Look Away: Delta Announces Q3 Financials
1 Delta Air Lines announced its Q3 financial results on Tuesday. The airline ended Q3 with $3.1 billion of revenue… and a net loss of $5.4 billion. Amazingly, the $3.1 billion in revenue is an improvement after the airline earned just $1.5 billion in revenue for Q2 of 2020, giving it a more than 100% increase during the third quarter. We can’t forget to celebrate the little things.
Delta still took it on the chin in Q3, with $4 billion in virus-related expenses such as voluntary departure packages for staff, early retirement of aircraft, and getting everything really, really clean. I mean, it can never be clean enough. Out, damned spot! Out, I say!
The $3.1 billion in revenue was a 76% drop compared to Q3 2019, with the expenses of $9.4 billion representing a 10% drop from a year ago. Excluding all those one-time charges, however, costs dropped 52%. Delta’s cash burn was $24 million per day for the quarter, dropping down to $18 million per day in September.
Delta ends the quarter with $21.6 billion of liquidity. That figure is comprised of a combination of cash reserves, Biscoff cookie futures, and barrels of Woodford Reserve.
A Real PITA – Alitalia Gets a New Name, We Think
2 The on-again, off-again relationship between Alitalia and the Italian government may finally be coming to an end – at least in name. The Italian government will launch a new airline next year, named ITA. This new airline will represent a “clear discontinuity” from the past. That comment seems like a real burn coming from the people who are mostly responsible for Alitalia’s ineptitude, but such is life in Italy.
Alitalia has most recently been in financial limbo since it began operating in 1946 since 2017 when Etihad finally cut it off like a parent to a child with an online shopping addiction.
The Italian government has been keeping Alitalia financially afloat since 2017, finally scrapping its current plan once and for all by declaring that Alitalia won’t exist anymore starting next year while starting a new airline with a new name. This genius plan seems very likely to totally fix everything. The problem wasn’t gross mismanagement of the airline – it was its name.
We don’t really believe this anyway. Alitalia by any other name… is still Alitalia. But the Italian government loves that name, and we would not be surprised to see them reverse course. Regardless of the name, the Italian government says ITA will be a full-service, global airline. What it doesn’t say — or need to say, for that matter — is that it’ll lose a ton of money, just like its predecessors.
Alaska Sets the Date for its Alliance Wedding
3 Alaska Airlines was hoping for a very short engagement, but it has taken a little more time to sew the dress than hoped. The hiccups have been overcome, and it is now official. Alaska will join oneworld on March 31, 2021 in holy matrimony.
Alaska had announced it would join oneworld earlier this year when it also bulked up its relationship with American Airlines. The original plan was to have everything done by the end of 2020, but the airline just ran out of time. In particular, tying together IT systems has taken a great deal of work.
In lieu of presents, please just buy tickets on the airline. PLEASE. Any ticket will do…. to anywhere… please?
Norwegian Pilots Union Pushes for Price Floor
4 With the announcement that Wizz Air is entering the Norwegian domestic market, the pilots union in Norway is calling for the government to set a price floor keeping prices from dropping due to the added LCC competition.
The Norwegians likely got the idea from the wily Austrians who implemented a €40 floor earlier this summer to fend off LCC competition for national flag carrier Austrian Airlines. The pilots union believes Wizz will depress the domestic market in the country, undercutting both SAS and Norwegian. A look at one-way fares from Oslo to Bergen show Wizz Air is entering the market with flights starting at about $22, compared to a $75 starting domestic fare for SAS. Norwegian finds itself priced between the two, with a $22 basic fare and as much as $100 for a Flex fare.
It seems if the Norwegian airlines cannot hack it against competition, they likely weren’t long for the world anyway. While SAS has been a strong carrier for decades thanks only to mounds of government support, Norwegian is seemingly on the brink of collapse every few months, pandemic or not. No government-mandated price floor is going to save them when their main offering is flights from Europe to North America for $39 each way. At some point, the floor will go the way of Wile E. Coyote, and the airline will fall through the floor. Roll credits.
JetBlue Devalues Mosaic Upgrade Perk
5 JetBlue is unusual amongst U.S. airlines as it does not allow its elite members, even its highest tier, access to extra legroom seats at the front of the plane for no charge. However, JetBlue has always offered them to its Mosaic members for a low-priced amount of TrueBlue points, giving elites a reasonable option to upgrade.
But JetBlue has now quadrupled its pricing for on-board seat upgrades for elite members, greatly reducing the value it had provided. A three-hour flight from JFK to Florida cost 600 points to redeem for the extra-legroom seat, opposed to a $55 cash buy-up. The cash buy-up has remained the same, but the elite buy-up with points now costs 2,400.
JetBlue, when questioned by representative from The Points Guy, said their pricing model aligns with changes in travel demand and that redemption values are linked to fare and ancillary fees. Looks to us like they just jacked up the price and hoped no one would notice. Either way, it’ll cost elites significantly more to upgrade their seats on JetBlue going forward if they want to use points.
Airline Potpourri
- Air Arabia will resume flights between Sharjah, UAE (SHJ) to Kiev with 3x-weekly service beginning October 25.
- Air Côte d’Ivoire is planning to replace its A319 fleet with A320neo aircraft.
- Berniq Airways of Libya took delivery of its first A330-200.
- China Eastern will receive a $4.6 billion cash injection from four state-owned investment firms in China.
- Flair Airlines, missing an easy opportunity to name a certain 16-time World Heavyweight Champion as its new CEO, named Stephen Jones to the position.
- GOL is considering adding Salvador (SSA) as a hub.
- LOT is delaying the opening of its short-haul base in Budapest.
- Porter has delayed its resumption of service for the fifth time now, hoping to restart flying on December 15.
- Ukraine International Airlines has posted its winter schedule with service to three domestic and 23 international destinations from its Kiev hub.
Andrew’s Moment of Levity
I had a first date last week and we went to the skating rink. It was half-priced night, so it seemed like a good idea. But she refused to see me again, calling me a cheapskate.