LONDON – Delta Air Lines (DL) has published the airline’s financial results for Q4 and Full Year 2020 and has included its outlook for Q1 2021. The report highlights include both GAAP and adjusted metrics.

Q4 financial results as follows:

  • Adjusted pre-tax loss of US$2.1bn excludes nearly US$1bn of items directly related to the impact of, and our response to, COVID-19, including charges associated with employee pay and benefit changes, which were offset by the benefit of the CARES Act payroll support program (PSP) grant recognized in the quarter
  • Adjusted operating revenue of US$3.5bn declined 69% on 62% lower sellable capacity versus the same period in 2019
  • Total operating expense, which includes US$930m of items described above, decreased US$5.2bn over the same period in 2019. Adjusted for those items and third-party refinery sales, total operating expense decreased US$4.6bn or 47% in the Q4 compared to the same period in 2019, driven by lower capacity- and revenue-related expenses and strong cost management across the business
  • During the Q4 cash burn averaged US$12m per day, marking an approximate 90% reduction in cash burn since late March
  • At the end of 2020, the company had US$16.7bn in liquidity, including cash and cash equivalents, short-term investments, and undrawn revolving credit facilities
Delta Boeing 767-300ER Photo: Francesco R. Cecchetti/AW

Full Year 2020 Financial Results

  • Adjusted pre-tax loss of US$9bn excludes a net of US$6.6bn of items primarily related to the impact of, and our response to, COVID-19
  • Adjusted operating revenue of US$15.9bn declined 66% on 61% lower sellable capacity versus the prior year
  • Total operating expense, which includes US$4.3bn of COVID-19 related and other items, decreased US$10.8 bn over the same period in 2019. Adjusted for those items and third-party refinery sales, total operating expense decreased US$16.0 bn or 40% in 2020 compared to the same period in 2019
GAAPAdjustedGAAPAdjusted
($ in millions except per share and unit costs)4Q204Q194Q204Q19FY20FY19FY20FY19
Pre-tax (loss)/income(1,108)1,397(2,121)1,417(15,587)6,198(8,996)6,214
Net (loss)/income(755)1,099(1,604)1,098(12,385)4,767(6,839)4,776
Diluted (loss)/earnings per share(1.19)1.71(2.53)1.70(19.49)7.30(10.76)7.32
Operating revenue3,97311,4393,53211,38417,09547,00715,94546,718
Operating expense4,83110,0405,3149,96129,56440,38924,13040,082
Total cost per available seat mile (CASM)13.2115.3414.5315.2122.0114.6717.9614.56
CASM-Ex12.5711.5915.6110.88
Fuel expense7232,0127171,9833,1768,5193,1668,477
Total debt and finance lease obligations29,15711,16018,82310,48929,15711,16018,82310,489
Total revenue per available seat mile (TRASM)10.8617.479.6617.3912.7317.0711.8716.97
Average fuel price per gallon1.452.011.441.991.642.021.642.01

Q1 2021 Outlook

Q121 Forecast
Scheduled Capacity 1Down ~35%
Sellable Capacity 1Down ~55%
Total Revenue 1, 2Down 60% – 65%
Total Operating Expense 1, 2Down 35% – 40%
Consolidated CASM 1, 2Down 5% – 10%
Capital Expenditures~$350 million
Average Daily Cash Burn 2$10-15 million
Liquidity 3$18-19 billion
Adjusted Net Debt 2, 3~$18 billion
1 Compared to March quarter 2019 2 Non-GAAP measure 3 Includes estimated PSP funds of ~$3.0 billion
Photo: Brandon Farris

Revenue Environment


The company’s adjusted operating revenue of US$3.5bn for the Q4 was down 69% versus the same period in 2019, a 10-point improvement from Q3 2020. Passenger revenues declined 74% on 62% lower sellable capacity.

Non-ticket revenues outperformed passenger revenues, with cargo revenues up 10% versus the prior year period and total loyalty revenues down 54%.

