Delta Air Lines posted an adjusted pre-tax loss of $3.9 billion for the second quarter, even before fleet restructuring costs and investment write-downs widened its overall coronavirus crisis losses incurred for the period.
The adjusted loss figures exclude a further $3.2 billion of items directly related to the impact of Covid-19 and the company’s response, including fleet-related restructuring charges, write-downs relating to some of Delta’s equity investments, and the benefit of the CARES Act grant recognised in the quarter.
Total adjusted revenue, excluding refinery sales, plummeted 91% to $1.2 billion for the three months ending 30 June. That was based on capacity cut by 85% during the quarter. Operating costs at an adjusted level were cut 53% to $5.5 billion for the period.
“A $3.9 billion adjusted pre-tax loss for the June quarter on a more than $11 billion decline in revenue over last year illustrates the truly staggering impact of the Covid-19 pandemic on our business,” says Delta chief executive Ed Bastian.
“Given the combined effects of the pandemic and associated financial impact on the global economy, we continue to believe that it will be more than two years before we see a sustainable recovery.”
Delta, the world’s most profitable airline prior to the crisis, is the first of the US majors to detail the impact of the coronavirus for the three months ending June, during which international air travel was a brought to a virtual standstill.
The fleet restructuring costs of $2.5 billion relate to its move to retire its entire Boeing MD-90, 777 and 737-700 fleets, and portions of its 767-300ER and Airbus A320 fleets by late 2020. The company also cancelled its purchase commitment for four A350 aircraft from LATAM Airlines.
It also during the quarter recorded a $1.1 billion write-down of its investment in LATAM Airlines and a $770 million write-down in its investment in Aeromexico. Both carriers have entered formal Chapter 11 bankruptcy processes. Delta also wrote down its investment in UK carrier Virgin Atlantic during the quarter, resulting in a $200 million charge.