Delta Delays $5 Billion of Jetliner Deliveries in Blow to Airbus

Delta Air Lines Inc. is delaying $5 billion in jetliner deliveries until after 2022, dealing a blow to Airbus SE as the U.S. carrier braces for years of weak travel demand.

The deferral agreement includes about $2 billion in planes that were scheduled to be handed over this year, Delta said in a statement Tuesday as it reported worse-than-expected quarterly results. The delays will also affect a small number of CRJ regional jets made by Bombardier Inc., Delta said, without disclosing the total number of aircraft affected.

The revamped delivery schedule will ease cash strains during the next two years as Delta shrinks its operations to contend with the coronavirus pandemic, which has caused an unprecedented collapse in commercial flying. Like other airlines, the Atlanta-based company has already slashed spending by parking planes, cutting flights and thinning its employee ranks in response to the crisis.

“This has less to do with the outlook for demand and more to do with our cash situation,” Delta Chief Executive Officer Ed Bastian said in an interview. “It’s an indication of a great partnership with Airbus and the recognition that we’re playing the long game and are still going to take these aircraft.”

Delta fell 2.1% to $31.94 ahead of regular trading in New York.

The deferrals underscore the pressure on Airbus and rival Boeing Co. to preserve orders even as their customers have little need for new aircraft — and undelivered jetliners stack up outside the factories of both planemakers. Delta is also planning to retire 400 aircraft by 2025, including 200 this year.

Slower Burn

Reflecting efforts to cut spending, Delta expects daily cash burn to average $10 million in December, and $10 million to $12 million for the fourth quarter as a whole. That’s down from $24 million in the third quarter. Delta lowered operating costs 50% in the three months ending Sept. 30 from the same period a year earlier.

“We’re getting a pretty good line of sight to break even by the spring,” Bastian said of the outlook for the company’s cash burn. “The fact that we get down to $10 million is pretty darn good when we were at $100 million in March.”

Revenue will hit as much as 35% of year-earlier levels in the fourth quarter, up from 10% in the second quarter, Bastian said. He expects continued improvement over the next six months as travel edges up 1% to 2% a week, with 2021 a “year of recovery.”

Delta reported an adjusted third-quarter loss of $3.30 a share, worse than the $2.97 shortfall that was the average of analyst estimates compiled by Bloomberg. Adjusted revenue plunged 79% to $2.65 billion, while analysts had expected $3.12 billion.

The results excluded pretax charges of about $4 billion from the cost of fleet restructuring as well as voluntary worker retirements and separation programs. Those items were partially offset by aid from the federal government that was recognized in the quarter, Delta said.

About 58,000 workers have left the carrier voluntarily, including 18,000 permanent departures. Those reductions are enabling Delta to avoid layoffs among most workers, including flight attendants, mechanics and baggage handlers, until the start of next summer at the earliest. The carrier remains in talks with its pilots union and has deferred furloughs until Nov. 1.

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