Delta Air Lines has injected a ray of hope into the US airline industry with predictions of a sustained improvement in this year’s second half after ending a horror 2020 with a pre-tax loss of $US9 billion.
The airline still expects to burn $US10 to $15 million in cash per day in the first quarter of 2021 with revenues down 35 to 40 percent.
But it predicts this will be followed by an “inflection point” in the northern spring as vaccine distribution continues, travel restrictions ease and consumer confidence grows.
READ: Unruly passengers face $US35,000 fine, jail in FAA crackdown.
Delta chief executive Ed Bastian said the change would hopefully result in cash burn “reaching breakeven or better by the second quarter".
“And as the year progresses, we expect demand will start to accelerate as vaccinations become more widespread and the virus is in a contained state, and customers gain greater confidence to make future travel commitments,’’ Bastian said on the airline’s financial results conference call.
“This should enable a sustained recovery to begin in the second half of 2021, with a return to profitability this summer.”
The Delta boss pointed to consumer behavior that indicated pent-up demand.
“Shopping visits across Delta's digital channels are significantly outpacing the passenger volumes we're carrying,’’ he said.
“In our most recent corporate survey, 40 percent of respondents expect full recovery by 2022.
“Our partners at American Express are also seeing encouraging signs, whether it's cardholders holding on to their points in anticipation of redeeming them for air travel, for a recent survey ... suggested approximately 70 percent of respondents expect to take a trip in 2021 after not traveling in 2020.
“Although it will take time, customers want to travel again when they feel it's safe. They feel they've had a year of their life taken from them, and they're starting to get ready to reclaim.”
Bastian said Delta remained focused on keeping its culture intact and it employees engaged while continuing to prioritize customers with a focus on health and safety.
“Customers have shown they are willing to pay more for the quality of our network, product, and our service,’’ he said.
“The gains we have achieved in customer satisfaction position us well to drive sustainable revenue growth in the future.”
Innovation would also be a key as the airline tackled challenges such as carbon neutrality, keeping costs competitive and debt repayment.
“Given the changes we've made over the last year, our goal is to sustain our non-fuel unit cost at or below 2019 levels by the December quarter of this year, and roughly 75 percent of 2019 capacity levels, displaying continued agility in managing our cost,’’ Bastian said.
Have questions or want to share your thoughts?
