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LAXintl
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Delta post Q1 Loss

Thu Apr 15, 2021 4:14 pm

March quarter 2021 Delta reporting GAAP pre-tax loss of $1.5 billion on total revenue of $4.2 billion. Adjusted pre-tax basis showed a loss of $2.9 billion and loss per share of $3.55 on operating revenue of $3.6 billion a decline of 65 percent on 55 percent lower sellable capacity.

At the end of the March quarter, company had $16.6 billion in liquidity and total debt and finance lease obligations of $29.0 billion.

https://ir.delta.com/news/news-details/ ... fault.aspx

=


Slightly worse results than the market expected. Lets see how AA and UA come in as a comparison.
Last edited by LAXintl on Thu Apr 15, 2021 4:18 pm, edited 1 time in total.
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jbs2886
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:16 pm

LAXintl wrote:
March quarter 2021 Delta reporting GAAP pre-tax loss of $1.5 billion on total revenue of $4.2 billion. Adjusted pre-tax basis showed a loss of $2.9 billion and loss per share of $3.55 on operating revenue of $3.6 billion a decline of 65 percent on 55 percent lower sellable capacity.

At the end of the March quarter, company had $16.6 billion in liquidity and total debt and finance lease obligations of $29.0 billion.

https://ir.delta.com/news/news-details/ ... fault.aspx

=

https://ir.delta.com/news/news-details/ ... fault.aspx


Slightly worse results than market expected. Lets see how AA and UA come in as comparison.


Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.
 
tphuang
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:29 pm

jbs2886 wrote:
LAXintl wrote:
March quarter 2021 Delta reporting GAAP pre-tax loss of $1.5 billion on total revenue of $4.2 billion. Adjusted pre-tax basis showed a loss of $2.9 billion and loss per share of $3.55 on operating revenue of $3.6 billion a decline of 65 percent on 55 percent lower sellable capacity.

At the end of the March quarter, company had $16.6 billion in liquidity and total debt and finance lease obligations of $29.0 billion.

https://ir.delta.com/news/news-details/ ... fault.aspx

=

https://ir.delta.com/news/news-details/ ... fault.aspx


Slightly worse results than market expected. Lets see how AA and UA come in as comparison.


Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.


DL has always been stating it's cash burn on just the core stuff, without the interest/principal payments and severance payments.

Also, cash burn can be misleading. Airlines can move certain large one time expenses from month to month. And there will be increased expense as airlines bring back parked aircraft into fleet needing to do heavy maintenance and retrain pilots. It's probably more important to see how much permanent cost cut they've made and what their revenue is as a % of 2019.
Last edited by tphuang on Thu Apr 15, 2021 4:32 pm, edited 1 time in total.
 
MIflyer12
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:31 pm

jbs2886 wrote:
Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.


Oh, it's heavily footnoted:

Cash (Burn)/Generation. We present cash (burn)/generation because management believes this metric is helpful to investors to evaluate the company's ability to maintain liquidity and return to cash generation. The company defines cash (burn)/generation as net cash from operating activities and net cash from investing activities, adjusted for (i) net redemptions of short-term investments, (ii) strategic investments and related, (iii) net cash flows related to certain airport construction projects and other, (iv) aircraft financing arrangements, (v) government grant proceeds, and (vi) other charges that are not representative of our core operations, such as charges associated with our voluntary separation and early retirement programs. Adjustments include:

Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.

Strategic investments and related. Cash flows related to our investments in and related transactions with other airlines are included in our GAAP investing activities. We adjust for this activity because it provides a more meaningful comparison to our airline industry peers.

Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operations in the periods shown.

Aircraft financing arrangements.Cash flows from payments reported within investing activities related to the purchase of aircraft that are fully financed in the period are removed from free cash flow in calculating daily cash burn to better illustrate the cash generated from our core operations.

Government grant proceeds.Cash flows related to the PSP Extension grant proceeds, reported within operating activities in GAAP results. We adjust free cash flow for this item in calculating daily cash burn to better illustrate the cash from our core operations.

Voluntary programs.Cash flows from the voluntary separation and early retirement programs offered to employees during 2020, reported within operating activities in GAAP results. We adjust free cash flow for this item in calculating daily cash burn to better illustrate the cash from our core operations.
 
