Delta records $776m profit thanks to US payroll support

US carrier Delta Air Lines reported a pre-tax profit of $776 million for the three months to June but an adjusted loss of $881 million taking account of the $1.5 billion received through US government payroll support.

Delta recorded second quarter revenue of $7.1 billion, with operating revenue of $6.3 billion, and reported “a solid pre-tax profit in the month of June” in an “improving demand environment”.

Operating revenue was 76% up on the first quarter of this year but 49% down on the same quarter in 2019.

Chief executive Ed Bastian noted “accelerating demand” and forecast the carrier would achieve “sustainable profitability in the second half of 2021”.

Bastian said: “Domestic leisure travel is fully recovered to 2019 levels and there are encouraging signs of improvement in business and international travel.”

He forecast capacity for the three months to September would remain about 30% down on the same quarter of 2019.

Passenger revenue in the three months to June was down 53% on the same period in 2019 with scheduled capacity 32% lower and saleable capacity 39% lower due to Delta’s policy of blocking middle seats through to the end of April.

However, the carrier reported a more “normalised” booking curve “as customers made future travel plans” with average daily net cash sales – the sum of tickets sold, less those refunded – double the average in the first quarter. Average net cash sales in June reached 70% of the June 2019 level.

Delta also reported its premium cabins “outperformed the main cabin where demand is strongest” and said: “This is expected to be reflected at a system level . . . with the return of business and international travel at scale.”

The carrier noted “the pace of corporate recovery accelerated during the quarter” with corporate traffic volumes doubling from 20% of the 2019 level in March to 40% in June “driven by increased vaccination rates, the re-opening of offices and demand in business-heavy markets like New York and Boston”.

Bastian said: “With the recovery picking up steam, we’re making investments. We’re also opportunistically acquiring aircraft and creating flexibility to accelerate our capacity restoration in 2022 and beyond.”

Delta recently acquired seven Airbus A350s and 29 Boeing 737-900s to replace older, less efficient aircraft over the next two years, starting in summer 2022.

The airline reported it had $17.8 billion in liquidity at the end of June. Total debt stood at $29 billion and adjusted net debt at $18 billion.

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