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Midwestindy
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Delta Q4 2020 Earnings

Thu Jan 14, 2021 12:37 pm

Delta just released their 4th quarter earnings report. High-level summary:

Full year 2020 GAAP pre-tax loss of $15.6 billion and loss per share of $19.49

For the full year, adjusted operating revenue declined to $15.9 billion, down 66 percent versus 2019

December quarter 2020 GAAP pre-tax loss of $1.1billion and loss per share of $1.19

December quarter 2020 adjusted pre-tax loss of $2.1billion and adjusted loss per share of $2.53

Adjusted operating revenue of $3.5billion declined 69percent on 62percent lower sellable capacity

During the December quarter cash burn averaged $12million per day, marking an approximate 90 percent reduction in cash burn since late March

Q1 expected cash burn of $10-15 million

https://s2.q4cdn.com/181345880/files/do ... esults.pdf
ORD & IND

AA & DL
 
MIflyer12
Posts: 9598
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 12:54 pm

At the end of 2020, the company had $16.7 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit
facilities

It's a fairly common industry practice but I'm not a fan of the 'available liquidity' reference. 'We can borrow more money!' to add to already large piles of debt.

March Quarter 2021 Outlook
1Q21 Forecast
Scheduled Capacity 1 Down ~35%
Sellable Capacity 1 Down ~55%
Total Revenue 1, 2 Down 60% - 65%
Total Operating Expense 1, 2 Down 35% - 40%
Consolidated CASM 1, 2 Down 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


Scheduled capacity down 35% may be useful to pilots (who might work 50 hours/month instead of 40) but expectations for revenue down 60-65% is the more telling. You can't pay bills with flight hours on empty planes.

A couple fleet references:

• Restructured our aircraft orderbook, reducing aircraft purchase commitments by $2 billion in 2020 and $5 billion through 2022
• Accelerated its fleet simplification strategy with 227 aircraft retirements in 2020, reducing the number of fleet families from 13 to 11. Delta anticipates the
cumulative retirement of nearly 400 aircraft through 2025, further simplifying fleet families down to nine



They had fairly empty planes but avg fares have held up pretty well: yield declined only 3%, from $0.1829 to $0.1777.

It looks like no new impairment charges or equity write-downs for 4Q20.
 
NWADTWE16
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 1:31 pm

People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares
I haven't been everywhere, but it's on my list!
 
usflyer msp
Posts: 4147
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 1:47 pm

NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares


I don't know if I would jump to that conclusion. Last quarter both UA and AA had higher RASM numbers than DL, even with the seat blocking.
 
ethernal
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 1:53 pm

MIflyer12 wrote:
At the end of 2020, the company had $16.7 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit
facilities

It's a fairly common industry practice but I'm not a fan of the 'available liquidity' reference. 'We can borrow more money!' to add to already large piles of debt.


It's not like the majority of that $16.7B is undrawn revolving credit. $14B is cash/short term investments and less than $3B are untapped revolving credit lines (which, at this point in the game, aren't likely to be panic closed and probably have significant penalties to the bank for closure).
 
ethernal
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 1:58 pm

usflyer msp wrote:
NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares


I don't know if I would jump to that conclusion. Last quarter both UA and AA had higher RASM numbers than DL, even with the seat blocking.


How is RASM defined in this case? Does Delta's 737 have 180 available seats or does it have 130? I'm assuming that - for consistency in reporting - it is the former (180 seats). In which case, duh. Delta's fare premium doesn't make up for selling 30% fewer seats.

If United and American are really holding up a RASM premium relative to "blocked-seats-adjusted-availability" then Delta is really doing something super wrong (especially since pre-pandemic they typically had a RASM lead).
 
Atlwarrior
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 1:59 pm

Geez, Louise. Thank God we are done with 2020. I hope airlines can turn it around starting with Spring travel, it inevitably looks as if it will be another merger soon.
 
usflyer msp
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 2:08 pm

ethernal wrote:
usflyer msp wrote:
NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares


I don't know if I would jump to that conclusion. Last quarter both UA and AA had higher RASM numbers than DL, even with the seat blocking.


How is RASM defined in this case? Does Delta's 737 have 180 available seats or does it have 130? I'm assuming that - for consistency in reporting - it is the former (180 seats). In which case, duh. Delta's fare premium doesn't make up for selling 30% fewer seats.

