Airlines Industry-July 20th

TSA Checkpoint

TSA checkpoint numbers have remained stagnant over the past two weeks. Historically, every week has increased the 4-month high by ~100k, however since July 2nd, daily traffic has not exceeded 760k. The plateauing of checkpoint numbers coincides with the rising number of new cases of COVID-19 in the United States.

Though the TSA stated that it would change and update travel procedures by the end of Mid-June, as of the date of this report, there have been no official updates from the TSA concerning policy changes.

FAA Reports

FAA traffic numbers have come in for the month of June. The month of June saw a steady increase in flights to and from Atlanta. May reported had a high of 673 daily flights, while June nearly reached 40% of pre-corona numbers at 955 daily flights. June of last year averaged 2,609 daily flights. Expect to see a decline for the month of July, if TSA checkpoint numbers are anything to go by. The ratio will not be 1-to-1 however, as airlines will likely change their schedules to match the needs of their customers.

Delta Airlines (Q2 Earnings Call Highlights)

Last week on Tuesday, Delta Airlines conducted their Q2 earnings call. Their stock preemptively dropped 3% the day prior and stayed around $1 lower than average for the entire day of Tuesday with a low of $25.64. On Wednesday’s opening bell, DAL shot up 6% and slowly climbed throughout the day, peaking at $28.67.

There were many notable points and stats found in Delta Airline’s Q2 earnings call—The kicker: Revenues declined 91%, and we reported a $3.9 billion pre-tax loss, one of the largest in Delta’s history.” This is higher than most industry experts were forecasting (80%-90%) and is definitely shocking for Delta’s investors. The rest of the earnings call was to ensure investors that Delta could reasonably deal with their massive loss of revenues.

Their efforts to increase liquidity from the last earnings call were successful, as they ended the quarter with $15.7B in liquid assets. This doesn’t include the $5.4B extra that they received from the CARES Act. Delta stated that with their current rate of cash burn, they would have enough liquid assets to cover their losses for 19 months. Speaking of cash burn, Delta’s cash burn for the month of June was $27M/day. This is down from their $100M/day cash burn that they experienced in March.

40,000 employees have elected to take short-term unpaid leaves from the company, and crews as well as ground employees have seen work schedules reduced by up to 25%.

Finally, Delta talked about reducing the size of their company in an effort to survive the pandemic. For them, it meant “accelerating strategies to streamline our company, simplify our fleet and reduce our fixed cost base in ways not possible in the past. We have made the decision to permanently retire more than 100 aircraft this year, including the entire MD-88, MD-90, 777 and 737-700 fleets.”

In the News

No mask? On Delta, you’ll now need a note from the airline’s doctor

Zach Griff

Starting Monday, July 20, Delta will require any passenger who refuses to wear a mask to speak virtually with a medical professional before the flight, the airline told TPG in an exclusive interview on Friday after we inquired about updates to the mask policy.

Delta is doubling down on its mask requirement. If a customer cannot wear a mask, the airline would prefer that they reconsider travel — quite the statement for an airline. But flying can be essential, and this new process is trying to make it as safe as possible.

Delta gives pilots ultimatum: Take a pay cut or be furloughed

Victoria M. Walker

According to a leaked memo obtained by CNBC, the airline[Delta] is proposing that the pilots union agree to a 15% cut to pilots’ minimum pay in order to avoid furloughs for a year. According to the report, the Air Line Pilots Association (ALPA) wants the airline to offer paid leaves of absences first.

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