Delta Plans A Vacation From GAAP Prison

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Yesterday Delta delivered its fourth quarter earnings report confirming what everyone already knew: it lost an enormous sum of money in 2020.

$12.4 billion, or $34 million per day.

Looking ahead, CEO and apparent optimist Ed Bastion sees profitability on the horizon.

“Can I Redeem My Travel Points for a Vaccine?”

After a sharp rise in travel over the holidays, including a pandemic record 1.3 million passengers moving through TSA checkpoints on January 4th, airline travel has returned to just 40% of last years’ levels.

Still Delta was able to cut operating losses to $12 million per day in the fourth quarter, down from $24 million in the third quarter.

The Brightside: But Mr. Bastian claims the airline could be reporting profits by summer, even as it prepares to hunker down for a winter of record Covid numbers.

  • Bastian’s optimism is based on two key points: searches on the company’s website for flights are recovering, he said, and those hunkered up under curfews around the world have had a year to stockpile frequent-flier miles.

Delta shares climbed 3.8% to $41.98 on Thursday following his projections, even as the company acknowledged it expects first quarter revenue will sink 65% below pre-pandemic earnings.

Business Travel: With business travel down 85 per cent, “it is becoming increasingly clear that business travel will not be a meaningful contributor to revenue in 2021 as vaccination timelines continue to shift out.”

National Lampoon’s Inoculation Vacation

Governments and the private sector are working on ways to get people traveling again before vaccines have been distributed far and wide, which could also give travel companies like Delta an early leg up and put awkward tourists with sunscreen-drenched noses back in our cities.

In the U.S., Microsoft, Oracle and the Mayo Clinic are collaborating on a digital vaccination passport that someone who has been vaccinated can present to travel, attend public events, or go back to work or school.

The European Union is considering its own vaccine certificate, which would grant travel privileges to those who have been inoculated.

The Takeaway: Delta’s investing a lot of faith in President-elect Joe Biden, who is expected to prioritize expedition of vaccine delivery when he takes office next week. The new administration will have to mobilize a patchwork of state and municipal efforts that have seen only 9 million Americans get a vaccine so far — that’s less than half of the 20 million the U.S. had planned on by the end of 2020.