If United and American are really holding up a RASM premium relative to "blocked-seats-adjusted-availability" then Delta is really doing something super wrong (especially since pre-pandemic they typically had a RASM lead).


It does not include the blocked seats as they are not "available". At least in the 3rd quarter DL was blocking seats and still getting less for them than their competitors. Most of DLs cash burn advantage comes from them being able to strip out costs faster not getting a revenue premium.
 
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admanager
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 2:29 pm

And for the good news..."Delta has said it expects to get to cash flow positive by the spring."
 
PSU.DTW.SCE
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 2:32 pm

admanager wrote:
And for the good news..."Delta has said it expects to get to cash flow positive by the spring."

That inflection point for cash-flow positive is going to probably be March / April timeframe when people start making summer booking in large scale, or when peak summer travel period rolling into the 90-day horizon.

I think there was some hope previously that they could be cash-flow positive by year-end 2020 thinking that the advanced bookings would be there for Spring Break travel period in March / April 2021, but they aren't seeing the booking volume or extended demand curve like they had hoped....yet.
 
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Polot
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 2:37 pm

usflyer msp wrote:
ethernal wrote:
usflyer msp wrote:

I don't know if I would jump to that conclusion. Last quarter both UA and AA had higher RASM numbers than DL, even with the seat blocking.


How is RASM defined in this case? Does Delta's 737 have 180 available seats or does it have 130? I'm assuming that - for consistency in reporting - it is the former (180 seats). In which case, duh. Delta's fare premium doesn't make up for selling 30% fewer seats.

If United and American are really holding up a RASM premium relative to "blocked-seats-adjusted-availability" then Delta is really doing something super wrong (especially since pre-pandemic they typically had a RASM lead).


It does not include the blocked seats as they are not "available". At least in the 3rd quarter DL was blocking seats and still getting less for them than their competitors. Most of DLs cash burn advantage comes from them being able to strip out costs faster not getting a revenue premium.

Have to be careful talking about cash burn, as it is not standardized and not all airlines are including the same things in that discussion. Delta hasn’t been including debt servicing in that equation for example, while UA has.

DL entered the pandemic on stronger footing than UA and especially AA though, hence why it is holding its own fairly well (although UA hasn’t been doing too bad either all things considered).
 
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Midwestindy
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 2:46 pm

Polot wrote:
usflyer msp wrote:
ethernal wrote:

How is RASM defined in this case? Does Delta's 737 have 180 available seats or does it have 130? I'm assuming that - for consistency in reporting - it is the former (180 seats). In which case, duh. Delta's fare premium doesn't make up for selling 30% fewer seats.

If United and American are really holding up a RASM premium relative to "blocked-seats-adjusted-availability" then Delta is really doing something super wrong (especially since pre-pandemic they typically had a RASM lead).


It does not include the blocked seats as they are not "available". At least in the 3rd quarter DL was blocking seats and still getting less for them than their competitors. Most of DLs cash burn advantage comes from them being able to strip out costs faster not getting a revenue premium.

Have to be careful talking about cash burn, as it is not standardized and not all airlines are including the same things in that discussion. Delta hasn’t been including debt servicing in that equation for example, while UA has.

DL entered the pandemic on stronger footing than UA and especially AA though, hence why it is holding its own fairly well (although UA hasn’t been doing too bad either all things considered).


You are actually on the money on that, DL's cash burn was 3rd worst, only better than AA/B6 & B6 is a bit unfair to compare since they are based in the Northeast:

Image
https://crankyflier.com/2020/11/10/and- ... -derby-is/
ORD & IND

AA & DL
 
freakyrat
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 3:11 pm

NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares


Yes planning on booking a flight DFW-MDT for later on in the year and Delta is the most expensive with UA being the least expensive.
 
MIflyer12
Posts: 9598
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 3:27 pm

ethernal wrote:
MIflyer12 wrote:
At the end of 2020, the company had $16.7 billion in liquidity, including cash and cash equivalents, short-term investments and undrawn revolving credit
facilities

It's a fairly common industry practice but I'm not a fan of the 'available liquidity' reference. 'We can borrow more money!' to add to already large piles of debt.


