Delta Air Lines Inc. 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.
“When I look at the first quarter, what’s been clear is our business has made a turn,” Bastian said in an interview with CNBC. “That turn is active and rebounding” with the increasing vaccination rate.
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 Group Inc. and United Airlines Holdings 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 fell less than 1% to $47.79 at 9:33 a.m. 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. carrier 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.
Read more: Where Can You Fly Right Now? Tracking the Return to the Skies
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 will take more time.
“Travelers are gaining confidence and beginning to reclaim their lives,” Bastian said in the statement.
(Updates with CEO comment in third paragraph)