Moderators: jsumali2, richierich, ua900, PanAm_DC10, hOMSaR

 
MIflyer12
Topic Author
Posts: 8499
Joined: Mon Feb 18, 2013 11:58 pm

Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 11:37 am

Here's a link to the 8-K SEC filing: https://d18rn0p25nwr6d.cloudfront.net/C ... 55b9c8.pdf

Highlights:

They really didn't cut capacity too much thru the 1Q - ASMs were down only 5.7% for the quarter.

Passenger revenue cratered.

Latin America off 11.2%
Domestic off 16.9%
Atlantic off 23.8%
Pacific off 33.3%, for a weighted average of 18.2%

Wage and salary expense was up 5% y-over-y, reflecting hiring ramp-up and raises that got baked in. Profit sharing accrual dropped $220 million to zero.

Change in number of aircraft in the fleet, -362. They say they will park 650 by the end of June.

Lots of balance sheet/liquidity activity: use of credit revolvers, aircraft sale/lease-backs, private aircraft mortgages, Enhanced Equipment Trust Certificates

Has already received $2.7 Billion of the $5.4 Billion 70% grant/30% loan from CARES Act payroll support plan.
 
JammyBritton27
Posts: 75
Joined: Wed Oct 11, 2017 2:28 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 12:04 pm

CARES Act Relief - Payroll support of $5.4 billion & Eligibility for $4.6 billion in secured loans

Earnings breakdown: https://news.alphastreet.com/delta-air- ... breakdown/

Number of aircraft in fleet at the end of the quarter was 677 versus 1,039 a year ago quarter.

DAL management expects June quarter total expenses to decline by approximately 50%, or $5 billion, over prior year due to reduced capacity, lower fuel and cost initiatives.
 
tphuang
Posts: 5462
Joined: Tue Mar 14, 2017 2:04 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 12:11 pm

Based on this filing, they cut $5 billion in cost, by cutting 80% domestic and 90% international flights for this quarter. If revenue is down 95% YoY, that's about a $4.5 billion loss quarter. Probably a little higher than that since now the cancellations have gone up from 70% to 85%. Not terrible given the circumstances. Their cash burn rate is higher than that, which indicates continued losses from refund of cancellations. But at some point, that should stop.
"With the significant impact of COVID-19 on Delta’s revenue, we were burning $100 million per day at the end of March. Through our decisive actions, we expect that cash burn to moderate to approximately $50 million per day by the end of the June quarter"
this made sense since $4.5 billion per 90 days is about $50 million a day and at some point the refund should no longer be more than the bookings.
- had $6 billion in liquidity at end of March.
- expect to have $10 billion in liquidity by end of June. That seems to indicate they expect to be able to add more liquidity in the coming months using their unencumbered assets.
- Reduced planned capital expenditures by more than $3 billion, including working with original equipment manufacturers to optimize the timing of ourfuture aircraft deliveries and deferring aircraft mods, IT initiatives, and ground equipment refreshment. Not sure if this is $3 billion less in capex just this year or for duration of covid
 
Rdh3e
Posts: 3632
Joined: Wed Mar 30, 2011 2:09 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 1:08 pm

tphuang wrote:
.
- had $6 billion in liquidity at end of March.
- expect to have $10 billion in liquidity by end of June. That seems to indicate they expect to be able to add more liquidity in the coming months using their unencumbered assets.

Well, $6B plus their CARES funding of up to $10B (grant plus loan eligibility), minus $4.5B of burn (prob low side) equals $11.5B. since they said their burn would be $50M/day "by the end of the quarter" and not "average for the quarter" it's likely their burn will make up the difference and get you to the $10B without encumbrance. They might choose to avoid the govt loan and do private funding instead or take a smaller loan so all the calcs are obviously fuzzy
 
splitterz
Posts: 185
Joined: Sat Apr 09, 2011 2:40 am

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 1:37 pm

Wow. They’re so much better positioned than UAL.
 
tphuang
Posts: 5462
Joined: Tue Mar 14, 2017 2:04 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 2:02 pm

Rdh3e wrote:
tphuang wrote:
.
- had $6 billion in liquidity at end of March.
- expect to have $10 billion in liquidity by end of June. That seems to indicate they expect to be able to add more liquidity in the coming months using their unencumbered assets.