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LAXintl
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:35 pm

jbs2886 wrote:

Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.


On call they spoke about July "break-even" projection assuming continued upward trend
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alasizon
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:35 pm

jbs2886 wrote:
LAXintl wrote:
March quarter 2021 Delta reporting GAAP pre-tax loss of $1.5 billion on total revenue of $4.2 billion. Adjusted pre-tax basis showed a loss of $2.9 billion and loss per share of $3.55 on operating revenue of $3.6 billion a decline of 65 percent on 55 percent lower sellable capacity.

At the end of the March quarter, company had $16.6 billion in liquidity and total debt and finance lease obligations of $29.0 billion.

https://ir.delta.com/news/news-details/ ... fault.aspx

=

https://ir.delta.com/news/news-details/ ... fault.aspx


Slightly worse results than market expected. Lets see how AA and UA come in as comparison.


Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.


According to their note at the bottom of the release, they remove severance payments (among other things) that are not part of their core operations. Looking at the actual results it appears with voluntary separation packages included, they were a net $2m/day average in March without factoring in any debt servicing.

Cash (Burn)/Generation. We present cash (burn)/generation because management believes this metric is helpful to investors to evaluate the company's ability to maintain liquidity and return to cash generation. The company defines cash (burn)/generation as net cash from operating activities and net cash from investing activities, adjusted for (i) net redemptions of short-term investments, (ii) strategic investments and related, (iii) net cash flows related to certain airport construction projects and other, (iv) aircraft financing arrangements, (v) government grant proceeds, and (vi) other charges that are not representative of our core operations, such as charges associated with our voluntary separation and early retirement programs.
Airport (noun) - A construction site which airplanes tend to frequent
 
jbs2886
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:39 pm

MIflyer12 wrote:
jbs2886 wrote:
Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.


Oh, it's heavily footnoted:

Cash (Burn)/Generation. We present cash (burn)/generation because management believes this metric is helpful to investors to evaluate the company's ability to maintain liquidity and return to cash generation. The company defines cash (burn)/generation as net cash from operating activities and net cash from investing activities, adjusted for (i) net redemptions of short-term investments, (ii) strategic investments and related, (iii) net cash flows related to certain airport construction projects and other, (iv) aircraft financing arrangements, (v) government grant proceeds, and (vi) other charges that are not representative of our core operations, such as charges associated with our voluntary separation and early retirement programs. Adjustments include:

Net redemptions of short-term investments. Net redemptions of short-term investments represent the net purchase and sale activity of investments and marketable securities in the period, including gains and losses. We adjust for this activity to provide investors a better understanding of the company's free cash flow generated by our operations.

Strategic investments and related. Cash flows related to our investments in and related transactions with other airlines are included in our GAAP investing activities. We adjust for this activity because it provides a more meaningful comparison to our airline industry peers.

Net cash flows related to certain airport construction projects and other. Cash flows related to certain airport construction projects are included in our GAAP operating activities and capital expenditures. We have adjusted for these items, which were primarily funded by cash restricted for airport construction, to provide investors a better understanding of the company's free cash flow and capital expenditures that are core to our operations in the periods shown.

Aircraft financing arrangements.Cash flows from payments reported within investing activities related to the purchase of aircraft that are fully financed in the period are removed from free cash flow in calculating daily cash burn to better illustrate the cash generated from our core operations.

Government grant proceeds.Cash flows related to the PSP Extension grant proceeds, reported within operating activities in GAAP results. We adjust free cash flow for this item in calculating daily cash burn to better illustrate the cash from our core operations.

Voluntary programs.Cash flows from the voluntary separation and early retirement programs offered to employees during 2020, reported within operating activities in GAAP results. We adjust free cash flow for this item in calculating daily cash burn to better illustrate the cash from our core operations.


I think I'm trying to compare it to AA's statement where their interest, etc. was $8M a day. I'm not seeing the same limitations placed by DL as AA. But may not have enough information yet until AA release.
 
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Midwestindy
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:41 pm

LAXintl wrote:
jbs2886 wrote:

Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.


