- Delta Air Lines, Inc. (NYSE: DAL) CEO Ed Bastian recently discussed the company’s recovery strategy
Atlanta-based Delta Air Lines, Inc. (NYSE: DAL) recently announced it is borrowing $3 billion to boost its financial liquidity. This will be done by selling $1.5 billion in notes and a term loan for $1.5 billion. This debt is being secured with slots, gates, and routes such as domestic slots at JFK, LGA, DCA along with slots in Europe and Latin America.
Delta Air Lines, Inc. (NYSE: DAL) also recently posted a $607 million loss for the first quarter of 2020 — which is the company’s first quarterly loss since 2012. And the current quarter for Delta Air Lines, Inc. (NYSE: DAL) (ending in June) will be worse due to the COVID-19 pandemic. At the end of June, Delta is expecting to have about $10 billion in financial liquidity.
Delta Air Lines, Inc. (NYSE: DAL) saw a loss of $534 million in the first quarter of the year, especially towards the end of the quarter. Revenue for the quarter was $8.6 billion, which is down 18% compared to the same period last year.
In the earnings call, Delta Air Lines, Inc. (NYSE: DAL) CEO Ed Bastian said that the company would also work on a range of initiatives to reassure wary passengers in order to drive more air travel as the pandemic winds down.
For example, Delta Air Lines, Inc. (NYSE: DAL) may look into an “immunity passport” (lower loads on planes to encourage social distancing). The ticket prices would be higher to make up for the lost revenues.
“When you ask people what the most important thing is to get them to start traveling, it’s confidence in their safety,” Bastian explained. “We have medical advisors that we work with, and we’ll continue to work with to help them translate the return of business to where people feel safe.”
Here is an interview that Bastian did on CNBC this week:
To navigate the changes with the pandemic, Delta Air Lines, Inc. (NYSE: DAL) had reached a $5.4 billion deal with the federal government’s Coronavirus Aid, Relief and Economic Security (CARES). And the company also pursued $4.6 billion in secured loans.
Another major initiative Delta Air Lines, Inc. (NYSE: DAL) is pursuing is a reduction in capital expenditures by over $3 billion. And the company has suspended shareholder returns, including stock repurchases and future dividend payments.
Delta Air Lines, Inc. (NYSE: DAL) CFO Paul Jacobson also postponed the decision to retire in order to help the travel giant with the economic crisis.
“The decade of work we put into the balance sheet to lower debt and build unencumbered assets has been critical to our success in raising capital and we expect to end the June quarter with approximately $10 billion in liquidity,” said Jacobson in a statement.
Bastian noted that the recovery will be “choppy” and could take two to three years. Earlier this month, Bastian said that the company was losing $60 million per day and that figure increased to $100 million by the end of the quarter. And Delta Air Lines, Inc. (NYSE: DAL) was flying 95% less passengers with about 85% less capacity, according to Business Insider.
