Delta stopped burning through cash in March

Since the pandemic hit the US airline industry last March, major carriers have been burning through millions of dollars a day. For Delta Air Lines, at least, that ended last month.

The company reported it lost $2.3 billion in the first three months of the year, excluding special items. And although the airline still reported an average daily cash burn rate of $11 million a day throughout the quarter, it said that was due to the funds it spent through the first two months of the period. In March, Delta reported it was generating positive cash of about $4 million a day.

Cash generation and cash burn are not the same as profits and losses. There are many other expenses, including depreciation on aging equipment, such as planes, that aren’t factored into the cash burn rate.

But being cash flow positive is a critical milestone for a US airline since they have been burning through so much cash during the last year. That has forced the airlines to raise huge amounts of money from Wall Street — and slash expenses — in order to ride out the crisis.

Delta said that it was helped by strong demand for leisure travel, although the more lucrative business travel sector is still weak. The company also said that advanced bookings suggest that the strong demand will continue into the summer travel season, which starts in the second quarter.

“Recent demand trends are encouraging with rising confidence in air travel as vaccination rates improve and travel restrictions ease,” said Delta President Glen Hauenstein, noting that current domestic leisure bookings are “85% recovered” compared to 2019 levels. But with mainly just leisure travel returning, Delta said second quarter revenue will still be down 50% to 55% from 2019.

Other major US airlines are due to report results next week. Shares of Delta, American, United and Southwest were all down slightly Thursday morning.