It's not like the majority of that $16.7B is undrawn revolving credit. $14B is cash/short term investments and less than $3B are untapped revolving credit lines (which, at this point in the game, aren't likely to be panic closed and probably have significant penalties to the bank for closure).


Watch for AA's results and the fraction of available liquidity that is undrawn CARES Act and CARES 2 loans plus undrawn commercial revolvers.
 
MIflyer12
Posts: 9598
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 3:43 pm

usflyer msp wrote:
ethernal wrote:
usflyer msp wrote:

I don't know if I would jump to that conclusion. Last quarter both UA and AA had higher RASM numbers than DL, even with the seat blocking.


How is RASM defined in this case? Does Delta's 737 have 180 available seats or does it have 130? I'm assuming that - for consistency in reporting - it is the former (180 seats). In which case, duh. Delta's fare premium doesn't make up for selling 30% fewer seats.

If United and American are really holding up a RASM premium relative to "blocked-seats-adjusted-availability" then Delta is really doing something super wrong (especially since pre-pandemic they typically had a RASM lead).


It does not include the blocked seats as they are not "available". At least in the 3rd quarter DL was blocking seats and still getting less for them than their competitors. Most of DLs cash burn advantage comes from them being able to strip out costs faster not getting a revenue premium.


Are you sure about the exclusion of blocked seats from ASM, CASM, RASM, etc.? ASMs were down 56% year over year.

Note A from the 8-K contradicts you, stating that revenue and cost measures are set against SCHEDULED capacity, not SELLABLE capacity.

Note A: Scheduled capacity, also referred to as available seat miles or ASMs and which we have historically presented as a capacity measure, equals the total
number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period. Sellable capacity
refers to available seat miles after giving effect to load factor caps and blocked seats. Cost and revenue unit metrics in this release, including all measures presented
in the statistical summary and in Note B, are calculated on the basis of scheduled capacity.


It would really be more productive to compare measurements that are industry-standard instead of sniping about those alleged as not.
 
MIflyer12
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 3:49 pm

PSU.DTW.SCE wrote:
admanager wrote:
And for the good news..."Delta has said it expects to get to cash flow positive by the spring."

That inflection point for cash-flow positive is going to probably be March / April timeframe when people start making summer booking in large scale, or when peak summer travel period rolling into the 90-day horizon.

I think there was some hope previously that they could be cash-flow positive by year-end 2020 thinking that the advanced bookings would be there for Spring Break travel period in March / April 2021, but they aren't seeing the booking volume or extended demand curve like they had hoped....yet.


There's way too much ambiguity in a positive cash flow timing estimate. They're not explicit with:

- Scheduled capacity

- Sellable capacity, if different (for how much longer beyond 1Q21 they will continue blocking seats)

- load factors

- yields

IMHO that cash flow positive timing 'spring' is little better than an aspiration. I wouldn't buy the stock on that!
 
LHA320
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 4:20 pm

MIflyer12 wrote:
[i] Delta anticipates the cumulative retirement of nearly 400 aircraft through 2025, further simplifying fleet families down to nine


Fleet families down to nine? What am I missing?

A220
A32x
A330
A350
B737
B757
B767

Do they count the A319, A320 and A321 as separate groups? Or is the 767 differed in 763 and 764?
717 should be retired by then afaik.
AB6 - A319 - A320 - A321 - A333 - A388 - AT42 - 733 - 734 - 735 - 73H - 738 - 752 - 753 - 763 - 772 - DC10 - MD83
 
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Polot
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 4:28 pm

LHA320 wrote:
MIflyer12 wrote:
[i] Delta anticipates the cumulative retirement of nearly 400 aircraft through 2025, further simplifying fleet families down to nine


Fleet families down to nine? What am I missing?

A220
A32x
A330
A350
B737
B757
B767

Do they count the A319, A320 and A321 as separate groups? Or is the 767 differed in 763 and 764?
717 should be retired by then afaik.

They may be including RJs so CRJ700/900 and E170/175.

Or they are breaking out Neos (A321 and A330) from ceos as separate “families” because they have different engines.
Last edited by Polot on Thu Jan 14, 2021 4:30 pm, edited 1 time in total.
 
FlyGuyNash
Posts: 58
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 4:29 pm

LHA320 wrote:
MIflyer12 wrote:
[i] Delta anticipates the cumulative retirement of nearly 400 aircraft through 2025, further simplifying fleet families down to nine


Fleet families down to nine? What am I missing?

