Delta Airlines (NYSE: DAL) posted a big loss for its second-quarter earnings. Overall, the company reported revenue of $1.2 billion versus $1.43 billion expected. This was 91% lower than the same quarter in 2019. Net income was a $2.81 billion loss versus expectations of a $2.66 billion loss. The loss is more significant when looking at it on a pre-tax basis, as it came in at $3.9 billion.
Of course, this result isn't too surprising given that the coronavirus has shut down travel. TSA travel data shows the same picture as nearly every other measure. We're well off the lows from March and April, but also far away from the same time last year. Notably, the pace of gains has been slowing from teens to single digits. Additionally, it's not like the virus has gotten under control as new cases are higher now than they were when the country shut down.
CEO Ed Bastian said that "Demand growth has largely stalled. The pace of improvement from this point is going to depend on consumers' confidence in flying." As a result, Delta is only adding back 500 flights in August instead of 1,000 as originally planned. Additionally, it doesn't think it'll be adding any more flights for the rest of the year.
Relative to 2019, Delta has had a revenue decline of $11 billion due to the coronavirus. Through a combination of federal stimulus, loans, and issuance, Delta has been able to raise $15 billion in financing which should give it a few quarters cushion. Money that came from the federal government is contingent on Delta retaining workers until October 1, so cost-cutting options are limited until then.
Stock Price Impact
Delta's woes are quite evident from its stock chart. While the Nasdaq (NASDAQ: QQQ) is making all-time highs and the S&P 500 (NYSE: SPY) is 5% away from its all-time highs. Delta is 56% off its pre-coronavirus levels. Over the past month, the stock is down 30% as enthusiasm about the economy reopening has worn off, and it's increasingly clear that the coronavirus crisis is not over. Operating expenses were reduced by some workers taking voluntary unpaid vacations, retiring planes, and sidelining other planes.
Other than the one sharp move higher in early-June which quickly reversed, the stock has largely been range-bound since it bottomed in March. Its earnings report and conference call confirmed this gloomy picture as the carrier doesn't think business will return to normal until two years. The one positive thing from its earnings call is it has reduced its daily cash burn to $27 million per day which was as high as $100 million per day in April.
As case counts were dropping, there was some reason for optimism, but now with case counts above previous levels, this optimism has vanished. Many airlines have reported that demand for future bookings has sharply decreased in recent weeks.