With taxpayers’ help, Delta posts $652 million profit in 2Q

Delta Air Lines is reporting a $652 million profit in the second quarter, helped by hordes of vacation travelers in the U.S. and money from taxpayers, positioning the airline for stronger results once business and international flying recover from the pandemic.

However, Wednesday’s financial report from Delta — the first U.S. carrier to post quarterly numbers — shows that airlines still face turbulence as they try to rebound from their worst year ever.

Without $1.5 billion in federal pandemic relief and other one-time events, the Atlanta airline would have posted an adjusted loss of $678 million.

Crowds at the nation’s airports are approaching 2019 levels, but Delta’s revenue remains halved compared with quarters before the pandemic, after excluding sales from its fuel refinery. The company expects costs to rise as it rebuilds its operation, including hiring and training employees to handle the growing number of passengers.

“We still have a long ways to go,” CEO Ed Bastian said in an interview, “but the business is in a much, much better place than it was 90 days ago. We posted a solid profit in the month of June, and it augers well for where we’re going this summer.”

Bastian predicted that the airline — which lost more than $12 billion last year — will be profitable in both the third and fourth quarters, with third-quarter revenue down a more manageable 30% to 35% compared with 2019.

Delta was the most profitable U.S. airline going into the pandemic, and it is likely to emerge from virus outbreak at or near the front of the pack. Other carriers are looking healthier, too.

Delta said that domestic leisure travel has fully recovered from the pandemic. More than 2 million people a day on average are streaming through U.S. airports, according to figures from the Transportation Security Administration.

Business and international travelers are still mostly absent, however, and both are crucial for Delta, American Airlines and United Airlines.

Corporate travel is showing signs of life. Delta estimates it was 40% of normal in the second quarter, up from 20% in the first quarter, and Bastian expects it will hit 60% in September.

International travel is still deeply depressed.

Bastian cited COVID-19 variants as the biggest threat to the budding travel recovery. Fear around the variants is delaying the reopening of international borders but is having no effect on U.S. bookings even as they spread across the country, Bastian said.

Delta’s adjusted loss works out to $1.07 per share, which was better than Wall Street expected. Analysts surveyed by FactSet were looking for a loss of $1.38 per share.

Revenue plunged to $7.13 billion from $12.57 billion two years ago — 2020 was such a lost cause that airlines aren’t even comparing this year’s results to last year.

With a smaller workforce, Delta cut its labor and profit sharing costs by 36%, or more than $1 billion. It spent 31% less on fuel, or or $804 million, than it did in 2019.

The airline is also buying more planes. On Tuesday, Delta said it would buy or lease 36 used Boeing and Airbus planes, apparently taking advantage of lower prices on the used-plane market.

David Koenig can be reached at www.twitter.com/airlinewriter