A220
A32x
A330
A350
B737
B757
B767

Do they count the A319, A320 and A321 as separate groups? Or is the 767 differed in 763 and 764?
717 should be retired by then afaik.


They still count the regionals in their fleet. So you are missing the CRJ and ERJ.
 
PSU.DTW.SCE
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 4:38 pm

LHA320 wrote:
MIflyer12 wrote:
[i] Delta anticipates the cumulative retirement of nearly 400 aircraft through 2025, further simplifying fleet families down to nine


Fleet families down to nine? What am I missing?

A220
A32x
A330
A350
B737
B757
B767

Do they count the A319, A320 and A321 as separate groups? Or is the 767 differed in 763 and 764?
717 should be retired by then afaik.

No one has ever really been able to figure it out exactly how they define fleet families or to whether or not it includes wholly-owned DCI aircraft.

The two that are gone in 2020:
B777
MD88/90
* B73G was just a sub-fleet retirement within the B737 family

What will be gone by 2025:
B717 (definetely its own family)
B763 (is it its own family, or not, shares a pilot pool 7ER with the 752/753 but not the 764) has some part commonality with the 764 but different engines and other major components)
CRJ-200 (the wholly-owned frames flown by 9E) & capacity purchase by OO)
 
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lightsaber
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 4:47 pm

admanager wrote:
And for the good news..."Delta has said it expects to get to cash flow positive by the spring."

This is great news. It will be interesting to see which majors can expand first.

A brutal year.

Lightsaber
7 months without TV. The best decision of my life.
 
ethernal
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 5:31 pm

MIflyer12 wrote:
usflyer msp wrote:
ethernal wrote:

How is RASM defined in this case? Does Delta's 737 have 180 available seats or does it have 130? I'm assuming that - for consistency in reporting - it is the former (180 seats). In which case, duh. Delta's fare premium doesn't make up for selling 30% fewer seats.

If United and American are really holding up a RASM premium relative to "blocked-seats-adjusted-availability" then Delta is really doing something super wrong (especially since pre-pandemic they typically had a RASM lead).


It does not include the blocked seats as they are not "available". At least in the 3rd quarter DL was blocking seats and still getting less for them than their competitors. Most of DLs cash burn advantage comes from them being able to strip out costs faster not getting a revenue premium.


Are you sure about the exclusion of blocked seats from ASM, CASM, RASM, etc.? ASMs were down 56% year over year.

Note A from the 8-K contradicts you, stating that revenue and cost measures are set against SCHEDULED capacity, not SELLABLE capacity.

Note A: Scheduled capacity, also referred to as available seat miles or ASMs and which we have historically presented as a capacity measure, equals the total
number of seats available for transporting passengers during a reporting period multiplied by the total number of miles flown during that period. Sellable capacity
refers to available seat miles after giving effect to load factor caps and blocked seats. Cost and revenue unit metrics in this release, including all measures presented
in the statistical summary and in Note B, are calculated on the basis of scheduled capacity.


It would really be more productive to compare measurements that are industry-standard instead of sniping about those alleged as not.



Yeah, I'd love to see an authoritative source for the RASM claims (saying that RASM base does not include blocked seats). I'm not saying it isn't true, it just runs counter to expectations and - if true - is a truly bad sign for Delta. But I'm skeptical given my own personal experience with fares, the fact that I know several people who are not Delta fanboys or av-geeks that have made comments that they prefer to fly Delta due to this policy, and so on. But I'm more than willing to be proven otherwise - and it is entirely possible that the majority of travelers today do not care (leisure / low yield).

Also, if we're looking at Q3 data, then United was blocking seats (pseudo-blocking at least) for most of that period. So at least that comp would be off. I'd love to see the Q4 data.
 
FlyingElvii
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 5:49 pm

PSU.DTW.SCE wrote:
admanager wrote:
And for the good news..."Delta has said it expects to get to cash flow positive by the spring."

That inflection point for cash-flow positive is going to probably be March / April timeframe when people start making summer booking in large scale, or when peak summer travel period rolling into the 90-day horizon.

I think there was some hope previously that they could be cash-flow positive by year-end 2020 thinking that the advanced bookings would be there for Spring Break travel period in March / April 2021, but they aren't seeing the booking volume or extended demand curve like they had hoped....yet.

