Don't Worry About Delta Air Lines' $7 Billion Pre-Tax Loss
On Tuesday morning, Delta Air Lines (NYSE: DAL) became the first airline to report its second-quarter results, covering the period when the COVID-19 pandemic had its greatest impact on U.S. air travel. For the first half of the quarter, TSA passenger screenings were down more than 90% year over year every single day.
Not surprisingly, Delta posted a massive loss for the period. On a GAAP basis, its pre-tax loss amounted to $7 billion. Its adjusted pre-tax loss was a bit better, though still quite daunting at $3.9 billion. However, investors shouldn't worry too much about these short-term losses, as Delta has taken aggressive steps over the past few months to reduce its cash burn, bolster its liquidity, and lock in permanent cost cuts.
Excluding sales of petroleum products from the refinery it owns, Delta Air Lines generated just $1.2 billion of revenue last quarter: down 91% year over year. Delta's industry-leading loyalty program and credit card partnership with American Express helped cushion the impact of evaporating demand. Loyalty revenue declined "only" 44% year over year, compared to a 94% plunge in passenger revenue.
Source Fool.com
