Airline Stock Under Pressure: Delta Air Lines, Inc (NYSE: DAL)

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Delta Air Lines, Inc (NYSE: DAL) stock fell over 0.85% on 16th April, 2021 (As of 12:30:48 UTC-4 · USD; Source: Google finance) after the company reported a wider first-quarter loss that missed Wall Street estimates as revenue remained depressed by the COVID-19 pandemic, but the carrier said “encouraging” demand trends have recently stemmed cash outflows and it should return it to profitability in the short term itself “if recovery trends hold”.

Meanwhile, the beginnings of a rebound were enough to enable the airline to generate positive cash flow in March to the tune of $4 million a day, which reflects a sign of improvement after a challenging start to the year. Delta isn’t alone in seeing signs of a recovery, with American Airlines Group Inc. and United Airlines Holdings Inc. reporting that their planes are flying with an average 80% of seats filled. While domestic leisure trips are leading the rebound, with bookings at 85% of 2019 levels, even long-depressed domestic business travel has picked up to about 20% of previous levels, as per the company.

Moreover, Passenger revenues declined by 70% in the March quarter 2021 compared to March quarter 2019 on 55% lower sellable capacity as Delta was the only carrier to continue blocking middle seats. Domestic passenger revenues were down 66% versus March quarter 2019, but up more than five-points in comparison to the preceding quarter’s results driven by leisure demand. International passenger revenue remains limited at down 81% compared to March quarter 2019, driven by continued travel restrictions.

Delta expects scheduled capacity for the second quarter ending in June to be down 32% from the comparable quarter in 2019. It projected a total revenue decline in the range of 50% to 55% from the second quarter of 2019, when the company reported revenue of $12.5 billion. The carrier plans to remove its middle seat block on May 1, adding capacity into the key summer travel season. The airline expects to end the second quarter with $19 billion to $19.5 billion of net debt after receiving another $2.7 billion in federal payroll support funding during the period.

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