(Bloomberg) — Delta Air Lines Inc (NYSE:). is sticking to its forecast for a profitable third quarter as rising U.S. vaccination rates stoke a resurgence in travel.
The carrier still sees a path to profitability by late summer after deep losses from the coronavirus pandemic, Chief Executive Officer Ed Bastian said in an earnings statement Thursday. A “surge” in demand already helped Delta stop burning cash in March, he said, a sign of improvement after a first quarter in which the company posted a bigger-than-expected loss.
“Travelers are gaining confidence and beginning to reclaim their lives,” Bastian said.
The steady outlook, which Delta debuted in January, bolsters indications of a broad recovery in air travel as worry about the spread of Covid-19 wanes. American Airlines (NASDAQ:) Group Inc. and United Airlines Holdings (NASDAQ:) Inc. have said their planes are flying with an average 80% of seats filled, and Delta is among carriers that have begun to recall workers from temporary leave as demand increases.
Delta was little changed at $48.11 ahead of regular trading in New York. The shares rose 20% this year through Wednesday, the worst among the five largest U.S. airlines. Delta is the first major U.S. carriers to report first-quarter earnings.
The Atlanta-based airline posted an adjusted loss of $3.55 a share in the first quarter, worse than the $3.17 average deficit of analyst estimates compiled by Bloomberg. Revenue, excluding sales from a Delta-owned refinery, tumbled 65% to $3.6 billion.
Delta generated positive cash flow of $4 million a day in March. The company maintained its forecast to break even on a cash-flow basis this quarter.
While leisure trips are leading the recovery, even long idle domestic business travel has picked up to about 20% of previous levels, Bastian said in an interview.
Large corporate customers are linking vaccination rates to a decision to fly again in a trend that will likely start this summer and build to a “meaningful improvement” by fall, he said. The return of international business passengers “is a little bit longer tail.”
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