Well, $6B plus their CARES funding of up to $10B (grant plus loan eligibility), minus $4.5B of burn (prob low side) equals $11.5B. since they said their burn would be $50M/day "by the end of the quarter" and not "average for the quarter" it's likely their burn will make up the difference and get you to the $10B without encumbrance. They might choose to avoid the govt loan and do private funding instead or take a smaller loan so all the calcs are obviously fuzzy

I was thinking that $10 billion number was not including additional $4.5 loans.

So if burn rate at end of march was $100 million a day when they had canceled very few flights and there were a lot of refund issuance. Now, they are in the 60 to 70M/day range and will drop to $50M/day ballpark by end of June. So let's just say April at $65 million/day on average, May at 60 million/day on average and June at 55 million/day (dropping from high 50s early June to 50 at end) on average. That's around $5.4 billion for the quarter.

position at end of Q1 + CARES money + $1 from cash & leaseback + other liquidity additions - cash burn for quarter = expected position at end of Q2
$6 + 5.4 + 1 + x - 5.4 = 10. x= 3 billion.
so they are getting $3 billion somewhere else - could be from drawing out all of their revolver or from upsizing their loan from $2.6 to 4 + any position additional liquidity like more selling of assets and such.

Looks like they are working really hard to avoid taking additional loan from gov't.

If we assume the following burn rates per day for coming month:
July $45
Aug $35
Sep $30
Oct $25
Nov $25
Dec $20
that's about $5.5 billion burn for rest of the year. Then for next year
Jan $25
Feb $25
Mar $15
Apr $10
May $10
June $5
July cash positive
That's about another $3 billion cash burn if we assume demand recovers enough where they can be cash positive next summer.
Definitely in a good enough position they can probably avoid chapter 11, but I'd imagine they would need additional cash injection this year. Especially if the recovery curve is longer than expected.
 
User avatar
aemoreira1981
Posts: 3640
Joined: Mon Jan 09, 2017 12:17 am

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 2:39 pm

The real issue is going to be this quarter...I really dread to see those numbers from the US4 plus AS and B6
.
 
CRJ5000
Posts: 149
Joined: Thu Jan 17, 2019 3:06 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 2:48 pm

Honestly, not as bad as I thought.
Can you imagine telling someone 3 months ago that DL would be posting a 607 million dollar loss for 1Q and that it would beat a lot of expectations...
 
Sightseer
Posts: 998
Joined: Mon Jan 12, 2015 6:04 am

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 2:58 pm

CRJ5000 wrote:
Honestly, not as bad as I thought.
Can you imagine telling someone 3 months ago that DL would be posting a 607 million dollar loss for 1Q and that it would beat a lot of expectations...

Or that Q1 results would massively prop up Q2 results.
 
Max Q
Posts: 8557
Joined: Wed May 09, 2001 12:40 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 3:21 pm

600 million vs 2billion loss at UA


DL makes significantly more profits in good times and far reduced losses in bad


I’m amazed how they do this
The best contribution to safety is a competent Pilot.


GGg
 
ordbosewr
Posts: 621
Joined: Thu Jun 09, 2011 8:30 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 3:40 pm

Max Q wrote:
600 million vs 2billion loss at UA


DL makes significantly more profits in good times and far reduced losses in bad


I’m amazed how they do this


Careful with that comparison.

