After Announcing Earnings, Delta Looks Forward

After Announcing Earnings, Delta Looks Forward

In its earnings call Tuesday, Delta Air Lines presented shareholders and analysts the financial results during the third quarter of 2020. It is no surprise the Atlanta based carrier continues to accumulate losses as COVID-19 has halted mobility across pretty much all of the world.

Throughout July, August and September Delta has made losses of $2.6 billion, compared to a $1.5 billion profit during the same period last year. In terms of revenue, the Atlanta based earned gained $3.06 billion, compared to more than $12 billion this time of the year in 2019. Earnings results are just under financial analyst estimates.

During the earnings call, Delta’s CEO Ed Bastian echoed the carrier’s consumer centric approach in helping reinstate consumer confidence. In September, the Atlanta based carrier achieved a net promoter score of 75%, which represents a 22% growth over the score it received in the same time last year. Net promoter scores measure consumer experience by asking consumers how likely are they to recommend a company to a friend or colleague on a scale of 0 to 10.

In this way, Delta believes that measures such as blocking middle seats, thorough regulations regarding mask enforcement and handing out sanitizing gel to flyers are well received by travelers and are helping them feel safe when getting back to the skies.

Though major airlines have been scaling back their schedules lately after an overly-optimistic plan for the summer season, Delta is confident that passenger numbers will ramp up for Thanksgiving and Christmas. The airline has seen its net cash sales from $5 million per day in early July to almost $30 million in September. However, as uncertainty looms, scrutinizing cost reductions to preserve cash reserves is the only viable option for the airline to stay afloat during the months to come.

After the expiration of the CARES Act on Oct. 1, airlines have been furloughing staff in order to “right size” for a smaller future.

Delta has delayed furloughs until Nov. 1 as it continue to negotiate exit packages with its pilots’ unions. The deal will affect more than 1700 pilots. Meanwhile, the carrier has reduced its flight attendant and ground personnel workforce by 20% as well as putting staff in involuntary leave.

In terms of consumer demand, Delta said that it expects business travel numbers to be roughly 15% of what they were last year by December and is confident figures will pick up throughout next year. Speaking about leisure travel, Delta President Glen Hauenstein said that leisure markets such as Florida and some destinations in the Caribbean have recovered to roughly between 35% and 40% of pre-pandemic levels.

However wider leisure travel remains down both within the U.S and internationally due to state-imposed lockdown restrictions and government entry restrictions that are still in place for some international destinations. What remains uncertain is how will the market behave once restrictions are lifted and whether consumers will consider a socially distant vacation in the outdoors before considering travel to another urban area before the vaccine comes in place.

As a geography nerd, Jose has always been fascinated by the complexities of the airline industry and its ability to bring the world closer together. Born and raised in Peru, now studying in the UK. he has travelled around America, Europe and South East Asia. His favorite aircraft is the Boeing 767-300, which he has flown many times during his childhood; although now the A350 is slowly growing up on him.

Jose Antonio Payet
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