Airline stock under pressure: Delta Air Lines, Inc. (NYSE: DAL)

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Delta Air Lines, Inc. (NYSE: DAL) stock lost over 3% on July 14th, 2020 (as of 9:43 am GMT-4; Source: Google finance) post second quarter of 2020 results. The firm reported a $3.9 billion adjusted pre-tax loss while revenue lost $11 billion against prior corresponding period on COVID-19 impact. COVID-19 dampened the air travel in the June quarter with enplaned passengers falling 93% on a yoy basis. Adjusted operating revenue lost 91% yoy to $1.2 billion while Passenger revenues lost 94% on 85% lower capacity. Non-ticket revenue fell 65 percent, as Cargo, MRO and Loyalty revenues fell at a lower rate as compared to the ticket revenue.

Moreover, investment sentiment further dampened as Management reported that they believe that it would be “more than two years before a sustainable recovery”. As a part of its recovery path, the firm is positioning the airline to be a smaller, more efficient airline in the next several years by retiring entire MD-88, MD-90, 777 and 737-700 fleets and portions of the 767- 300ER and A320 fleets in 2020.

As per the balance sheet measures, the firm raised over 0$15 billion in financing transactions since early March, at a blended average interest rate of 5.5 percent, including the unsecured loan portion received under the CARES Act payroll support program. The intend to achieve breakeven cash burn by year end and also extending maturities of $1.3 billion of borrowings under revolving credit facilities from 2021 to 2022. The firm got $5.4 billion of grant funds and unsecured loans through the PSP of the CARES Act. They also submitted a non-binding Letter of Intent to the U.S Treasury Department for $4.6 billion under the CARES Act secured loan program. The firm witnessed a write-down $1.1 billion in its investment in LATAM Airlines and a $770 million write-down in its investment in AeroMexico post-bankruptcy filings. Virgin Atlantic investment led to a $200 million write down charge.

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