DAL Q1 2020 Earnings

Call Details

• Call Title: Delta Air Lines, Inc. Q1 2020 Earnings Call
• Date: April 22, 2020 at 3:00 PM UTC
• Management Team:
  • Ed Bastian (Chief Executive Officer)
  • Glenn Hauenstein (President)
  • Paul Jacobson (Chief Financial Officer)
  • Jill Greer (Vice President of Investor Relations)
  • Tim Mapes (Chief Marketing and Communications Officer)

Call Summary

Financial Performance

• Delta reported a March quarter pre-tax loss of $422 million, which was $1.3 billion lower than the prior year.
• Revenues dropped sharply through March, and the company described near-term demand for air travel as having dropped to almost zero in weeks.
• Delta ended the quarter with $6.0 billion in cash on the balance sheet.
• The company has raised $5.4 billion of new financing since early March at an average rate just under 4%, encumbering approximately $6.5 billion of collateral.
• Fuel expense is expected to be approximately $2.0 billion lower in the June quarter due to reduced flying and lower fuel prices.
• Delta expects cash flow to remain negative through the end of the year absent a stronger-than-forecast demand recovery.

Guidance

• Delta expects to have at least $10 billion in liquidity at the end of the June quarter based on current financing and cost actions (company expectation).
• Delta expects cash burn to decline from approximately $100 million per day at the end of March to about $50 million per day beginning in May (company expectation).
• Delta expects a more than 90% reduction in revenues in the June quarter relative to prior year levels (company expectation stated as 'more than 90% expected reduction in revenues this quarter').
• Delta expects a $5.0 billion reduction in total operating expense for the June quarter versus prior year levels, driven by parked aircraft, facility consolidations, reduced discretionary spend, and other cost actions (company expectation).
• Delta will apply for the CARES Act loan program by April 30 and has until September 30 to decide whether to take the secured loan (company timeline disclosure).
• The company stated it is prepared for a choppy recovery and indicated a belief that a sustainable recovery could take up to three years (company expectation).