(Reuters) – Delta Air Lines CEO Ed Bastian predicts 2021 will be “the year of recovery” after the coronavirus pandemic cut operating revenues by 64% and caused its first annual loss in 11 years.
“We do not expect the trip to return close to where it was by the summer, but it will be a significant improvement, enough to be able to increase profitability for us in the second half of the year,” Bastian Reuters said.
The strength of the recovery will depend on factors such as the pace of vaccine launches and people’s appetite for flights after a year that nearly stopped global travel.
In the first quarter, the Atlanta-based airline expects revenues to drop from 60% to 65% from a year ago and its scheduled flight capacity was reduced by 35%.
As he continues to block middle seats at least until March 30, he expects the actual capacity he sells to decrease by about 55%.
“When the demand for air travel increases due to confidence, it will be an indication that we will start selling those central seats,” Bastian said.
Business travel is expected to increase in the second half of the year, but remain silent for a period of time, he said.
A resurgence in international travel, which has been hit hard by travel bans, will take at least another year, and Bastian said the airline will continue to burn $ 10 million to $ 15 million a day in the first quarter.
It lost an average of $ 12 million a day in the fourth quarter but remains on track to stop its burning cash in the spring, the airline said.
Global airline IATA believes a positive cash flow return for the industry may not happen this year, chief economist Brian Pearce said Thursday, as a resurgence of lockdowns killed a fragile booking recovery.
Delta expects to have $ 18 billion to $ 19 billion in cash by the end of March, including an additional $ 3 billion in government payroll support, while carrying approximately $ 18 billion in net debt.
It had $ 16.7 billion in cash in 2020 after a series of capital raisings.
FIRST ANNUAL LOSS SINCE 2009
Delta, the first US airline to post its 2020 results, reported a loss of $ 12.4 billion – the first since 2009 – on operating revenues of $ 17 billion. It made a profit of $ 4.8 billion the year before.
It lost $ 755 million in the fourth quarter, or $ 1.19 per share.
Delta booked $ 1 billion in COVID-19 related expenses in the quarter, although total adjusted operating expenses decreased by $ 4.6 billion or 47% on reduced fuel, maintenance and salary costs.
Delta avoided permits, but said nearly 18,000 employees, or 20 percent of its workforce, decided to leave the company in 2020.
It does not intend to fire any employees once the second round of government payroll support for airlines expires in March.
The airline plans to retire nearly 400 jets by 2025 as it simplifies its fleet to nine aircraft families.
Bastian previously hinted at buying Boeing Co.’s 737 MAX.
It is hoped the US government will lift the international travel ban by spring or summer if the virus is contained, Bastian said.
Turning to disruptions on recent US flights by supporters of US President Donald Trump, Bastian said Delta has placed passengers involved in incidents that targeted Senators Mitt Romney and Lindsey Graham on its no-fly list.
Reporting by Tracy Rucinski; editing by Jason Neely