Delta Air Lines kicked off the fiscal year 2020-results presentation on January 14, being the first US airline to have analyzed the numbers of the deep red year. In the coming weeks, we will update this story on all the major US airlines.

Spirit Airlines (February 10):
Spirit Airlines reported a full-year net loss for 2020 of $-428.7 million compared to a $335.2 million profit the previous year. The operating loss was $-507.7 million, a billion down from the $501 million profit in 2019. Total revenues dropped by 52.7 percent to $1.1810 billion.

In Q4, the low-cost airline reported a net loss of $-157.3 million on $498.5 million revenues, but it is happy about the 71.5 percent load factor in what it described as a “soft demand driven by pandemic-related concerns.” It’s low-cost structure has been key to the year’s results, which despite a loss is better than what its competitors have done.
Daily cash burn equaled to $1.8 million in Q4. On December 31, Spirit had $1.9 billion in unrestricted cash available. Non-aircraft spend wasreduced by $70 million. Spirit said it prevented unvoluntary furloughs of unionized workforce thanks to the voluntary leave schemes, while reducing unvoluntary leave for non-unionized members by 95 percent in the last quarter.

The yellow airline says it plans to take delivery of sixteen Airbus A320-neo’s aircraft this year, six of them in Q2 and five in Q3. Another seventeen should join in 2022, five in both Q2 and Q3. This is conditional to final adjustments and other developments. Once completed, the fleet should grow to 173 aircraft by the end of this year and to 190 by the end of 2022 from 157 by late 2020.

 

American Airlines (January 28):
American posted a net loss of $-8.885 billion in 2020 after a $1.686 profit the previous year. The operating loss was $-10.421 billion, down from a $3.065 billion profit in 2019, with operating expenses at -35% to $27.758 billion. Total revenues dropped by 62.1 percent to $17.337 billion.

Over 20.000 employees opted for voluntary early out or partial long-term leave to help American get through the Covid-crisis. Management was reduced by almost one third. Reductions in jobcount were part of American’s stringent cost reduction measures which resulted in $700 million lower non-aircraft capital expenses, $17 billion operating and capital budget cuts. Another $1.3 billion in permanent non-volume and non-fuel efficiency measures will be implemented this year.

American reduced its fleet by 150 aircraft by early-retiring five types like the Boeing 757 and 767, Embraer E190, Airbus A330, and Bombardier CRJ200, while putting some older Boeing 737-800 in storage. This resulted in $1.5 billion in fleet impairment charges. The airline has deferred deliveries of eightteen MAX, with deferral rights confirmed for five of them. Sale and leasebacks have been arranged for Airbus A321neo’s joining the fleet this year.

American Airlines has bolstered its liquidity position to $14.3 billion and raised over $13 billion through debt and equity offerings. It secured $7.5 billion through a secured loan under the CARES act, of which $500 million has been drawn down. Daily cash burn has come down from $100 million per day in April to $30 million at the end of Q4.
For 2021, the carrier is cautiously optimistic about a recovery but this all depends on the roll-out of vaccines. Q1 bookings remain weak, with capacity down by 45 percent compared to 2019 levels.

Southwest Airlines (January 28):
2020 ended for Southwest Airlines with a $-3.074 billion net loss compared to a $2.300 billion profit the year before. It has been its first loss since 1972. The operating loss was $-3.816 billion ($2.957 profit in 2019), with total revenues down by 59.7 percent to $9.048 billion. April stood out as the worst month of all, when revenues dropped like a stone by 92 percent.

Southwest took a page of the same book as most airlines and focussed on cost reductions, cutting cash spending by some $8 billion over the year and daily cash burn down to $12 million by the end of Q4. With a weak quarter ahead, core cash burn is expected to end slightly higher at $10-15 million per day. The carrier hope to reach cash break-even later this year but this is entirely dependent on a “substantial rebound in passenger traffic and revenues.”

The airline has ended the year with $13.3 billion in liquidity plus $1.0 billion available through a revolving credit facility. More liquidity could be generated as it has another $12 billion in unencumbered assets of which $10 billion in aircraft. Southwest raised $18.9 billion in capital, of which $13.4 billion in debt issuances and aircraft sale and leasebacks. Debt obligations stand at $10.3 billion. Earlier this month, the airline agreed with the Department of Treasury on a $1.7 billion payroll support extension that includes $488 million as a low-interest unsecured loan.