On call they spoke about July "break-even" projection assuming continued upward trend



Break-even cash flow vs. break-even EPS are not the same thing. The June/July comment is in relation to EPS, they are already break even cash flow wise based on March.
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LAXintl
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:45 pm

One can clearly see how revenue lagging far behind demand. For Q2 they forecast to fly 68% of 2019 capacity but estimate 50-55% of revenue.

Regarding the key corporate travel segment, they stated they expect 1/3 of them to have travel in Q2. Long term see 75-80% of corp revenues coming back "next couple years".

On global stage see Europe unlikely to open for much of summer, though UK might have a chance.
Last edited by LAXintl on Thu Apr 15, 2021 4:46 pm, edited 1 time in total.
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Polot
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 4:46 pm

Midwestindy wrote:
LAXintl wrote:
jbs2886 wrote:

Cash positive of $4M a day in March. Doesn’t appear to be caveated as “core” or whatnot.


On call they spoke about July "break-even" projection assuming continued upward trend



Break-even cash flow vs. break-even EPS are not the same thing. The June/July comment is in relation to EPS, they are already break even cash flow wise based on March.

Break even cash flow with caveats as mentioned. EPS is really what everyone cares about because it is not excluding the stuff that are not “core” activities but nevertheless obligations DL has.
 
MIflyer12
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 5:04 pm

LAXintl wrote:
One can clearly see how revenue lagging far behind demand. For Q2 they forecast to fly 68% of 2019 capacity but estimate 50-55% of revenue.


I've been posting of that problem for months, in response to the overexcited 'Carrier xx is scheduling XX% of 2019 capacity next month!' remarks. That doesn't mean they're achieving historic mean load factors (~80%) or typical yields on their way to generating XX% of 2019 revenues.

We may see - before the end of the year - if any of the Big 6 U.S. carriers can make money (on a GAAP basis, not op income which ignores finance costs) at 75% of 2019 revenues.

One big surprise in the DL 1Q earnings is their decision to drop an extra $1 Billion into the pension plan, and are considering yet another $1 Billion before the end of the year. The variable rate component of the insurance premiums due the PBGC is based on the plan’s funded status (the premium is a percentage of the amount by which the plan is underfunded). Look like they're making avoidance of that variable rate premium expense a real priority (instead of managing for total available liquidity).

As previously announced during the quarter, the company voluntarily funded $1 billion into its pension plans on April 1. The company is evaluating up to $1
billion of additional voluntary contribution later this year to fully fund the pension plans based on terms included in the recently passed American Rescue Plan Act
of 2021 related to pension funding. At this level of funding, investment returns are expected to satisfy future benefit payments, which we believe would eliminate
any material cash contributions to the plans going forward.
 
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Midwestindy
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 5:08 pm

LAXintl wrote:
One can clearly see how revenue lagging far behind demand. For Q2 they forecast to fly 68% of 2019 capacity but estimate 50-55% of revenue.

Regarding the key corporate travel segment, they stated they expect 1/3 of them to have travel in Q2. Long term see 75-80% of corp revenues coming back "next couple years".

On global stage see Europe unlikely to open for much of summer, though UK might have a chance.


To be fair, their Q2 sellable capacity is only 60% of 2019, but they said revenue will be down 50-55%, so they are expecting 45-50% of revenues.

MIflyer12 wrote:
LAXintl wrote:
One can clearly see how revenue lagging far behind demand. For Q2 they forecast to fly 68% of 2019 capacity but estimate 50-55% of revenue.


I've been posting of that problem for months, in response to the overexcited 'Carrier xx is scheduling XX% of 2019 capacity next month!' remarks. That doesn't mean they're achieving historic mean load factors (~80%) or typical yields on their way to generating XX% of 2019 revenues.

We may see - before the end of the year - if any of the Big 6 U.S. carriers can make money (on a GAAP basis, not op income which ignores finance costs) at 75% of 2019 revenues.


DL said they expect LFs in the mid 70s in May, & 80s in June. They also said that leisure yields are at normal levels, or will be by the summer as they yield up with better LFs.

