and airlines expect fears of illness to weigh heavily on travel demand for the foreseeable future.

For Delta and other airlines, the virus interrupted a historic boom in business. Delta had posted 10 consecutive years of annual profits and was anticipating another year of buoyant demand in 2020. The airline's last quarterly loss was in the fourth quarter of 2014.

The outlook changed abruptly as the virus spread beyond China. The 18% revenue decline Delta reported on Wednesday for the latest quarter is likely only the beginning, because the pandemic's full chilling effect on travel didn't take hold until March. Delta said it expects a 90% drop in revenue during the second quarter.

Delta Chief Executive Ed Bastian told employees the recovery could take two to three years.

"We do know that Delta will be a smaller airline for some time, and we should be prepared for a choppy, sluggish recovery even after the virus is contained," he said in a memo. "I hope it's sooner, but we need to be realistic in our planning."

Delta's shares fell 5.9% in midafternoon trading.

Delta reported a net loss of $534 million for the first three months of the year, down from a profit of $730 million during the first quarter of 2019. Adjusted earnings swung to a loss of $326 million, or 51 cents a share, down from a profit of 96 cents a share a year ago.

The losses have made preserving cash a priority. Delta is aiming to slow the rate at which it is burning through cash from $100 million a day at the end of March to $50 million a day by the end of June. The airline expects to end the second quarter with $10 billion in liquidity, up from $6 billion now. Paul Jacobson, Delta's finance chief, agreed to call off his planned retirement to help steer the airline through the crisis.

Mr. Bastian said Delta issued over a million refunds worth more than $500 million in March. For much of the month, he said, Delta paid out more in refunds than it made in ticket sales. That gap is starting to narrow, though Mr. Jacobson said he expects sales to remain slightly negative as Delta works through a backlog of refunds.

Delta said it has raised $5.4 billion since March, including loans and a $1.2 billion deal to sell aircraft and lease them back. The airline also sought government aid to pay workers in the coming months and said it has already received the first $2.7 billion in funds from the Treasury Department, half of what it will receive under that program. The airline is eligible for an additional $4.6 billion secured loan from the government.

The airline said it plans to apply for that funding by the end of the month, but has through September to decide whether to draw the money. Mr. Bastian said he believed the government funding would provide enough liquidity to get through the crisis without asking for additional government relief.

To cut costs, Delta has extended payment terms with airports, vendors and lessors; worked with manufacturers to push back aircraft deliveries; cut executive pay and parked planes. The airline can't reduce its workforce in the coming months as a condition of receiving federal aid, but about 35,000 employees have volunteered for unpaid leave.

Delta took a $112 million charge on some of its investments in foreign carriers, though it said others were only temporarily impaired. Mr. Bastian said Delta doesn't have plans to sell its stakes in foreign airlines, but also can't afford to provide any financing to help them weather the difficulties.

United Airlines Holdings Inc. reported a pretax loss of $2.1 billion during the first quarter, including certain one-time items like an allowance for a loss on a loan to a South American airline. United said Tuesday that it is tapping equity markets in an effort to shore up its balance sheet -- selling shares to raise more than $1 billion.

Delta executives said Wednesday that they don't have immediate plans to issue equity, preferring to raise more funding by borrowing against assets.

Write to Alison Sider at


(END) Dow Jones Newswires

April 22, 2020 14:17 ET (18:17 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
Delta Air Lines (NYSE:DAL)
Historical Stock Chart
From Jun 2020 to Jul 2020 Click Here for more Delta Air Lines Charts.
Delta Air Lines (NYSE:DAL)
Historical Stock Chart
From Jul 2019 to Jul 2020 Click Here for more Delta Air Lines Charts.