Delta turned record profit into a record loss in one year

Thursday, Delta reported a record $6.8 billion loss for 2020, excluding special items. Including those items, its net loss for the year was $12.4 billion. A year earlier, Delta had reported record revenue and operating profits.

Delta, the first major air carrier to report fourth-quarter results, has been hammered along with the rest of the industry with the near halt in air travel caused by the Covid-19 pandemic earlier in the year. It will not be alone in reporting record losses.

Although air travel picked up in the fourth quarter as people traveled for the holiday season, it was still only at a fraction of year-earlier levels. Delta's revenue plunged $7.5 billion, or 65%, during the quarter, leaving it down $29.9 billion for the full year. That resulted in a fourth quarter loss of $1.6 billion, excluding special items.

In 2019, Delta recorded a full-year operating profit of $4.8 billion, leading it to pay employees a record $1.6 billion in profit sharing bonuses. Delta did not have any profit sharing for 2020 -- only buyouts to encourage employees to leave the company voluntarily, as Delta and other airlines scrambled to cut staff and other costs. The buyouts and employees agreeing to take temporary unpaid leave during the year resulted in the total amount spent on employee pay and other benefits falling $2.5 billion, or 22% for the full year. Fourth quarter employee pay was down 34%.

Delta's 2020 loss was far more than its previous record: the annual losses it posted in 2006 during its bankruptcy reorganization. But $50 billion in grants and loans from the federal government and the ability to borrow money -- and in some cases sell addition shares of stock -- has left US airlines with enough cash. None are believed close to a bankruptcy filing.

Delta ended the year with $10.1 billion in cash on hand, compared with $3.7 billion a year earlier, even after it burned through $8.3 billion in cash in the fourth quarter.

US airlines have reported combined losses of $24.2 billion, excluding special items, during the first nine months of 2020. All the major airlines are forecast to report losses in the fourth quarter. Southwest will be reporting the first annual loss in its history when it reports results later this month.

Despite all the red ink shares of Delta were slightly higher in premarket trading on the report.