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Delta Air Lines (DAL) on Wednesday announced a smaller-than-expected loss in the second quarter, with “accelerating demand” putting the airline back on track to profitability.
Here are the main results of the Q2 report, compared to consensus estimates compiled by Bloomberg:
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Adjusted profit (loss) before tax: Estimate of $ 881 million vs. ($ 898 million)
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Adjusted earnings (loss) per share: ($ 1.07) vs ($ 1.42) estimate
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GAAP earnings per share: Estimate of $ 1.02 vs. (0.17)
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Returned: $ 6.3 billion vs. $ 6.3 billion estimated
Delta recorded a pre-tax loss of $ 881 million in the second quarter, down $ 2 billion from the loss in the previous quarter – and significantly lower than the loss of almost $ 4 billion in the same quarter of last year – as the airline continued to come out of the worst of COVID. -19 pandemic. In an interview with Yahoo Finance, CEO Ed Bastian told Yahoo Finance that the airline will be profitable in the third quarter.
“We expect mid-to-mid single-digit profit in the third quarter. Hope it gets better than that. But I feel pretty comfortable in this range, ”said Bastian.
The company recorded a profit before tax in June. Adjusted operating revenue was $ 6.3 billion, up 76% from $ 3.6 billion in the previous quarter and up sharply from about $ 1.2 billion in the same quarter of the previous year. Total second quarter operating revenue was $ 7.1 billion, including $ 777 million from third-party refinery sales.
Yet the company has yet to regain its pre-pandemic levels. By comparison, Delta’s adjusted revenue for the second quarter of 2019 was $ 12.4 billion.
“You know, posting positive earnings and cash flow in June, just over a year from the worst crisis this industry has ever seen, since the start of the pandemic, it’s pretty remarkable,” he said. Bastian said while praising the resilience of Delta’s 75,000 employees.
Delta had $ 17.8 billion in cash at the end of the quarter. Its total debt and finance lease obligations were $ 29.1 billion. This included $ 3.4 billion in loans he received from the federal government.
“Among its historical peers, Delta had the best capital execution during the crisis and, by contrast, has already started deleveraging,” Raymond analyst James Savanthi Syth recently wrote in a note to clients. Syth cites as an example the $ 1.5 billion payment Delta made during the quarter to fully fund employee pensions.
“We have to go to Europe”
Bastian predicted third quarter revenue to reach 70% of what it was in 2019, boosted by a return from business travelers.
“We surveyed all of our large companies, over 90% of our companies tell us that they will significantly increase their business travel in the third quarter compared to what they were in the second quarter,” he said. he told Yahoo Finance.
International travel, before the pandemic, accounted for 35% of Delta’s revenue, but Bastian said it currently represents less than a quarter. Delta needs those overseas routes to get back to $ 12.4 billion in quarterly revenue.
“We have to open up Europe, which is our biggest theater of operations,” Bastian said.
He and other airline CEOs have worked closely with the White House and European authorities, but Bastian said the Biden administration “is focused on continuing to increase the vaccination rate in our country before. to open the borders to other nations “.
However, he was convinced that Delta would go through the next phase of recovery, but is unsure how long it will take.
“We have all seen how much people miss to travel,” he said. “When you look at the pent-up demand and the number of people traveling now, it gives you the strength to keep going. “
Adam Shapiro is co-presenter of Yahoo Finance Live from 3 p.m. to 5 p.m. Follow him on Twitter @Ajshaps
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