A USD12B loss for 2020, Delta is cautious in early 2021

AP – Delta Air Lines closed the books on a disastrous 2020 with a comparatively small fourth-quarter loss, and executives expect a few more rocky months before — they hope — widespread coronavirus vaccinations and testing might salvage something of the upcoming summer travel season.

Delta on Thursday reported a quarterly loss of USD755 and USD12.4 billion in losses for all of 2020. It is the largest annual loss in the history of the airline, which dates to the 1920s, and the global pandemic ended a decade in which Delta churned out a profit each and every year.

The fourth-quarter numbers likely would have been worse but for a December increase in air travel that likely contributed to another surge in virus infections as millions crossed the country to spend time with family and friends during the holidays.

Delta is the first major United States (US) airline to report year-end financial results and the numbers suggest more big losses to come as other carriers post quarterly numbers. US air travel in the fourth quarter was down more than 60 per cent compared with the previous year, as travel restrictions and fear of contracting the virus kept most travellers grounded.

Much like most of last year, the 2021 outlook for Delta and other airlines is intertwined with how quickly the US and other nations can vaccinate enough of their citizens against the coronavirus so that travel restrictions can be eased.

Several dozen mothballed Delta Air Lines jets are parked on a closed runway at Kansas City International Airport. PHOTO: AP

Delta predicts that first-quarter revenue will fall 60 per cent to 65 per cent from the same period in 2019 — almost the same as the 65-per-cent decline in the fourth quarter. It expects to lose USD10 million to USD15 million a day in the next three months. After that, however, Delta sees things getting.

CEO Ed Bastian is sticking to a prediction that Delta will reach break-even in the second quarter. “Hopefully the vaccines will be distributed at a much heightened level, that the virus will be much more contained, and that people will be ready to get on with their lives,” Bastian said.

People will soon be planning summer vacations and, Bastian said in an interview, Delta expects bookings “to start opening up again”. However, international travel and business trips, two lucrative sources of revenue for the Atlanta airline and its rivals, are expected to recover more slowly than less-profitable domestic leisure travel.

Bastian said he expects that international travel this summer will be better than 2020, “a very low bar”, but will take another 12 to 18 months to fully recover. And by the second half of this year, business travel will still be only 25 per cent to 50 per cent of what it used to be, he said.