Polot wrote:
Midwestindy wrote:
LAXintl wrote:

On call they spoke about July "break-even" projection assuming continued upward trend


Break-even cash flow vs. break-even EPS are not the same thing. The June/July comment is in relation to EPS, they are already break even cash flow wise based on March.

Break even cash flow with caveats as mentioned. EPS is really what everyone cares about because it is not excluding the stuff that are not “core” activities but nevertheless obligations DL has.


UA is doing the same, advertising "core cash burn." I think AA might surprisingly be producing the most accurate number.
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alohashirts
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 5:21 pm

Will be interesting to see how they do once middle seats will no longer be blocked. It also wouldn’t hurt the bottom line and it would probably help attract more passengers if its CEO and company stay out of heated social and political matters. They seem to have forgotten they’re an airline at times.
 
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NWAESC
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 5:32 pm

Citizens United means they get to weigh in on sociopolitical issues.

Let's also be honest here, and remember that a company will align it's values with what it believes it's target market wants.
"Nothing ever happens here, " I said. "I just wait."
 
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UPlog
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 5:59 pm

Lots of hocus-pocus going on with how airlines calculate their cash burn. Ultimately all that matters is the end number whether they turn a profit or not.
Things like debt payments, severance, etc must still be paid out and need to be considered in the burn.

LAXintl wrote:
Regarding the key corporate travel segment, they stated they expect 1/3 of them to have travel in Q2. Long term see 75-80% of corp revenues coming back "next couple years".


Is Bastian the first of the US3 to admit business travel might not come back fully? Believe Kirby and Parker both banking on full recovery.

MIflyer12 wrote:
I've been posting of that problem for months, in response to the overexcited 'Carrier xx is scheduling XX% of 2019 capacity next month!' remarks. That doesn't mean they're achieving historic mean load factors (~80%) or typical yields on their way to generating XX% of 2019 revenues.


Lagging revenue without the corporate crowd is likely the biggest obstacle ahead (assuming the virus does not turn for the worse).
US3 might need to realign their businesses from network to products to better service a less premium heavy customer base for years to come potentially.
I fly your boxes
 
TWFlyGuy
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 6:11 pm

MIflyer12 wrote:
I've been posting of that problem for months, in response to the overexcited 'Carrier xx is scheduling XX% of 2019 capacity next month!' remarks. That doesn't mean they're achieving historic mean load factors (~80%) or typical yields on their way to generating XX% of 2019 revenues.


Lagging revenue without the corporate crowd is likely the biggest obstacle ahead (assuming the virus does not turn for the worse).
US3 might need to realign their businesses from network to products to better service a less premium heavy customer base for years to come potentially.[/quote]

I think DL may be the best positioned to deal with that. IIRC DL has slightly better (passenger wise) seat pitch than AA/UA. As such, they can add seats to come more toward competitor capacity to drive increase revenue. All can, and likely will, reduce F capacity if Business demand lags too long. On the international side, I think AA and UA have some advantage with older 777's they can sit more quickly while DL may have a newer and thus tougher to sit, widebody fleet. I think those factors will be key to who can recover quickest.
 
Someone83
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 6:17 pm

What explains the 600 mill USD difference in GAAp revenue and adjusted revenue?
 
joeblow10
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 6:17 pm

TWFlyGuy wrote:
MIflyer12 wrote:
I've been posting of that problem for months, in response to the overexcited 'Carrier xx is scheduling XX% of 2019 capacity next month!' remarks. That doesn't mean they're achieving historic mean load factors (~80%) or typical yields on their way to generating XX% of 2019 revenues.


Lagging revenue without the corporate crowd is likely the biggest obstacle ahead (assuming the virus does not turn for the worse).
US3 might need to realign their businesses from network to products to better service a less premium heavy customer base for years to come potentially.



The first part of your analysis is spot on but I disagree DL is the best positioned - quite the opposite, I think they are probably worst positioned coming out of this - for the exact reason you mentioned: premium seat density.

DL was/is a very premium centric airline and they heavily rely on paid upgrades and business travel to really earn that top of the industry margin they had going for so long. Between the pilot staffing issues and the huge fleet decrease from 2022-2025 that is now forecast with their retirements - they will not have any room to grow or really shift capacity. That might mean good load factors but there are less seats to fly and offset the large fixed costs associated with the industry - especially without the business travelers paying top dollar.