In December, Southwest and Boeing agreed on an undisclosed settlement for costs associated to the delayed arrival and grounding of the MAX 8 on order. “As a result of certain delivery credits provided in the Boeing Agreement, as well as progress payments made to date on undelivered aircraft, the Company currently estimates an immaterial amount of aircraft capital expenditures in 2021. Therefore, the Company currently estimates its annual 2021 capital expenditures to be no more than $500 million.”

Seven MAX were delivered in December, bringing the total number to 41. After modifications and pilot training, they are scheduled to return to service on March 11. Another 28 MAX 8 will follow this year. Southwest had sixty 737-700s in storage by late December and during 2020 retired 24 of the type, while returning twelve to lessors. The total fleet number on December 31 stood at 718, down from 747 a year earlier.

JetBlue (January 28):
As the third airline to report its 2020 results on January 28, JetBlue announced a $-1.362 billion net loss. This compares to a $569 million net profit in 2019. The operating loss was $-1.714 billion versus an $800 million profit, but expenses were 36 percent down to $4.671 billion. Total revenues dropped by 63.5 percent to $2.957 billion. In Q4, revenues were down -67 percent compared to the previous year but faired slightly better than the -70 percent that was expected. It reflects solid bookings in October and higher volumes during the December holiday weeks, but Q1 will probably see 65-70 percent lower revenues compared to 2019.

JetBlue slashed its variable costs by adapting capacity and cut fixed costs by $150-200 million as it adjusted its workforce. Average cash burn was reduced to $6.7 million per day by the end of Q4.
The carrier raised $700 million in capital through equity offerings and sale and leaseback. It ended the year with $3.053 billion in net liquidity.
In 2021, JetBlue expects to reduce its operating costs by over $1.2 billion.

The New York-based airline hopes to exit the crisis by offering over eighty new routes and focus on Newark and Los Angeles as its major hubs, while benefitting from its partnership with American. The airline plans to grow its fleet from 267 aircraft by December 2020 to 282 in December this year as it takes delivery of five Airbus A321neo’s, three A321LRs, and seven A220s. 

 

Alaska Air Group (January 26):
Alaska Air Group, which consists of Alaska Air and Horizon, has recorded a 2020 net loss of $-1.307 billion compared to a $769 million profit in 2019. The operating loss was $-1.753 billion versus a $1.063 billion profit the previous year. Total revenues were down by 59 percent to $3.566 billion, with passenger revenues taking a 63 percent hit and cargo at -22 percent. The Group’s airlines flew 61.6 percent fewer passengers at 17.9 million.

Like all airlines, Alaska Air suffered from weaker demand as new Covid-cases resulted in more travel and border restrictions. Q4 ended at a $-430 million loss compared to a $181 million profit in the same period in 2019 but almost identical to the $-431 million loss announced for Q3. Operating expenses were down by 30 percent in Q3 to $1.381 billion.

In 2020, the Group accessed $5.0 billion in fresh capital, of which $2.0 billion came from capital markets and $600 million from banks. It closed the year with $3.3 billion in unrestricted cash and marketable securities but since then this has increased to $3.4 billion, with $5.2 billion in liquidity. Alaska Air can tap in additional CARES funding until May 28, having extended the drawdown period by two months. Net cash burn was $350 million for the last quarter of $3.7 million per day. Debt to shareholders totals $14.046 billion, up from $12.993 billion.

While not out of the woods yet, CEO Brad Tilden is optimistic about the future and recovery during the coming months, thanks to its restructured balance sheet. The optimism was reflected on January 24 with the arrival of Alaska Air’s first Boeing 737 MAX 9, which after an extensive training period will enter service on March 1. It is the first of thirteen MAX 9s to arrive this year and a total of 68 until 2024 after the airline revised its order book. This includes thirteen aircraft from Air Lease Corporation (ALC) and 23 additional orders with Boeing. It also took options on fifteen more, bringing the total options to 52. Alaska retired forty ex-Virgin America Airbus A320ceo’s last year, of which twenty if Q4. It continues to operate 31 Airbus aircraft, including ten A321neo’s.

United Airlines (January 20):
United Airlines reported a full-year net loss of $-7.069 billion compared to a $3.009 billion profit for 2019. The adjusted loss was $-7.7 billion, the airline said on January 20.

