almost 4 years ago • 2 mins
No matter how much Delta Air Lines wants to achieve liftoff, the coronavirus-induced first-quarter loss it reported on Wednesday suggested that won't happen any time soon 🛬
Delta was among the US airlines that reached a bailout agreement with the government last week, and it’s been beefing up its bank balance with additional loans of its own. But a glance at the airline’s last quarter shows just how much wreckage the pandemic caused: revenue was down almost one-fifth from the same time last year – even though coronavirus didn’t shut Western economies down until March – and the company’s loss was bigger than expected. That was partly down to the $100 million a day Delta was burning by the end of March 🔥 – a figure it hopes to halve by the end of this quarter by parking its aircraft and deferring spending plans.
Between additional loans, government support, and – in United Airlines’ case – a share sale that raised $1 billion this week, US airlines are well-placed to survive the crisis. They might even find cheaper fuel actually makes their lives easier once they take to the skies 🦅 That is, as long as major oil producers haven’t gone broke, having sold their products at loss-making prices or ceased production altogether. It’s so expensive to restart production once it’s stopped, after all, that demand might temporarily outstrip supply later in the year, pushing up oil prices again.
Delta didn’t beat predictions, breaking with what’s fast becoming a tradition among recent earnings updates: around 70% of the companies that have reported so far have topped expectations, even taking into account their coronavirus profit warnings. Still, the airline’s stock price barely moved on Wednesday 📊 Given how quickly companies’ fortunes are turning in this pandemic, professional analysts’ formal estimates might not have matched the investor forecasts that were already reflected in its share price.
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