DL is going to have to match down fares just the same as UA/AA - and that’s really going to hurt their bottom line compared to the premium travelers they were used to if that doesn’t recover quickly
 
MIflyer12
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 6:31 pm

joeblow10 wrote:


The first part of your analysis is spot on but I disagree DL is the best positioned - quite the opposite, I think they are probably worst positioned coming out of this - for the exact reason you mentioned: premium seat density.

DL was/is a very premium centric airline and they heavily rely on paid upgrades and business travel to really earn that top of the industry margin they had going for so long.


Do some math of the fleet configs UA vs. DL and see which is heavier in intl J and Y+, and in domestic Y+. It's not Delta.
 
joeblow10
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 6:36 pm

MIflyer12 wrote:
joeblow10 wrote:


The first part of your analysis is spot on but I disagree DL is the best positioned - quite the opposite, I think they are probably worst positioned coming out of this - for the exact reason you mentioned: premium seat density.

DL was/is a very premium centric airline and they heavily rely on paid upgrades and business travel to really earn that top of the industry margin they had going for so long.


Do some math of the fleet configs UA vs. DL and see which is heavier in intl J and Y+, and in domestic Y+. It's not Delta.


Difference is UA and AA have already been charging rock bottom because of ongoing fare wars for a few years... and that’s why DLs margin was so much higher.

I’m not suggesting DL won’t turn a profit - I’m simply saying their margin is going to come way down without the top dollar customer.
 
MIflyer12
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 6:46 pm

You're not making a coherent case. You said DL is 'probably worst' positioned because of premium seat density. It doesn't have the highest premium seat density. I am happy to see you corrected with publicly available info. Compare E75, 763, 764, 319, 320, 739, 772 to 333, 789 to 359... UA has a higher premium seat ratio to regular coach.

I have lauded UA's ability to configure with a rich mix of Y+, presuming they were selling much of it (or would reconfigure). There's the question why UA yields haven't matched DL -- but it's not lack of premium seats in UA mainline.
 
joeblow10
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 6:54 pm

MIflyer12 wrote:
You're not making a coherent case. You said DL is 'probably worst' because of premium seat density. It doesn't have the highest premium seat density. I am happy to see you corrected with publicly available info. Compare E75, 763, 764, 319, 320, 739, 772 to 333... UA has a higher premium seat ratio to regular coach.

I have lauded UA's ability to configure with a rich mix of Y+, presuming they were selling much of it (or would reconfigure). The question is why UA yields haven't matched DL -- but it's not lack of premium seats in UA mainline.


I probably was not clear - DL may have “denser” aircraft when you compare Y+ - but the difference is DLs customers were the ones paying for those - the main differentiator in recent years and why DL had such high margins (which was openly bragged about on earnings calls) was their ability to get customers, especially corporate folks, to buy up with their own wallet. These folks willing to pay a premium are no longer going to be traveling in the numbers they were.

Every time I have flown UA since BE was introduced (and yes, I am one who buys it) - I am almost invariably assigned an E+ seat at the gate. UA has not matched DLs yields for years because they have been offering bottom of the barrel fares and BE fares to go to war with the ULCC crowd... and those customers wind up in E+ anyway. “Nobody” is paying for E+ at UA, in comparison to how DL did it

But now DL is going to be facing the same problem. Bottom of the barrel fares for leisure heavy traffic - and many fewer folks willing to “buy up” on a corporate ticket to Y+ or F.
 
jayunited
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 7:31 pm

Midwestindy wrote:

UA is doing the same, advertising "core cash burn." I think AA might surprisingly be producing the most accurate number.


United has always posted the real actual number United has never just posted the "core" cash burn figures. When United reported in March we reached breakeven they made sure employees understood they were talking about the operation "core" only which is how most people on the United thread have presented it. United has never presented their cash burn figures in the same manner as Delta. The cash burn number we get from United for Q1 will be 100% accurate and it will included nonoperational item like severance pay.
 