UA took almost 1B in loses on investments, did DL write down any investments as part of that $600M?

from the other thread on UA from tphuang:
https://www.sec.gov/ix?doc=/Archives/ed ... 20208k.htm
to be fair, the $2.1 billion loss includes
$319 million on investment
$697 million Nonoperating credit loss on BRW term loan and related guarantee
 
MIflyer12
Topic Author
Posts: 8499
Joined: Mon Feb 18, 2013 11:58 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 4:04 pm

ordbosewr wrote:
did DL write down any investments as part of that $600M?


Investment gains/losses are part of the income statement shown in today's earnings press release, 10-Q filing, and 8-K filing. DL had a -$212 million swing 1Q19 to 1Q20. I guess UA swings harder. :o
 
MrPeanut
Posts: 207
Joined: Fri Nov 23, 2018 8:36 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 4:39 pm

tphuang wrote:
Rdh3e wrote:
tphuang wrote:
.
- had $6 billion in liquidity at end of March.
- expect to have $10 billion in liquidity by end of June. That seems to indicate they expect to be able to add more liquidity in the coming months using their unencumbered assets.

Well, $6B plus their CARES funding of up to $10B (grant plus loan eligibility), minus $4.5B of burn (prob low side) equals $11.5B. since they said their burn would be $50M/day "by the end of the quarter" and not "average for the quarter" it's likely their burn will make up the difference and get you to the $10B without encumbrance. They might choose to avoid the govt loan and do private funding instead or take a smaller loan so all the calcs are obviously fuzzy

I was thinking that $10 billion number was not including additional $4.5 loans.

So if burn rate at end of march was $100 million a day when they had canceled very few flights and there were a lot of refund issuance. Now, they are in the 60 to 70M/day range and will drop to $50M/day ballpark by end of June. So let's just say April at $65 million/day on average, May at 60 million/day on average and June at 55 million/day (dropping from high 50s early June to 50 at end) on average. That's around $5.4 billion for the quarter.

position at end of Q1 + CARES money + $1 from cash & leaseback + other liquidity additions - cash burn for quarter = expected position at end of Q2
$6 + 5.4 + 1 + x - 5.4 = 10. x= 3 billion.
so they are getting $3 billion somewhere else - could be from drawing out all of their revolver or from upsizing their loan from $2.6 to 4 + any position additional liquidity like more selling of assets and such.

Looks like they are working really hard to avoid taking additional loan from gov't.

If we assume the following burn rates per day for coming month:
July $45
Aug $35
Sep $30
Oct $25
Nov $25
Dec $20
that's about $5.5 billion burn for rest of the year. Then for next year
Jan $25
Feb $25
Mar $15
Apr $10
May $10
June $5
July cash positive
That's about another $3 billion cash burn if we assume demand recovers enough where they can be cash positive next summer.
Definitely in a good enough position they can probably avoid chapter 11, but I'd imagine they would need additional cash injection this year. Especially if the recovery curve is longer than expected.

Two items:
1. The burn rate through summer should remain relatively flat. Demand through summer looks bad and the airline will have cut everything they could possibly cut by now to maintain bare bones operations and still meet the CARES requirements. Therefore, July - September burn rate should be relatively the same. Starting in October, burn rate should drop considerably once the airlines are able to shed the excess labor costs.
2. Keep in mind that most of their existing debt has covenants the required the airline to meet certain hurdle rates. In the scenario you outlined above, they would violate many of those hurdle rates. The reason why the government loans are appealing is because they generally do not come with the same level of restrictive covenants as private loans do. Therefore, they may have no option but take more loans from the government or declare bankruptcy.
 
panamair
Posts: 4348
Joined: Fri Oct 12, 2001 2:24 am

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 4:51 pm

ordbosewr wrote:
Max Q wrote:
600 million vs 2billion loss at UA


DL makes significantly more profits in good times and far reduced losses in bad


I’m amazed how they do this


Careful with that comparison.

