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TL Beer Gang, Episode 14: Samuel Adams Cold Snap

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By DAVID KOENIG 
 Delta Air Lines closed the books on a disastrous 2020 with a comparatively small fourth-quarter loss, and executives expect a few more rocky months before — they hope — widespread coronavirus vaccinations and testing might salvage something of the upcoming summer travel season.
 Delta on Thursday reported a quarterly loss of $755 and $12.4 billion in losses for all of 2020. It is the largest annual loss in the history of the airline, which dates to the 1920s, and the global pandemic ended a decade in which Delta churned out a profit each and every year.
 The fourth-quarter numbers likely would have been worse but for a December increase in air travel that likely contributed to another surge in virus infections as millions crossed the country to spend time with family and friends during the holidays. 
 Delta is the first major U.S. airline to report year-end financial results and the numbers suggest more big losses to come as other carriers post quarterly results. U.S. air travel in the fourth quarter was down more than 60% compared with the previous year, as travel restrictions and fear of contracting the virus kept most travelers grounded.
 Much like most of last year, the 2021 outlook for Delta and other airlines is intertwined with how quickly the United States and other nations can vaccinate enough of their citizens against the coronavirus so that travel restrictions can be eased. 
 Delta predicts that first-quarter revenue will fall 60% to 65% from the same period in 2019 — almost the same as the 65% decline in the fourth quarter. It expects to lose $10 million to $15 million a day in the next three months. After that, however, Delta sees things getting.
 CEO Ed Bastian is sticking to a prediction that Delta will reach break-even in the second quarter.
 “Hopefully the vaccines will be distributed at a much heightened level, that the virus will be much more contained, and that people will be ready to get on with their lives,” Bastian said.
 People will soon be planning summer vacations and, Bastian said in an interview, Delta expects bookings “to start opening up again.”
 However, international travel and business trips, two lucrative sources of revenue for the Atlanta airline and its rivals, are expected to recover more slowly than less-profitable domestic leisure travel. 
 Bastian said he expects that international travel this summer will be better than 2020, “a very low bar,” but will take another 12 to 18 months to fully recover. And by the second half of this year, business travel will still be only 25% to 50% of what it used to be, he said.
 So far in January, air travel in the U.S. is down nearly 60% from a year ago. While that is a huge improvement over last April, when travel fell 95%, public health officials are again asking people to avoid travel. 
 Christmas and New Year's gatherings might have contributed to a recent increase in reported cases of COVID-19. The seven-day rolling average for daily new cases in the U.S. rose over the past two weeks from about 182,000 to 249,000, according to data from Johns Hopkins University.
 Excluding some one-time gains, Delta's fourth-quarter loss amounted to $2.53 per share. That was close to Wall Street expectations. Analyst polled by FactSet were looking for a per-share loss of $2.50.
 Revenue plunged to $3.97 billion from $11.44 billion a year earlier, when the pandemic was just beginning to affect U.S. travel. The figure was $30 million more than expected in the FactSet survey. Service between the U.S. and both Asia and Europe were particularly hard hit, down nearly 90%.
 The average flight was 42% full in the last quarter compared with 86% a year earlier.
 Delta slashed its flight schedule, which helped it save $1.3 billion on fuel. Buyouts and early retirements allowed the company to cut spending on wages and benefits by $1 billion.
 For all the grim travel statistics since the pandemic started, there is less talk lately of possible bankruptcy filings by U.S. carriers. Helped by two rounds of government aid, plus billions more from issuing new debt, Delta ended 2020 with $16.7 billion in liquidity.
 Delta shares rose rose almost 4% at the opening bell. 
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 David Koenig can be reached at www.twitter.com/airlinewriter

A $12 billion loss for 2020, Delta is cautious in early 2021