Delta reports first profit since 2019 thanks to federal aid, improving revenue as travelers return

A Delta Air Lines Boeing 737 approaching LAX for touchdown.

Angel Di Bilio | iStock Editorial | Getty Images

Delta Air Lines on Wednesday reported second-quarter revenue that topped Wall Street’s estimates and mentioned leisure and enterprise journey bookings rose sharply after greater than a yr of pandemic lockdowns.

The Atlanta-based airline posted a profit of $652 million, snapping a five-quarter streak of losses, thanks to federal coronavirus aid that offset a few of its prices.

Delta shares have been down greater than 1% in late-morning buying and selling.

While nonetheless hamstrung by weak worldwide air journey, revenue will proceed to enhance in contrast with latest months, Delta mentioned. For the third quarter, Delta mentioned it expects revenue shall be down 30% to 35% over 2019, when it introduced in $12.56 billion.

Delta and another airways usually compare their results to 2019 earlier than the pandemic since the virus had created such dramatic shifts in demand final yr.

The airline mentioned home leisure journey has fully recovered and that enterprise journey demand was additionally recovering. Average each day web money gross sales — tickets bought minus refunds — doubled over the first quarter and have been 20% greater than its preliminary forecast.

It’s a pointy turnaround for Delta, which reported a report lack of $12.four billion final yr. Other airways have additionally grow to be extra upbeat.

American Airlines mentioned late Tuesday that it may put up a “slight” pretax profit for the second quarter and mentioned revenue will probably are available in greater than anticipated.

The sharp rise in demand has been rocky for airlines — and passengers. Thousands of workers took leaves of absence or early retirement packages at executives’ urging final yr, leaving some carriers in need of skilled pilots, customer support brokers and other employees as demand spiked. The federal support prohibited airways from laying employees off outright.

Delta mentioned final month it’s going to ramp up hiring of greater than 1,000 reservation brokers and plans to rent roughly 1,000 pilots over the following yr.

Delta is the first of the U.S. carriers to report second-quarter outcomes. American, United Airlines and Southwest Airlines are scheduled to report subsequent week.

Here’s how Delta carried out within the second quarter in contrast with what Wall Street anticipated, based mostly on common estimates compiled by Refinitiv:

  • Adjusted outcomes per share: a lack of $1.07 versus an anticipated lack of $1.38 a share. The determine strips out $1.5 billion in federal payroll support and different changes.
  • Total revenue: $7.13 billion versus anticipated $6.22 billion in revenue

Revenue for the three months ended June 30 got here in at $7.13 billion, down 43% from the $12.54 billion it generated throughout the identical interval in 2019 however greater than the $6.22 billion analysts anticipated.

“Looking forward, we are harnessing the power of our differentiated brand and resilient competitive advantages to drive towards sustainable profitability in the second half of 2021 and enable long-term value creation,” CEO Ed Bastian mentioned within the earnings launch.

Bastian instructed CNBC in an interview that the service hasn’t “seen any impact at all” on bookings from the delta variant of Covid-19.

Delta had $17.eight billion in liquidity on the finish of the quarter and whole debt and lease obligations of $29.1 billion.

Delta mentioned its third-quarter capability shall be down 28% to 30%. Its capability was down 32% within the second quarter, although the airline was blocking middle seats till May 1.

Delta late Monday introduced it was including used plane to develop its fleet: leasing seven Airbus A350 wide-body planes and shopping for 29 Boeing 737-900ERs. Its mentioned its 2021 gross capital expenditures would whole round $3.2 billion.

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