Total operating revenues were down by 64.5 percent to $15.355 billion, of which 11.805 billion was generated by passenger traffic, $1.648 by cargo, and $1.902 billion as other income. Cargo revenues were up 39.8 percent compared to the previous year.
Operating expenses dropped by 44.3 percent to $21.714 billion, resulting in an operating loss of $-6.359 billion.

Looking at Q4 of 2020, net loss was $-1.897 compared to a $641 million profit for the same period in 2019. Total revenues were down by 68.7 percent to $3.412 billion. While passenger revenues were down by 75.7 percent to $2.410 billion, cargo went up by an impressive 77 percent to $560 million.
Over the year, the airline reduced its fleet from 1.372 to 1.287 aircraft. In Q4, it took $94 million in impairments on eleven Boeing 757s. United also took a $130 million impairment on its network into China and $90 million on those to Hong Kong.

United was the first US airline to respond to the Covid-crisis by reducing its network and operations. It secured $3.154 billion in payroll support through the CARES act in Q2 and $447 million in Q3, plus a $520 million CARES supported loan in Q3.
Some 13.000 employees have been furloughed while another 9.000 have elected for voluntary options. While impressive, these numbers are well below the 36.000 announced in July.

In Q3, the carrier also secured debts of $7.376 billion. Full-year, United received $989 million in proceeds from selling shares into the ATM program, most of this (968 million) in the last quarter. From its MileagePlus loyalty program it leveraged a $6.8 billion loan.
United reduced its daily cash burn from $38 million in Q2 and $24 million in Q3 to $19 million in Q4. It ended with $19.7 billion in net liquidity.

In its guidance for the first quarter of 2021, United expects operating revenues to be 65-70 percent down compared to Q1 2019. Capacity will be 51 percent lower compared to 2019. While some benefits of vaccinations might become visible, it is unlikely this will improve the revenue outlook for the first quarter.   

Delta Air Lines (January 14):
Delta has reported a net loss of -$12.385 billion (GAAP) for 2020, compared to a $4.767 billion profit for 2019. TThe pre-tax result ended at -$15.587 billion versus $6.198 billion in 2019. The adjusted loss is -$6.839 billion versus a $4.776 billion profit. This makes Delta the airline with the biggest losses.

Delta lost almost $30 billion in total revenues over the year, which dropped from $47.007 billion in 2019 to $17.095 billion in 2020. While other airlines partly compensated lost passenger revenues with higher cargo revenues, cargo performed weaker in all quarters compared to 2019.

With operations drastically reduced, operating expenses were also lower from $40.389 billion to $29.564 billion. Daily cash burn was down to $12 million in December compared to $24 million in September, but 90 percent lower than in March.

All quarters have been loss-making. Q1 started with a net loss of -$534 million, followed by -$5.717 billion in Q2, -$5.379 in Q3, and -$755 million in Q4. These results reflect the different stages of the crisis, with Q2 the lowest point and Q4 showing sustained recovery.

These net losses exclude special items and impairments that are directly related to the Covid-crisis. The adjusted pre-tax loss of -$9.0 billion for the full year excludes $6.6 billion in special items. A large part of these is coming from the retirement of 227 aircraft (McDonnell Douglas MD-88 and MD90, Boeing 767-300ER, 777-200), which reduced the fleet from thirteen to eleven types. Delta continues to reduce its fleet and will have retired some 400 aircraft through 2025. It will take delivery of new aircraft, but by deferring purchase commitments have reduced by $2.0 billion last year, increasing to $5.0 billion through 2022.

In 2020, over 18,000 or 20 percent of Delta staff voluntarily left the airline. More involuntary furloughs were avoided thanks to voluntary programs that include early retirements, unpaid leave, job sharing, and other initiatives. The airline received $5.6 billion in payroll support through the CARES-act, of which $4.0 billion in funds and $1.6 billion in low-interest rate loans.

Delta completed more than $25 billion in financing restructuring, which includes $9.0 billion of the SkyMiles loyalty program. At the end of December, the airline had $16.7 billion in liquidity available against $29.2 billion in net debt. Another $9-10 billion is available in unencumbered assets, mostly aircraft.

CEO Ed Bastian is optimistic 2021 will see a turning point in which air travel will recover, but that will take until Q2. For Q1, scheduled capacity will be down by 35 percent. He expects Delta to come out of the crisis leaner and more nimble and return to revenue growth, profitability, and positive free cash flow.

 

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