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Dec 3, 2020

Delta Air Lines sees cash losses mounting as virus slows travel

We still need to manage COVID, not just lockdown and write a cheque: Perrin Beatty


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Delta Air Lines Inc. warned that cash losses could be deeper than expected this quarter, reaching as much as US$14 million a day, as the surge in coronavirus cases undermines travel demand.

The carrier also urged all employees to get tested weekly to stem the spread of COVID-19 and said it would begin a contact tracing program on Dec. 15 for international passengers, working with other carriers and the U.S. Centers for Disease Control and Prevention.

Delta now expects to burn US$12 million to US$14 million in cash daily this quarter, up from an earlier outlook for as much as US$12 million, according to a securities filing Thursday. Fourth-quarter revenue is still expected to be 30 per cent of what it was a year earlier.

The carrier’s dimmer outlook follows similar recent warnings from its biggest U.S. rivals about slipping demand and canceled trips as COVID-19 hospitalizations keep setting records. That reverses an earlier trend in which bookings were independent of the rise and fall of cases. While U.S. air travel jumped for the Thanksgiving holiday, it was just 41 US of last year’s level.

“While the environment continues to be volatile, I’m encouraged that we are still on track to reach the break-even point in the spring, and that outlook has been bolstered by continuing positive developments with vaccines,” Chief Executive Officer Ed Bastian said in a memo to employees included in the filing.

Atlanta-based Delta hasn’t decided whether it will require coronavirus vaccinations for employees before they can fly, but Bastian said the carrier would “strongly encourage” it for all airline workers. It’s likely that passengers on international flights will be required to get vaccinated, he said.

Frontline Workers

“Airline employees are frontline workers and will be given priority as frontline workers to access the vaccine,” Bastian said on NBC’s “Today” show. “Myself, I can’t wait to get vaccinated.”

The carrier has been using on-site rapid testing for employees, providing kits at workplaces with fewer employees and offering at-home kits to all its U.S. employees. Bastian has said he gets tested three times a week.

Starting Dec. 15, Delta will be the first U.S. carrier to ask customers traveling from the U.S. to another country to provide their name and contact information, which will be sent to the CDC for use in tracing if necessary.

The stock climbed 6.1 per cent to US$43.59 at 11:46 a.m. in New York, rising with other airlines amid a broad rally on improved prospects for federal coronavirus relief. Delta had dropped 30 per cent this year through Wednesday, in line with a Standard & Poor’s index of the country’s five biggest carriers.