Delta Air Lines CEO Ed Bastian, pointing to a budding recovery in travel demand, said Monday he expects the carrier to end March “at or pretty darn close to break even” after burning through billions of dollars of cash last year.
The hopeful talk came as more than 1.35 million people passed through U.S. airport security checkpoints last Friday, the most since March 15, 2020, according to TSA figures. That was still down 24% from a year earlier and down 46% from 2019.
Early in the pandemic, when air travel slowed to a trickle, Delta was burning through $100 million in cash a day.
The Atlanta-based airline slashed costs through employee buyouts, early retirements and voluntary unpaid leaves, along with flight cuts, grounding planes and other measures.
The company is still burning through about $12 million to $14 million in cash a day, according to its latest estimate for the first quarter of this year.
But with a rise in bookings as more Americans get vaccinated, Bastian hopes Delta will reach break-even in the second quarter and return to profitability in the third quarter.
“We’ve seen some glimmers of hope over the course of the last year, but they’ve been false hope, I think, in most regards. But this seems like it’s real, it seems substantive,” he said during a presentation at a JP Morgan investor conference Monday.
Last May, Delta said it saw “a little bit of a bounce off the bottom” and aimed to stop burning through cash by the end of 2020 — which didn’t come to fruition. By August, Bastian was looking to reach a break-even point in the first quarter of 2021.
Travel demand was very slow in January and February as the virus spread, but about five or six weeks ago, “we started to see bookings pick up,” Bastian said.
That’s driven by pent-up demand for domestic flights and leisure travel, said Delta President Glen Hauenstein. Business travel and long overseas international flights are expected to take longer to recover.
After a trend over the last year toward last-minute travel amid COVID-19 uncertainty, Hauenstein said he was encouraged by an increase in bookings for trips more than two weeks out.
The airline is blocking middle seats through April, and Hauenstein expects a boost in capacity when it opens up middle seats for booking.
Delta expects to get roughly $2.5 billion in federal aid in the current third round of stimulus funding, after getting billions in previous rounds. The company has been repaying some of its loans and plans to acquire planes with cash and accelerate voluntary contributions to its pension plans.