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 7:55 pm

joeblow10 wrote:
MIflyer12 wrote:
You're not making a coherent case. You said DL is 'probably worst' because of premium seat density. It doesn't have the highest premium seat density. I am happy to see you corrected with publicly available info. Compare E75, 763, 764, 319, 320, 739, 772 to 333... UA has a higher premium seat ratio to regular coach.

I have lauded UA's ability to configure with a rich mix of Y+, presuming they were selling much of it (or would reconfigure). The question is why UA yields haven't matched DL -- but it's not lack of premium seats in UA mainline.


I probably was not clear - DL may have “denser” aircraft when you compare Y+ - but the difference is DLs customers were the ones paying for those - the main differentiator in recent years and why DL had such high margins (which was openly bragged about on earnings calls) was their ability to get customers, especially corporate folks, to buy up with their own wallet. These folks willing to pay a premium are no longer going to be traveling in the numbers they were.

Every time I have flown UA since BE was introduced (and yes, I am one who buys it) - I am almost invariably assigned an E+ seat at the gate. UA has not matched DLs yields for years because they have been offering bottom of the barrel fares and BE fares to go to war with the ULCC crowd... and those customers wind up in E+ anyway. “Nobody” is paying for E+ at UA, in comparison to how DL did it

But now DL is going to be facing the same problem. Bottom of the barrel fares for leisure heavy traffic - and many fewer folks willing to “buy up” on a corporate ticket to Y+ or F.


I agree with your assessment here, but I think its a compound issue for Delta. Not only do they not have the traveler to pay for those upgrades, but a concerning trend is that the upgrade prices may no longer be justifiable because of degradation of the level of service.

Additionally, if Delta's holiday operational issues are a foreshadowing of what we might see this summer with the current booking trends, things could get ugly. Sustained operational problems are an easy way to have travelers (and companies) re-thinking travel choices.
 
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Polot
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 7:59 pm

joeblow10 wrote:
MIflyer12 wrote:
You're not making a coherent case. You said DL is 'probably worst' because of premium seat density. It doesn't have the highest premium seat density. I am happy to see you corrected with publicly available info. Compare E75, 763, 764, 319, 320, 739, 772 to 333... UA has a higher premium seat ratio to regular coach.

I have lauded UA's ability to configure with a rich mix of Y+, presuming they were selling much of it (or would reconfigure). The question is why UA yields haven't matched DL -- but it's not lack of premium seats in UA mainline.


I probably was not clear - DL may have “denser” aircraft when you compare Y+ - but the difference is DLs customers were the ones paying for those - the main differentiator in recent years and why DL had such high margins (which was openly bragged about on earnings calls) was their ability to get customers, especially corporate folks, to buy up with their own wallet. These folks willing to pay a premium are no longer going to be traveling in the numbers they were.

Every time I have flown UA since BE was introduced (and yes, I am one who buys it) - I am almost invariably assigned an E+ seat at the gate. UA has not matched DLs yields for years because they have been offering bottom of the barrel fares and BE fares to go to war with the ULCC crowd... and those customers wind up in E+ anyway. “Nobody” is paying for E+ at UA, in comparison to how DL did it

But now DL is going to be facing the same problem. Bottom of the barrel fares for leisure heavy traffic - and many fewer folks willing to “buy up” on a corporate ticket to Y+ or F.

I actually think AA has the best fleet and cabin configurations for post-covid aviation. Unfortunately everything else about the airline and its financial position is a mess.
 
FF630
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 9:13 pm

I am an accountant , just reviewed Delta's Q1 numbers. Only a person who has taken intermediate accounting 1&2, which are the two required junior level accounting classes would understand all this number manipulation. There are several acceptable formats under GAAP to present numbers. For example, you can report either EBITDA or NOI (net operating income) on financial statements. Because of the the CEO and CFO can use smoke and mirrors which many stockholders do not understand, it's all a PR game.
 
LawAndOrder
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 9:54 pm

Another Delta is burning thread and everyone is better lol. Delta is fine. We don’t know if they are positioned to be better or worse. Only time will tell. Let’s just get all the reports and get a comparison. I think DL is well positioned to catch the cheap traffic. They have been competing throughout the pandemic with the floor levels of spirit and frontier out of Atl.
 
