Delta’s Weak Q1 Earnings Will Only Get Worse in Q2
1 Delta Air Lines released its Q1 earnings report on Wednesday and the numbers are, as expected, gruesome. But hey, let’s start with the good news. Expenses were down an incredible $450m. Of course, that’s not due to great cost control but rather a massive cancellation of service along with plunging oil prices.
Back to the numbers that matter, the Atlanta-based airline had a net loss of $534 million in Q1 of 2020, its first quarterly loss in five years. That was on a revenue decrease of 18 percent. This is downright rosy compared to what’s coming next quarter.
These figures come after an extraordinarily strong January and February for the airline before the bottom fell out in March. Delta has been burning through $100 million of cash reserves per day and hopes to have that reduced to $50 million by the end of June.
In an effort to save money, Delta is cutting 80% of its domestic capacity and 90% of its international capacity through June, while 37,000 of its 90,000 employees are taking voluntary unpaid leave.
United Introduces Social Distancing-Friendly Policies
2 Introverts who have to fly in the next five weeks will be thrilled by United’s new policies to make social distancing easier on all passengers. Through at least May 31, it has enacted new policies to keep people far away from others, even if they want to cuddle up. The airline will:
- Limit seat selection so middle seats are not available and that window & aisle options are alternated for groups traveling in pairs on regional jets or in the premium cabins
- Board the aircraft in smaller groups to make distancing more practical
- Process upgrades at the gate rather than automatically in the days leading to departure to be able to better manage the seat map
If you’ve been quarantining with someone and somehow aren’t sick of them yet, United will let you sit next to each other if you contact the airline. Oh, and on the off chance that there’s a flight with enough demand to need to sit people next to each other, United will undo the block. But come on, that’s not happening for a long time.
CARES Act Exemptions: Seaborne Wins While Silver Losers
3 They may have owned by the same company, but Silver Airways and Seaborne Airlines saw very different outcomes on their exemption requests from the DOT Wednesday.
Seaborne received the good news that it can suspend service to two Puerto Rico locations — Vieques (VQS) until June 30 and Culebra (CPX) until September 30. The latter is particularly useful since Seaborne doesn’t actually have an airplane that can land on that short runway.
Meanwhile, Silver’s attempt to wiggle out of its Huntsville (HSV) to Orlando (MCO) flight failed. It will have to serve the Alabama city.
Draft Day Trade Rumors: Delta wants to swap 717s for MAX in Exchange with Boeing
4 On the eve of the NFL Draft, a trade rumor is circulating, except this one isn’t being reported by Adam Schefter. Delta Air Lines is looking to swap its 78 leased 717s in exchange for purchasing 100 737-MAX aircraft from Boeing according to reporting from The Air Current ($ Subscription Required $).
Delta owns most of its fleet — 70%, but the 78 717s represent nearly 40% of its leased aircraft. Returning these aircraft to Boeing would free up capital during the current crisis and allow the airline to regain its current financial footing as payment on the 100 MAX aircraft would not be due until closer to delivery. Boeing, facing near-zero aircraft demand for the near future, might be willing to make a deal to get Delta back on the order book.
The Bright Side: American Airlines “You Are Why We Fly” Video
5 American Airlines posted a :43 second video on YouTube this week that’s worth a look. It’s been a challenging two months for everyone, airlines included. The hundreds of thousands of employees of airlines, airports and the entire travel industry have seen their world turned upside-down and this video is a brief reminder of what it’s all about.
Airline Operation Potpourri
- Air Mauritius entered voluntary administration as the airline was unable to meet its financial obligations. It is not going out of business at this point.
- Austrian Airlines will withdraw its fleet of seven A319s and cut its fleet of Boeing 767s in half in an effort to reduce costs.
- China Eastern’s May flight schedule includes one international destination per country per week from Shanghai. It will continue to serve New York/JFK with once-weekly service for the foreseeable future.
- China Southern released its international flight schedule for May, continuing to serve one destination per week per country with Los Angeles being the one US destination, having weekly service from Shanghai. The airline also announced that it would not be accepting any third-party or agency bookings through August 1.
- Etihad, a 25% shareholder of Virgin Australia is open to discussions with regards to the future of VA, which is currently in the midst of voluntary administration procedures.
- Interjet’s entire network is down to just 148 weekly flights to 5 destinations from Mexico City (MEX).
- Vivaaerobus will operate 244 weekly flights on 34 routes based on its schedule filed through May 10. It will operate 14 routes from its Monterrey (MTY) hub, nine from Mexico City (MEX), eight from Guadalajara (GDL) and three from Cancun (CUN).
Andrew’s Moment of Levity
All credit for today’s moment of levity goes to the Twitter account of Manhattan, KS Regional Airport (MHK).
