Delta Air Lines expects to be pre-tax profitable in the fiscal third quarter

Delta Air Lines Inc (NYSE: DAL) said on Wednesday its revenue tanked less than expected in the fiscal second quarter resulting in a narrower loss than analysts’ forecast. The air carrier attributed upbeat performance to a returning demand for air travel after an unprecedented hit from the COVID-19 pandemic.

Financial performance

Delta reported $652 million of net income that translates to $1.02 per share. In Q2 of last year, its net income stood at a much higher $1.44 billion or $2.21 per share. Adjusted for one-time items, the airline lost $1.07 per share versus the year-ago figure of $2.35 of per-share earnings.

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Delta generated $7.13 billion of revenue in the recent quarter that represents a 43% annualised growth. According to FactSet, experts had forecast the company to post $6.20 billion of revenue and $1.38 of per-share loss.

Other notable figures in Delta’s earnings report include a 53% decline in passenger revenue that still beat expectations. Load factor slipped from 88% to 69% versus 69.8% expected. Compared to the pre-pandemic levels (2019), the air carrier expects its total revenue to keep 30% to 35% down in the third quarter.

CEO Ed Bastian discusses earnings on CNBC’s “Squawk Box”

Delta Air Lines was pre-tax profitable in June and expects the same for Q3 and the back half of fiscal 2021 at large. CEO Ed Bastian also expresses confidence that the Atlanta-based company will be free cash flow positive in the current quarter. In his interview with CNBC’s “Squawk Box”, he said:

“U.S. consumer travel is at, if not beyond the levels seen in 2019. Business travel is also coming back, but international is still a little choppy. We’ve been able to go from a series of fairly sizable losses in the past several quarters down to $900 million only in Q2 and are confident of being solidly profitable in the third quarter and stay profitable only a year after the worst crisis our industry has ever seen. It’s a remarkable testament to the resilience of our business and our people.”

According to Bastian, the delta variant has so far not weighed on demand at all. Delta’s recent survey reported about 95% of its customers expect to be back to their offices by the end of 2021 – an indication that business travel was likely to jump further in the upcoming months.