Delta Air Lines says domestic leisure travel to rebound 100% in June

Delta Air Lines Inc. (NYSE: DAL) expects domestic leisure travel to be more than 100% restored in the month of June, up from 60% in March, according to its latest filing with the Securities and Exchange Commission (SEC). 

Shares of all airline companies plummeted last year after the pandemic induced lockdown measures took effect and most of the domestic and international travel came to a halt.

Delta stock is up almost 20% year-to-date but is still trading below the pre-pandemic levels. As lockdown measures are lifted and people start to travel again, company revenues and profits should continue to recover. 

What else did the company say?

The company sees continued growth in leisure, corporate and transatlantic demand with stronger long-haul international travel recovery in 2022. The management aims to achieve 2019 revenues by 2023 on a reduced cost structure.

Delta has plans to reduce the fleet families in its portfolio of aircrafts from 13 in 2019 to 9 by 2025 . It is also targeting to leverage larger gauge aircraft with more average seats per plane to drive improvement in seat cost efficiency.

Financial outlook for June quarter

The company has projected its pre-tax loss for the June quarter to be $1.0 - $1.2 billion vs. the prior guidance of $1.0 - $1.5 billion issued on April 15.  The total revenue is expected to come in at around $6.0 - $6.2 billion down 50-52% from the June quarter of 2019.

Fuel price may pose a potential headwind on the cost front as now the company expects fuel price of $2.10 - $2.15 per gallon vs. prior guidance of $1.85 - $1.95 for the June quarter due to the rise in oil prices. WTI Crude is up 41% year-to-date and is currently trading at around $68.7 per barrel.

The scheduled capacity is still expected to be down by 32% compared to the June 2019 quarter.

Airline companies raised debt to tide over the pandemic which has left them with high debt on the balance sheet. Delta is also saddled with around $19 billion of net debt.

The company expects to generate pre-tax profit for the second half of the year.