For the FY, adjusted operating revenue declined to US$15.9bn, down 66% versus 2019, as the global pandemic severely affected air travel. Passenger revenues declined 70% on 61% lower sellable capacity.

Total loyalty revenues were down 51% and American Express remuneration declined 30% compared to the same period in 2019 to US$2.9bn.

Photo: Francesco Cecchetti

Cost Performance


Total adjusted operating expense for the Q4 decreased US$4.6bn or 47% versus the prior year period excluding items related to the company’s response to COVID-19 and the US$1.4bn CARES Act benefit, resulting in DL’s consolidated CASM, adjusted being 4.5% lower than the prior year period.

This performance was driven by a US$1.3bn, or 64% reduction in fuel expense versus the prior year period, a 51% reduction in maintenance expense, and lower volume- and revenue-related expenses.

In addition, salaries and related costs were down 34% compared to the same period in 2019 as a result of approximately 20%of our workforce, or nearly 18,000 employees, electing to voluntarily depart the company, in addition to the impact of voluntary unpaid leaves, work-hour reductions, and other cost-saving initiatives.

Finally, non-operating expenses for the Q4 were up US$248m versus the prior year period, driven primarily by higher interest expense from increased debt the company has incurred during the COVID-19 pandemic.

Photo: Andrew Henderson
Three Months EndedYear Ended
December 31,December 31,
(in millions, except per share data)20202019$ Change% Change20202019$ Change% Change
Operating Revenue:
Passenger$2,698$10,245$(7,547)(74)%$12,883$42,277$(29,394)(70)%
Cargo2041871710%608753(145)(19)%
Other1,0711,007646%3,6043,977(373)(9)%
  Total operating revenue3,97311,439(7,466)(65)%17,09547,007(29,912)(64)%
Operating Expense:
Salaries and related costs1,9402,949(1,009)(34)%8,75411,225(2,471)(22)%
Aircraft fuel and related taxes7232,012(1,289)(64)%3,1768,519(5,343)(63)%
Regional carriers expense, excluding fuel591885(294)(33)%2,4793,584(1,105)(31)%
Depreciation and amortization499622(123)(20)%2,3122,581(269)(10)%
Ancillary businesses and refinery604299305NM1,7851,24554043%
Contracted services381668(287)(43)%1,7782,641(863)(33)%
Landing fees and other rents323440(117)(27)%1,5181,762(244)(14)%
Aircraft maintenance materials and outside repairs204417(213)(51)%8221,751(929)(53)%
Passenger commissions and other selling expenses84488(404)(83)%5821,993(1,411)(71)%
Passenger service90313(223)(71)%5231,251(728)(58)%
Aircraft rent104105(1)(1)%399423(24)(6)%
Restructuring charges421421NM8,2198,219NM
CARES Act grant recognition(1,351)(1,351)NM(3,946)(3,946)NM
Profit sharing387(387)(100)%1,643(1,643)(100)%
Other218455(237)(52)%1,1631,771(608)(34)%
Total operating expense4,83110,040(5,209)(52)%29,56440,389(10,825)(27)%
Operating (Loss)/Income(858)1,399(2,257)NM(12,469)6,618(19,087)NM
Non-Operating Expense:
Interest expense, net(365)(72)(293)NM(929)(301)(628)NM
Impairments and equity method (losses)/gains18(18)(100)%(2,432)(62)(2,370)NM
Gain/(loss) on investments, net94136(42)(31)%(105)119(224)NM
Miscellaneous, net21(84)105NM348(176)524NM
Total non-operating expense, net(250)(2)(248)NM(3,118)(420)(2,698)NM
(Loss)/Income Before Income Taxes(1,108)1,397(2,505)NM(15,587)6,198(21,785)NM
Income Tax Benefit/(Provision)353(298)651NM3,202(1,431)4,633NM
Net (Loss)/Income$(755)$1,099$(1,854)NM$(12,385)$4,767$(17,152)NM
Basic (Loss)/Earnings Per Share$(1.19)$1.71$(19.49)$7.32
Diluted (Loss)/Earnings Per Share$(1.19)$1.71$(19.49)$7.30
Basic Weighted Average Shares Outstanding635642636651
Diluted Weighted Average Shares Outstanding635644636653
Photo: Luca Flores

Balance Sheet, Cash and Liquidity


The carrier ended the Q4 with US$16.7bn in liquidity. Cash used in operations during the Q4 was US$1.3bn. Daily cash burn averaged US$12m for the Q4, down from US$24m per day in the Q3.