PSU.DTW.SCE
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 10:28 pm

Q1 results industry wide are interesting but 2 out of the 3 months were just terrible. Demand recovery really didn’t kick into until early March.

Q2 is really when we start to see what everyone’s trajectory out looks like.
 
tphuang
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Re: Delta post Q1 Loss

Thu Apr 15, 2021 10:44 pm

MIflyer12 wrote:
One big surprise in the DL 1Q earnings is their decision to drop an extra $1 Billion into the pension plan, and are considering yet another $1 Billion before the end of the year. The variable rate component of the insurance premiums due the PBGC is based on the plan’s funded status (the premium is a percentage of the amount by which the plan is underfunded). Look like they're making avoidance of that variable rate premium expense a real priority (instead of managing for total available liquidity).

As previously announced during the quarter, the company voluntarily funded $1 billion into its pension plans on April 1. The company is evaluating up to $1
billion of additional voluntary contribution later this year to fully fund the pension plans based on terms included in the recently passed American Rescue Plan Act
of 2021 related to pension funding. At this level of funding, investment returns are expected to satisfy future benefit payments, which we believe would eliminate
any material cash contributions to the plans going forward.


That's an interesting part that seems to have been overlooked. I would think the big 3 are all saddled with pension plans that they need to put money into. They may have postponed that for a while during cash crunch, but it's not something they can just forget. There is also the heavy cost in retraining pilots over different fleet types and bringing back a lot of long term parked aircraft. I'm sure there are a lot of other expenses (some may only exist with legacies) that were not incurred for the past year, but will have to be incurred or paid back going forward.

They may get a few months of positive cash flow, but things really won't be okay until the higher yielding traffic comes back. AThese are mostly things that LCCs/ULCCs don't have to worry about as much.
 
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RyanairGuru
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Re: Delta post Q1 Loss

Fri Apr 16, 2021 1:05 am

UPlog wrote:
LAXintl wrote:
Regarding the key corporate travel segment, they stated they expect 1/3 of them to have travel in Q2. Long term see 75-80% of corp revenues coming back "next couple years".


Is Bastian the first of the US3 to admit business travel might not come back fully? Believe Kirby and Parker both banking on full recovery.


Scott Kirby said a few months ago that United expect that corporate demand will eventually recover to 80% of 2019 levels but that 20% is gone forever. That’s basically the same as what Delta have said now.
Worked Hard, Flew Right
 
IADCA
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Re: Delta post Q1 Loss

Fri Apr 16, 2021 1:29 am

LawAndOrder wrote:
Another Delta is burning thread and everyone is better lol. Delta is fine. We don’t know if they are positioned to be better or worse. Only time will tell. Let’s just get all the reports and get a comparison. I think DL is well positioned to catch the cheap traffic. They have been competing throughout the pandemic with the floor levels of spirit and frontier out of Atl.


Nobody's "fine" when business demand is long-term uncertain and transatlantic/transpacific business and leisure both might be in the tank for another year. The core challenge to any of these business isn't competition. It's that they all have very high costs and limited flexibility to adapt some of their very expensive assets. Whether DL is less fine or more fine than UA or AA is less a matter of present position than recovery path. For example, if a US-UK travel corridor comes in, AA becomes the instant winner.
 
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Midwestindy
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Re: Delta post Q1 Loss

Fri Apr 16, 2021 1:34 am

RyanairGuru wrote:
UPlog wrote:
LAXintl wrote:
Regarding the key corporate travel segment, they stated they expect 1/3 of them to have travel in Q2. Long term see 75-80% of corp revenues coming back "next couple years".


Is Bastian the first of the US3 to admit business travel might not come back fully? Believe Kirby and Parker both banking on full recovery.


Scott Kirby said a few months ago that United expect that corporate demand will eventually recover to 80% of 2019 levels but that 20% is gone forever. That’s basically the same as what Delta have said now.


Nope, DL said:

"75% to 80% of our corporate revenues coming back over the course of the next couple of years, which I continue to think is conservative"

https://www.fool.com/earnings/call-tran ... -transcri/

No comment recently on any permanent loss of corporate travel
ORD & IND

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