Delta Air Lines became the first U.S. carrier to announce its first-quarter earnings for 2021, starting the year off with an overall loss, but with some positives to take from it. Following Generally accepted accounting principles or GAAP, the airline posted a loss of $1.5 billion for the first three months of the year.

Operating revenues for the quarter sat at $4.2 billion, with operating expenses at $5.5 billion. Lower operating expenses were in large part due to the second Payroll Support Program provided as part of COVID-19 relief, but also due to the airline operating at a much lower overall capacity. 

While posting a loss is not the direction any business wants to go, due to an increase in demand, March saw Delta turn a daily cash burn into a daily cash gain of $4 million per day. For the quarter as a whole, the daily cash burn for the carrier was $11 million. Although cash flow is not always a direct indicator for how a company is doing, the positive cash flow in March shows signs of recovery. It also comes 12 months after March 2020, the last time Delta had a positive monthly cash flow.

Passenger revenues were down 70% compared to the first quarter of 2019, the comparison quarter for Delta’s earnings release. Revenue passenger miles were down just 65% sitting at nearly 18 million revenue passenger miles for the quarter. Available seat miles saw the least change, being down 36% from 2019 for a total of 40.1 million available seat miles for the quarter. Overall, the airline’s load factor for the March 2021 quarter was 45%. Passenger revenues are still largely driven by domestic travel and an increase in leisure travel compared to normal trends. 

CEO Ed Bastian, in a press release, stated, “Thanks to the incredible efforts of our people, we achieved positive daily cash generation in the month of March, a remarkable accomplishment considering our middle seat block and the low level of demand for business and international travel. If recovery trends hold, we expect positive cash generation for the June quarter and see a path to return to profitability in the September quarter as the demand recovery progresses.” 

Future Outlook

While revenues in the first quarter were 60% lower when compared to the same quarter two years ago, there is generally a positive outlook at the airline for the near future. In part to increased demand, but also in part due to the airline ending its middle seat blocking policy, revenues are projected to increase slightly during the second quarter. While not expecting to be near pre-COVID numbers, second-quarter revenue is projected to be about 50% lower than Q2 of 2019.

Capacity will also be lower, with a scheduled capacity to be 32% of the scheduled capacity of 2019. Due to seat blocking being in effect for the month of April, the airline’s sellable capacity for the quarter will be 40% lower than in 2019. The ending of seat blocking will even out the scheduled and sellable capacity in later 2021 quarters. 

Like many other carriers, areas of expansion have slightly changed for Delta. With an increased demand for domestic leisure travel, the airline will be launching numerous routes to popular outdoor destinations across the country during the June quarter. Areas of growth include popular East Coast beach destinations along with a significantly increased presence in the state of Alaska, including the launch of flight from Anchorage to New York’s John F. Kennedy Airport.

“Recent demand trends are encouraging with rising confidence in air travel as vaccination rates improve and travel restrictions ease, with current domestic leisure bookings 85% recovered to 2019 levels,” said Glen Hauenstein, Delta’s president. “In the June quarter, we expect significant sequential improvement in revenue as leisure demand accelerates into the peak summer period and we add capacity efficiently with the removal of our seat block May 1 with revenues recovering to 45 to 50 percent of 2019.” 

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