The CDC International travel testing rule is going to be a killer for summer travel. Too many variables to really risk it for most people.
 
Vicenza
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 5:57 pm

NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares


Just so I understand correctly, are you saying people are choosing to pay more to specifically? If so, why?
 
ethernal
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 6:05 pm

Vicenza wrote:
NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares


Just so I understand correctly, are you saying people are choosing to pay more to specifically? If so, why?


Not sure I understand the question, but the hypothesis is that people are paying more for blocked middle seats. And I'd be shocked if at least some segment isn't paying a premium for that.

I mean, even ignoring COVID, blocked middle seats make the entire flying experience so much better. Not crammed shoulder to shoulder with someone and no worrying about overhead bin space. Boarding is much easier. Definitely worth paying a premium for (at least I am).
 
jbs2886
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 6:17 pm

ethernal wrote:
Vicenza wrote:
NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares


Just so I understand correctly, are you saying people are choosing to pay more to specifically? If so, why?


Not sure I understand the question, but the hypothesis is that people are paying more for blocked middle seats. And I'd be shocked if at least some segment isn't paying a premium for that.

I mean, even ignoring COVID, blocked middle seats make the entire flying experience so much better. Not crammed shoulder to shoulder with someone and no worrying about overhead bin space. Boarding is much easier. Definitely worth paying a premium for (at least I am).


Anecdotally I paid more a few times for DL because of blocked middle seats. Its not even just on the plane, it means fewer people in boarding lines, etc. and that if people are booking because of blocking middle seats, they are more likely to social distance and properly wear masks. This reduces risks even more than merely no person in the middle seat.
 
jayunited
Posts: 3494
Joined: Sat Jan 05, 2013 12:03 am

Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 6:42 pm

NWADTWE16 wrote:
People who are flying are paying more to fly Delta during the pandemic. Once they open to 100% sellable they won't command the same fares



I'm not sure your conclusion is correct. Prior to COVID Delta was already commanding higher fares from some of their hubs where they face little competition. Delta has always been able to charge a premium from SLC, MSP, DTW, and ATL. But if you look at LGA, JFK, BOS, SEA, and LAX Delta's fares are a lot closer to their competition depending on the route. Whenever Delta decides to stop blocking middle seats they still will have control over ticket prices at SLC, MSP, DTW, ATL.

Polot wrote:
Have to be careful talking about cash burn, as it is not standardized and not all airlines are including the same things in that discussion. Delta hasn’t been including debt servicing in that equation for example, while UA has.

DL entered the pandemic on stronger footing than UA and especially AA though, hence why it is holding its own fairly well (although UA hasn’t been doing too bad either all things considered).


I congratulate Delta on getting their daily cash burn down to $12 million but I wish this was standardized because it hard to compare when each airline chooses what to include or exclude from their daily cash burn number.

Having said that Delta's Q4 numbers will be much better than UA's in my opinion, one reason I say that is because a several of United union represented workgroups got pay raises in December. People might ask why the reason is simple its in their contract. United had been doing well trying to keep pace with Delta on daily cash burn but those pay raises did hurt our cash burn.
 
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fanoftristars
Posts: 1680
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Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 7:20 pm

I know it's anecdotal, but just bought tickets DFW-SLC. AA was $256 and DL was $310. We went with Delta. Better planes and less packed. Because status was safe this year, we flew a lot of AA and WN. AA's First/Business Class fares have been pretty darn cheap, with coach being ridiculous. Friends just bought tickets to DFW-HNL for $199 round trip on the AA non-stop. Another friend just bought DFW-FLL for $99 round trip. I'm sure they were both E fares, but still - that's cheap!

Just checking some other dates, the Main Cabin fare on AA DFW-SLC round trip, lowest fare, AA is $217, DL is $310. These are main cabin, not E fares.
"FLY DELTA JETS"
 
ethernal
Posts: 482
Joined: Mon May 06, 2019 12:09 pm

Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 7:44 pm

jayunited wrote:
Having said that Delta's Q4 numbers will be much better than UA's in my opinion, one reason I say that is because a several of United union represented workgroups got pay raises in December. People might ask why the reason is simple its in their contract. United had been doing well trying to keep pace with Delta on daily cash burn but those pay raises did hurt our cash burn.


