Delta Air faces headwinds in meeting cash burn goals

During the COVID-19 crisis Delta Air Lines has raised the equivalent of 19 months of liquidity, and believes it has manageable debt payments occurring over the course of the next year.

The airline is also still working to achieve its previously stated goal of reaching break-even daily cash burn by YE2020, but its daily cash burn will be flat in Jul-2020 compared with Jun-2020, as the rise in COVID-19 infections in the US is pressuring demand. Given the opaqueness of the demand environment, it appears unlikely Delta can drive its cash burn to zero by year-end.

Similarly to other airlines, Delta is holding discussions with it largest aircraft supplier, Airbus, about the future of its order book – the airline unsurprisingly has declared that it does not need any aircraft as hundreds of its jets remain grounded.

Summary:

Delta has raised its fair share of cash since the COVID-19 pandemic set in and believes it is well positioned to handle debt that is due during the next 18 months.

There is no certainty that Delta will ultimately achieve its goal of break-even daily cash burn by YE2020 as demand trends remain opaque, but the airline is not straying from its plan to attain that objective.

The airline is also unsurprisingly in talks with Airbus to defer deliveries as it declares it is doing its best to minimise aircraft deliveries during the next 18 to 24 months.