The airline anticipates receiving approximately US$3bn from the US Treasury under the PSP extension in the Q1. With these funds and an estimated US$10 to US$15m in average daily cash burn for the Q3, the company expects to end the Q3 with approximately US$18 to US$19 bn in liquidity.

At the end of the Q4, the company had total debt and finance lease obligations of US$29.2 bn with adjusted net debt of US$18.8bn, US$8.3bn higher year over year. The company’s total debt had a weighted average interest rate of 4.6% at year-end.

During the Q4, the company repaid US$2.6 bn under its revolving credit facilities drawn down in March 2020, US$3bn associated with the 364-day term loan entered into in March 2020, and a US$450m unsecured debt maturity.

The company currently has US$9 to US$10 bn in unencumbered assets, primarily consisting of aircraft, engines and spare parts.

At the end of the Q4, the company’s Air Traffic Liability stood at US$4.5bn, including a current liability of US$4.0 bn and a non-current liability of US$0.5bn. Travel credits represent approximately 65% of the Air Traffic Liability at the end of the Q4.

The company refunded more than US$3bn to customers in 2020 and extended the use of certain travel credits through December 2022 to provide additional flexibility to customers.

Delta Airlines Boeing 767-332ER (N1602). | Photo: © Roberto Leiro
December 31,December 31,
(in millions)20202019
ASSETS
Current Assets:
Cash and cash equivalents$8,307$2,882
Short-term investments5,789
Accounts receivable, net1,3962,854
Fuel inventory377730
Expendable parts and supplies inventories, net355521
Prepaid expenses and other1,1801,262
     Total current assets17,4048,249
Property and Equipment, Net:
Property and equipment, net26,52931,310
Other Assets:
Operating lease right-of-use assets5,7335,627
Goodwill9,7539,781
Identifiable intangibles, net6,0115,163
Cash restricted for airport construction1,556636
Equity investments1,6652,568
Deferred income taxes, net2,043120
Other noncurrent assets1,3571,078
     Total other assets28,11824,973
Total assets$72,051$64,532
Photo: Brandon Farris/Airways

Statement from Delta Air Lines


Ed Bastian, DL’s CEO, said, “Our December quarter results capped the toughest year in DL’s history. I want to thank the DL people who have risen to the occasion, focusing on delivering results for all of our stakeholders by putting our customers at the center of our recovery.”

“While our challenges continue in 2021, I am optimistic this will be a year of recovery and a turning point that results in an even stronger DL returning to revenue growth, profitability and free cash generation.”

Glen Hauenstein, DL’s president, said, “We see three distinct phases in 2021. The early part of the year will be characterized by choppy demand recovery and a booking curve that remains compressed, followed by an inflection point, and finally a sustained demand recovery as customer confidence gains momentum, vaccinations become widespread and offices re-open.”

Photo: Brandon Farris

“For each phase, DL has the levers to pull to successfully react to the emerging demand environment, including tightly matching our sellable capacity to expected demand.”

Gary Chase, DL’s interim co-chief financial officer, said, “We reduced our average daily cash burn to US$12 m in the Q4, a reduction of nearly 90% since the early days of the pandemic in March, as we progress to achieving cash breakeven in the spring.”

“Remaining agile and disciplined with our cost structure will be key to our success, and when combined with an improving demand environment, will allow us to return to the free cash flow generation needed for debt reduction.”


Featured image: Delta Air Lines Airbus A350-900. Photo: Brandon Farris

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