Delta Air Strains (DAL) outcomes Q1 2021

A Delta Airlines Boeing 757-251 approaches Washington Ronald Reagan National Airport (DCA) in Arlington, Virginia on February 24, 2021.

Daniel Slim | AFP | Getty Images

Delta Air Lines reported another quarterly loss on Thursday but expects to break even in June as demand for travel rebounds after a deep slump in the Covid pandemic.

Delta and its competitors continue to lose money, but have become optimistic about bookings improving as more travelers are vaccinated, travel restrictions are lifted and more attractions reopen. The airline said domestic leisure bookings rebounded to about 85% from 2019 levels, although international and business travel remains depressed.

Bookings in March doubled from January, CEO Ed Bastian told CNBC’s “Squawk on the Street”. However, he added that the demand for business travel for this time of year is only 20% of the norm.

“When I look at the first quarter, it became clear to us that our business has taken a turn,” said Bastian. “We have seen a huge increase in bookings over the past few months.”

The Atlanta-based airline, which was the first to report results this quarter, posted a net loss of $ 1.18 billion on revenue of $ 4.15 billion from January through March, a 60% decrease from that month Delta generated $ 10.47 billion in Q1 2019 based on that, which is a loss of $ 3.55 per share, compared to a forecast of $ 3.17 per share.

Delta forecast a 50% to 55% drop in revenue for the second quarter compared to the same period in 2019 with planned capacity one-third lower than two years ago. The cost of cutting fuel costs will rise 6% to 9% this quarter, it said. These costs include a race to train pilots paused during the pandemic or flight pilots flying various types of aircraft in time for the midsummer travel season.

The capacity and revenue forecast “calls for a slower than expected near-term recovery,” Cowen & Co. wrote in a note after the results were released.

Delta’s shares fell more than 3% in the early afternoon.

Bastian said in an earnings release that the company expects “positive cash generation for the June quarter and sees a way to return to profitability in the September quarter as demand continues to recover”.

Here’s how Delta outperformed Wall Street expectations in the first quarter, based on Refinitiv’s average estimates:

  • Adjusted earnings per share: a loss of $ 3.55 versus an expected loss of $ 3.17 per share
  • Total sales: $ 4.15 billion versus expected $ 3.91 billion in sales

The airline is the last US airline to block center seats. This practice started earlier in the pandemic to make customers feel better about flying. Delta will be releasing this policy next month.

A study by the Centers for Disease Control and Prevention published on Wednesday found that laboratory models show that physically distancing passengers on board can reduce exposure to the virus that causes Covid-19 by up to 57%. The study did not consider face masks that are required by the federal government on flights.

Bastian defended the decision to sell all seats on Delta’s planes and disagreed with the study’s conclusions as the researchers failed to enforce pandemic safety protocols.

“Our experts tell us that given the vaccination rates they are at and the demand for such a high vaccination rate, it is perfectly safe to sit in that middle seat,” he said.

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