A couple of small contractually obligated pay raises aren't going to make a huge difference in financial performance. What's driving performance today is the ability to balance supply/demand in a rapidly changing marketplace with unclear demand patterns. Are we flying the right capacity at the right times? Are we adjusting our route structure to adjust to changing demand profiles (leisure vs. business destinations)? Are we trying to fill planes or are we trying to do yield management? Is my fleet strategy right in context of depressed demand? Is my marketing / COVID response right (seat blocking vs. not seat blocking, change fees, etc)? Am I continuing to capture frequent flyers or are they changing carriers?

A few percentage points on some folks salaries is a rounding error in the grand scheme of things when losses are measured in the tens of billions.
 
jetmatt777
Posts: 4583
Joined: Sun Jun 26, 2005 2:16 am

Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 8:27 pm

ethernal wrote:
jayunited wrote:
Having said that Delta's Q4 numbers will be much better than UA's in my opinion, one reason I say that is because a several of United union represented workgroups got pay raises in December. People might ask why the reason is simple its in their contract. United had been doing well trying to keep pace with Delta on daily cash burn but those pay raises did hurt our cash burn.


A couple of small contractually obligated pay raises aren't going to make a huge difference in financial performance. What's driving performance today is the ability to balance supply/demand in a rapidly changing marketplace with unclear demand patterns. Are we flying the right capacity at the right times? Are we adjusting our route structure to adjust to changing demand profiles (leisure vs. business destinations)? Are we trying to fill planes or are we trying to do yield management? Is my fleet strategy right in context of depressed demand? Is my marketing / COVID response right (seat blocking vs. not seat blocking, change fees, etc)? Am I continuing to capture frequent flyers or are they changing carriers?

A few percentage points on some folks salaries is a rounding error in the grand scheme of things when losses are measured in the tens of billions.


Exactly. Let's say 30,000 received the cost of living adjustment (about 2% or around 50 cents per hour on average). Let's assume 5 out of 7 are working on any given day. That is 21,400 on shift any given day. Let's assume about half are part time and half are full time - we'll say that the average number of hours is 6.5. That is 139,000 paid hours per day, times 50 cents an hour. That pay raise costs the company an additional $70,000 a day. or 0.3% increase in daily cash burn. While not an immaterial number, it is fairly insignificant. I bet the daily cost for added fuel and rebookings to accommodate Jacksonville center closing every couple of days is more than that number. Leave it to Jay to first blame the employees, it is a rite of passage for UA management.
 
Pi7472000
Posts: 308
Joined: Fri Apr 27, 2018 3:26 pm

Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 9:05 pm

Good to see Delta turning around. They are really outperforming American and other peers!! People are willing to pay more to fly Delta!!

Would love to see United and Delta start a codeshare/alliance to push back against the alliance of American/Alaska and American/JetBlue.
 
ethernal
Posts: 482
Joined: Mon May 06, 2019 12:09 pm

Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 9:27 pm

Pi7472000 wrote:
Good to see Delta turning around. They are really outperforming American and other peers!! People are willing to pay more to fly Delta!!

Would love to see United and Delta start a codeshare/alliance to push back against the alliance of American/Alaska and American/JetBlue.


It's not clear to me that Delta is necessarily outperforming anyone (especially since they are the first to release earnings for the quarter). While there is some variation, the majors are at similar levels of cash burn and all are still losing money. The airlines are now about as lean as they can get without cutting into the muscle and causing long term damage to their fleets, people, and networks.

All the majors have a long road to profitable growth again. The debt overhang from this event is massive - the balance sheets built up over the past decade are completely decimated and big structural questions on the return of business travel is big risk for the legacies that are so dependent on that market.

I think one thing to give kudos to Delta on is that they have navigated this pretty well (at least from an external point of view) in relation to their people. Very limited involuntary layoffs - primarily voluntary LoAs or packages. That said, as good as that is, it also leaves some big questions in terms of Delta's talent. Do they still have the right people and culture left to continue to be the leader in the US? Maybe, maybe not. Involuntary layoffs are good in the sense that it allows you to prioritize low performers. For voluntary packages, it's often the high performers that are the first to leave - with a high degree of confidence that they can grow roots in other industries or return to the airline industry in greener days.
 
jayunited
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Joined: Sat Jan 05, 2013 12:03 am

Re: Delta Q4 2020 Earnings

Thu Jan 14, 2021 9:48 pm

Pi7472000 wrote:
Good to see Delta turning around. They are really outperforming American and other peers!! People are willing to pay more to fly Delta!!

