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Delta Nosedives on 2nd-Quarter Net Loss

Coronavirus outbreak continues battering airlines around the globe

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Jul 14, 2020
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Shares of Delta Air Lines Inc. (

DAL, Financial) tumbled over 3% on Tuesday on the back of reporting a second-quarter net loss close to its highest quarterly net loss in a decade.

For the quarter ending June 30, the Atlanta-based airline reported a net loss of $5.717 billion, or $9.01 in diluted loss per share, compared with net income of $1.443 billion, or $2.21 in diluted earnings per share, in the prior-year quarter.

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Company updates business position as coronavirus cases continue surging

Delta reported an adjusted pretax loss of $3.9 billion, excluding the $3.2 billion of items directly related to the coronavirus pandemic. CEO Ed Bastian added that a revenue decline of over 91% further illustrates the “staggering” impact of the virus outbreak on the airline’s business.

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Delta announced that demand for air travel declined dramatically during the June quarter, with emplaned passengers down 93% year over year. The airline blocked middle seats and capped the load factor at 60%. Bastian further said on CNBC’s “Squawk Box” that increasing virus cases in the South, coupled with quarantine measures in the Northern states, contributed most to the decline in passenger demand. CNBC further reported that New York Governor Andrew Cuomo has increased the number of states on New York’s travel advisory list to 22, up from the previous number of 18.

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According to Johns Hopkins University statistics, global Covid-19 cases have surpassed 13.1 million, with over 3.3 million cases in the U.S. Further, the seven-day average of daily new coronavirus cases in the U.S. surpassed 60,000 for the first time since the beginning of the pandemic.

Stock falls on net loss and CEO warning of lengthy recovery

Shares of Delta plunged to an intraday low of $25.46, down 5.07% from Monday’s close of $26.82.

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Bastian warned that given the combined effects of the pandemic and associated financial impacts, management expects it will take at least two years before the company sees a sustainable recovery. Despite this, GuruFocus still ranks Delta’s profitability 7 out of 10 on the back of operating margins that have increased approximately 4.9% per year over the past five years and are outperforming over 69% of global competitors.

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Gurus with holdings in Delta include

PRIMECAP Management (Trades, Portfolio) and Pioneer Investments (Trades, Portfolio).

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See also

CNBC also reported on Tuesday that Australian flag carrier Qantas Airways Ltd. (

ASX:QAN, Financial) is removing nearly all international flights until March 2021 as global coronavirus cases continue surging.

Disclosure: No positions.

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