Delta Records First Full-Year Profit in Two Years

Airline still suffered loss of $408 million in final quarter of 2021.

A Delta Airlines Boeing 757-200 takes off. [Courtesy: Delta Airlines]

Last year was the first profitable year in two years for Delta Air Lines (NYSE: DAL) which announced its fourth-quarter and calendar-year 2021 financial results on Thursday. 

The company says its profit was $208 million, bolstered by $4.5 billion in federal aid funding which kept the airlines afloat at the height of the pandemic.

In a statement Thursday, Delta CEO Ed Bastian said, “2021 was a year like no other for Delta, with significant progress in our recovery supported by growing brand preference, enabling us to be the only major U.S. airline to deliver profitability across the second half of the year." 

Thanks to strong holiday and business travel, Delta’s revenue in the fourth quarter ($9.47 billion) was also the highest it has been since 2019.  

The airline still registered an overall loss for the quarter to the tune of $408 million but says it expects that demand from the leisure and business travel segments will result in a strong spring and summer, and a return to profitability for the following three quarters of 2022. 

Delta expects to fly at up to 85 percent capacity for the first quarter of 2022, and projects that revenues will climb from 72 to 76 percent of 2019 levels.

Omicron to Define Q1, Then Profitability Expected 

Amid disruptions internally and externally from the omicron COVID-19 variant, Delta’s fourth-quarter revenue exceeded expectations. Delta officials shared Thursday in an investor relations conference call that as many as 8,000 employees contracted COVID-19 in the last month. That, compounded by a winter storm, forced the airline to cancel more than 2,200 flights from Christmas Eve to the end of the year. 

Those cancellations cost the airline as much as $75 million in fourth-quarter revenue and kept pretax profit to $170 million, despite the airline’s third-quarter forecast of $200 million to $250 million.

"With Omicron impacting our near-term outlook, we expect losses in January and February months with a return to profitability in the month of March. Despite expectations for a loss in the March quarter, we remain positioned to generate a healthy profit in the June, September, and December quarters, resulting in a meaningful profit in 2022," said Dan Janki, Delta's chief financial officer, in a news release. 

Bastian: Pilot Shortage at Regional Level 

Another focus for Delta analysts was the recent news of labor shortages, especially pilot recruitment. On the call Thursday, Bastian downplayed the direct effects of this to clarify that hiring difficulties existed mostly at the regional levels and that there was little trouble attracting candidates at the mainline level.

To reward its employees for their commitment, Delta announced a special profit-sharing payment of $1,250 per employee set for February 14. 

"As always, our people drove this success, which is why we were happy to announce this morning a special profit-sharing payment for all eligible employees," Bastian said. 

The airline will hand out a total of $100 million to eligible employees, nearly 20 percent of the profit earned in the first half of 2021.

Delta plans to hire as many as 100-200 pilots per month through 2023, which will be welcome news for pilots after its recent announcement to remove degree requirements for pilot candidates.

Unfazed by the potency of omicron, investors seemed to welcome the news that the airline is recovering well, as the share price was up 3 percent to $41.81 as of Thursday afternoon.

However, Bastian was quick to point out that the worst of the omicron variant would delay a recovery in travel for another 60 days, with the peak disruption coming in the next seven days—but that booking patterns around President’s Day were healthy.

Michael Wildes holds a master’s degree in Logistics & Supply Chain Management, and a bachelor’s degree in Aeronautical Science, both from Embry-Riddle Aeronautical University. Previously, he worked at the university’s flight department as a Flight Check Airman, Assistant Training Manager, and Quality Assurance Mentor. He holds MEI, CFI & CFII ratings. Follow Michael on Twitter @Captainwildes.

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