Would love to see United and Delta start a codeshare/alliance to push back against the alliance of American/Alaska and American/JetBlue.



There is no way the DOT would ever approve a DL/UA codeshare even if the codeshare was confined to the Northeast region. There isn't a single person within the DOT who would sign off on a codeshare like that.

Both Delta and United are going to have to figure out the Northeast region and how to combat AA/B6 on their own.
 
panamair
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Re: Delta Q4 2020 Earnings

Fri Jan 15, 2021 12:01 am

ethernal wrote:

Yeah, I'd love to see an authoritative source for the RASM claims (saying that RASM base does not include blocked seats). I'm not saying it isn't true, it just runs counter to expectations and - if true - is a truly bad sign for Delta.


The TRASM/PRASM figures Delta publishes in the financials are scheduled ASMs without taking into account blocked seats or capped capacity (i.e., not the sellable capacity). For example, the published figures for Q4 2020 show ASMs being down 44% compared to 2019; during the Q3 results call Glen Hauenstein provided guidance of Q4 capacity as being down 45% when using scheduled capacity or down 60% when using sellable capacity. Another quick check is that their guidance for Q1 2021 capacity in this report is a reduction of 33% with scheduled capacity or 55% with sellable capacity. Given that we know Q1 is not seeing so far a big reduction from Q4 yet, the 44% reduction in Q4 is comparable to the 33% figure for Q1 and not comparable to the 55% figure (vs sellable seats) for Q1.

ethernal wrote:
Also, if we're looking at Q3 data, then United was blocking seats (pseudo-blocking at least) for most of that period. So at least that comp would be off. I'd love to see the Q4 data.


United halted seat blocking earlier than Q3 (in Q2 I believe)
 
User avatar
aemoreira1981
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Re: Delta Q4 2020 Earnings

Fri Jan 15, 2021 1:39 am

I’m a bit surprised yet glad that Delta has its cash burn rate that low. It will be really interesting to see what United’s numbers look like given the size of that wide-body fleet.
 
panamair
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Joined: Fri Oct 12, 2001 2:24 am

Re: Delta Q4 2020 Earnings

Fri Jan 15, 2021 2:08 am

aemoreira1981 wrote:
I’m a bit surprised yet glad that Delta has its cash burn rate that low. It will be really interesting to see what United’s numbers look like given the size of that wide-body fleet.


United's mid-December investor update was guiding to a $24-$26m daily cash burn rate for Q4, not including $10m a day for debt payments.

https://money.usnews.com/investing/news ... xpectation
 
ethernal
Posts: 482
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Re: Delta Q4 2020 Earnings

Fri Jan 15, 2021 2:16 am

panamair wrote:
ethernal wrote:

Yeah, I'd love to see an authoritative source for the RASM claims (saying that RASM base does not include blocked seats). I'm not saying it isn't true, it just runs counter to expectations and - if true - is a truly bad sign for Delta.


The TRASM/PRASM figures Delta publishes in the financials are scheduled ASMs without taking into account blocked seats or capped capacity (i.e., not the sellable capacity). For example, the published figures for Q4 2020 show ASMs being down 44% compared to 2019; during the Q3 results call Glen Hauenstein provided guidance of Q4 capacity as being down 45% when using scheduled capacity or down 60% when using sellable capacity. Another quick check is that their guidance for Q1 2021 capacity in this report is a reduction of 33% with scheduled capacity or 55% with sellable capacity. Given that we know Q1 is not seeing so far a big reduction from Q4 yet, the 44% reduction in Q4 is comparable to the 33% figure for Q1 and not comparable to the 55% figure (vs sellable seats) for Q1.


This makes a lot of sense and is what I would have expected. It would seem odd to try to adjust the ASM definition due to the blocking as it would throw off all historical reporting as well (although I guess all historical data is garbage in context of this seismic shift).

panamair wrote:
ethernal wrote:
Also, if we're looking at Q3 data, then United was blocking seats (pseudo-blocking at least) for most of that period. So at least that comp would be off. I'd love to see the Q4 data.


United halted seat blocking earlier than Q3 (in Q2 I believe)


Thank you, you are correct. For some reason I thought AA stopped, then United continued until at least August but I was mistaken. Time just all blurs together these days.
 
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LAX772LR
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Re: Delta Q4 2020 Earnings

Fri Jan 15, 2021 4:10 am

jbs2886 wrote:
Anecdotally I paid more a few times for DL because of blocked middle seats.

Same. Paid a nearly $350 premium to fly DL vs AA on LAX-MSY for the holidays; not only because they're my primary airline (I tend to stray if the fare difference is more than $100 domestically), but because of the blocked seats.

AA's price was insanely low, but lack of blocked seats and (at the time of booking) fear that the MAX might be flying again, made that an easy choice to pay so much more for (the same thing on) DL.
I myself, suspect a more prosaic motive... ~Thranduil
 
JFLANY
Posts: 19
Joined: Fri Mar 23, 2018 7:08 am

Re: Delta Q4 2020 Earnings

Fri Jan 15, 2021 4:44 am

Based on a selection of flight searches over the next 30 days, I observe that only DL and AS are commanding a premium for main cabin. AA and UA have relented, largely abandoning basic economy sales after flirting with them a few weeks ago. The fact that DL is blocking seats AND has consistently commanded a premium for main cabin throughout the pandemic (even though basic econ seats have blocked middles) is telling.
 
Seat1D
Posts: 71
Joined: Sun Oct 18, 2020 8:55 pm

Re: Delta Q4 2020 Earnings

Fri Jan 15, 2021 11:42 am

jayunited wrote:
Pi7472000 wrote:
Good to see Delta turning around. They are really outperforming American and other peers!! People are willing to pay more to fly Delta!!

Would love to see United and Delta start a codeshare/alliance to push back against the alliance of American/Alaska and American/JetBlue.



There is no way the DOT would ever approve a DL/UA codeshare even if the codeshare was confined to the Northeast region. There isn't a single person within the DOT who would sign off on a codeshare like that.

Both Delta and United are going to have to figure out the Northeast region and how to combat AA/B6 on their own.


I don't think UA and DL have to figure out anything, especially how to combat AA/B6.They just have to keep doing what they're doing. Both airlines have very robust schedules, are two of the more customer service friendly airlines and offer complete packages to consumers under one brand, one consistent name and product. . It's telling that it takes two airlines in the North East to try and equal a DL or UA and will most likely still fall short.
 
usflyer msp
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Re: Delta Q4 2020 Earnings

Thu Jan 21, 2021 6:05 pm

 
User avatar
OA412
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Re: Delta Q4 2020 Earnings

Thu Jan 21, 2021 6:25 pm

usflyer msp wrote:

That article is limited to Q3 earnings. Meanwhile this thread is about Q4 earnings. It would be interesting to see if the same was the case for Q4, but otherwise the article you linked isn't instructive.
Hughes Airwest - Top Banana In The West
 
jbs2886
Posts: 3122
Joined: Wed Apr 01, 2015 9:07 pm

Re: Delta Q4 2020 Earnings

Thu Jan 21, 2021 7:22 pm

OA412 wrote:
usflyer msp wrote:

That article is limited to Q3 earnings. Meanwhile this thread is about Q4 earnings. It would be interesting to see if the same was the case for Q4, but otherwise the article you linked isn't instructive.


In fairness, the quote says outperformed for the first 9 months so the analysis is comparable. Regardless, there are a lot of assumptions built in the analysis and executives can't lie on an earnings call, so its a bold assertion that they did (and very unlikely).
 
Oliver2020
Posts: 223
Joined: Mon Jan 21, 2019 5:39 am

Re: Delta Q4 2020 Earnings

Sat Jan 23, 2021 7:44 am

Oliver2020 wrote:
OA412 wrote:
usflyer msp wrote:

That article is limited to Q3 earnings. Meanwhile this thread is about Q4 earnings. It would be interesting to see if the same was the case for Q4, but otherwise the article you linked isn't instructive.


He qoutes Glen And then gives his opinion. I didnt read anything after that but here's the entire earnings call from Deltas SEC filings if you guys want to read it. Go to transcripts and select Q4. The earnings release is als available from Q4.

https://ir.delta.com/financials/default.aspx#

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