Americans are still avoiding air travel and that is slamming the airlines.
The Department of Labor said Tuesday that the price of airline tickets is down 25 percent compared with a year ago, squeezing margins of airlines now flying far fewer flights. Passenger volume is down by about 60 percent, according to TSA data.
So Delta Air Lines was expected to announce a loss Tuesday when it reported quarterly earnings. But the net loss of $5.38 billion in the third quarter, or a $6.9 billion pre-tax loss, dwarfed those expectations.
The company also said improvements in customer traffic could signal a slow turnaround for the carrier.
The company’s loss compared with a $1.5 billion profit during the same period a year ago. Revenue for the quarter was $3.06 billion, down 75.6 percent from the same period a year ago, the company reported.
Delta reported that $4 billion of its losses were directly due to COVID-19 and the company’s response, including fleet-related restructuring charges and charges for voluntary separation and early retirement programs for Delta employees.
“While our September quarter results demonstrate the magnitude of the pandemic on our business, we have been encouraged as more customers travel and we are seeing a path of progressive improvement in our revenues, financial results and daily cash burn,” Delta Chief Executive Officer Ed Bastian said in a statement.
Glen Hauenstein, Delta’s president, said it could be two years or longer before the company’s revenue fully recovers from the pandemic.
The announcement of the losses came after the White House and Congress failed to come up with a second deal to help ailing airline carriers survive losses from the pandemic. Bastian and other airline executives met with the White House last month in hopes of winning a $25 billion relief package, but it never moved forward legislatively.
Delta had $21.6 billion in liquidity at the end of September and cut its cash burn to $18 million a day, down from $27 million a day in June. On an adjusted basis, its pre-tax loss for the quarter was $2.6 billion with an adjusted loss per share of $3.30 and adjusted revenue of $2.6 billion.
“With a slow and steady build in demand, we are restoring flying to meet our customers’ needs, while staying nimble with our capacity in light of COVID-19,” Hauenstein said. “While it may be two years or more until we see a normalized revenue environment, by restoring customer confidence in travel and building customer loyalty now, we are creating the foundation for sustainable future revenue growth.”
–UPI contributed to this report.