UA took almost 1B in loses on investments, did DL write down any investments as part of that $600M?

from the other thread on UA from tphuang:
https://www.sec.gov/ix?doc=/Archives/ed ... 20208k.htm
to be fair, the $2.1 billion loss includes
$319 million on investment
$697 million Nonoperating credit loss on BRW term loan and related guarantee


Taking out the 'noise' of special items such as investment writedowns (UA) or MTM gains/losses (DL), they had the following adjusted pre-tax figures (only pre-tax as UA has only filed those and not the Operating or Net figures yet):

Adjusted non-GAAP Pre-tax Loss:
UA: $1.035 billion
DL: $422 million
 
DiamondFlyer
Posts: 3414
Joined: Wed Oct 29, 2008 11:50 pm

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 4:55 pm

MrPeanut wrote:
tphuang wrote:
Rdh3e wrote:
Well, $6B plus their CARES funding of up to $10B (grant plus loan eligibility), minus $4.5B of burn (prob low side) equals $11.5B. since they said their burn would be $50M/day "by the end of the quarter" and not "average for the quarter" it's likely their burn will make up the difference and get you to the $10B without encumbrance. They might choose to avoid the govt loan and do private funding instead or take a smaller loan so all the calcs are obviously fuzzy

I was thinking that $10 billion number was not including additional $4.5 loans.

So if burn rate at end of march was $100 million a day when they had canceled very few flights and there were a lot of refund issuance. Now, they are in the 60 to 70M/day range and will drop to $50M/day ballpark by end of June. So let's just say April at $65 million/day on average, May at 60 million/day on average and June at 55 million/day (dropping from high 50s early June to 50 at end) on average. That's around $5.4 billion for the quarter.

position at end of Q1 + CARES money + $1 from cash & leaseback + other liquidity additions - cash burn for quarter = expected position at end of Q2
$6 + 5.4 + 1 + x - 5.4 = 10. x= 3 billion.
so they are getting $3 billion somewhere else - could be from drawing out all of their revolver or from upsizing their loan from $2.6 to 4 + any position additional liquidity like more selling of assets and such.

Looks like they are working really hard to avoid taking additional loan from gov't.

If we assume the following burn rates per day for coming month:
July $45
Aug $35
Sep $30
Oct $25
Nov $25
Dec $20
that's about $5.5 billion burn for rest of the year. Then for next year
Jan $25
Feb $25
Mar $15
Apr $10
May $10
June $5
July cash positive
That's about another $3 billion cash burn if we assume demand recovers enough where they can be cash positive next summer.
Definitely in a good enough position they can probably avoid chapter 11, but I'd imagine they would need additional cash injection this year. Especially if the recovery curve is longer than expected.

Two items:
1. The burn rate through summer should remain relatively flat. Demand through summer looks bad and the airline will have cut everything they could possibly cut by now to maintain bare bones operations and still meet the CARES requirements. Therefore, July - September burn rate should be relatively the same. Starting in October, burn rate should drop considerably once the airlines are able to shed the excess labor costs.
2. Keep in mind that most of their existing debt has covenants the required the airline to meet certain hurdle rates. In the scenario you outlined above, they would violate many of those hurdle rates. The reason why the government loans are appealing is because they generally do not come with the same level of restrictive covenants as private loans do. Therefore, they may have no option but take more loans from the government or declare bankruptcy.


Hooray, let us celebrate giant job losses coming in October. Just what the economy needs!
From my cold, dead hands
 
simairlinenet
Posts: 817
Joined: Sat Oct 29, 2005 2:24 am

Re: Delta 1Q20 pre-tax loss $607 million

Wed Apr 22, 2020 5:17 pm

ordbosewr wrote:
Max Q wrote:
600 million vs 2billion loss at UA
DL makes significantly more profits in good times and far reduced losses in bad

I’m amazed how they do this

Careful with that comparison.

UA took almost 1B in loses on investments, did DL write down any investments as part of that $600M?

In addition, Delta:
-Typically earns more profit than United in Q1 due to a more north-south network, e.g., Florida
-Has a smaller Pacific presence--which was affected first.

Who is online

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos