Delta Air Lines lost $534 million in the first quarter of 2020, its first quarterly loss in more than five years, and is cutting flights by 85% as few people travel amid the coronavirus pandemic.
The Atlanta-based airline also said it expects revenue to plummet 90% in the second quarter, far worse than the 18% drop in the first three months of the year.
After performing strongly in January and February, Delta’s business plunged in March amid travel restrictions, border closures and stay-at-home orders.
“These are truly unprecedented times for all of us, including the airline industry,” Delta CEO Ed Bastian said in a written statement.
The company has embarked on an aggressive cost-cutting program in recent weeks. Expenses are declining 50% through lower fuel costs, reduced payroll, pay cuts, parking jets and closing airport concourses.
Delta said its flight cuts include slashing domestic flights 80% and international flights 90% for the April to June period.
The company has now had 37,000 of its 90,000 employees agree to take voluntary unpaid leave.
Delta also has been shoring up its finances. It said it has already received $2.7 billion of $5.4 billion in federal relief funding from the Coronavirus Aid, Relief and Economic Security Act. And it could apply for another $4.6 billion in federal loans offered to airlines if other financing is not available.
The airline has raised $5.4 billion since early March, including a $3 billion loan, $1.2 billion from selling aircraft and leasing them back, $1.1 billion in loans secured by airplanes and another $150 million from mortgaging aircraft. It also has drawn down $3 billion from existing credit lines and extended payment terms with airports, vendors and lessors.
“The decade of work we put into the balance sheet to lower debt and build unencumbered assets has been critical to our success in raising capital,” said Delta Chief Financial Officer Paul Jacobson in a written statement. Jacobson agreed to put off his planned retirement to help the company navigate through the coronavirus challenges.
The company was burning through $100 million of its cash reserves a day at the end of March, and aims to reduce that burn rate to $50 million a day by the end of June. It plans to have about $10 billion in liquidity by the end of the June quarter.
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