The chief executive of Delta Air Lines warned on Tuesday that the airline’s recovery in the crucial business market was likely to take at least two years as the carrier’s corporate revenues plunged.

The Atlanta-based airline’s business revenues dropped 86 per cent in the third quarter, while leisure passenger sales fell 82 per cent as it burnt through more than $20m of cash a day in a pandemic savaged market.

Ed Bastian said corporate travel, which provides half of its revenues, was likely to still trail behind 2019 levels by at least 20 per cent in two years’ time.

“It will take up to two years before we fully see where business travel is going to be [at] a sustained level of demand,” Mr Bastian told the Financial Times. “I don’t expect it to be 100 per cent back to 2019 levels, but . . . hopefully 75-80 per cent of it.”

While some corporate travellers are slowly returning to the skies, the recovery is threatened by executives’ and managers’ growing comfort with digital conferencing.

Paul Jacobson, Delta’s chief financial officer, told investors on Tuesday that the airline was working with airport authorities in the US and internationally, as well as the US Centers for Disease Control and Prevention, on pilot programmes to open international travel lanes, noting that “testing will be an important ingredient in getting there”.

Delta booked a $6.9bn pre-tax loss in the third quarter, compared with $1.9bn in pre-tax income a year earlier.

Operating revenue fell 76 per cent to $3bn. The company reported an adjusted loss per share of $3.30, slightly more than the $3 consensus among analysts polled by FactSet.

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The company’s cash burn averaged $24m a day for the three months to the end of September.

At the start of the pandemic the airline had hoped to reach zero by the end of the year, which Mr Bastian called “a pretty lofty goal without any real knowledge of how the virus would be contained”. He said Delta will now reach $10m a day in December and zero by spring next year.

The pandemic has devastated US airlines’ financials this year as would-be travellers have remained home, discouraged by both the virus and governmental restrictions to contain it.

The US Congress granted the industry a $50bn bailout in March, when passenger traffic was expected to recover within months, but it has now ignored pleas from aviation unions and executives to protect airline payrolls for another six months.

Delta has so far avoided furloughs, which began at its rivals American and United Airlines on October 1. At Delta, 18,000 employees have opted for a buyout package or early retirement, and another 40,000 agreed to voluntary leaves of varying length.

Still, Delta plans to begin furloughing 1,700 of its 13,000 pilots on November 1, although negotiations with their union continue.

The airline reported $5.3bn in charges during the quarter, stemming from both the voluntary separation programme and aircraft retirements.

Delta plans to retire more than 200 aircraft this year and 400 by 2025. Retiring planes removes fuel-guzzling models from an airline’s fleet while also allowing the company to save on maintenance.

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It is continuing to raise capital to weather the crisis. In September Delta pledged its profitable loyalty programme that raised $9bn — almost 40 per cent more than originally anticipated. The company ended the quarter with $21.6bn in liquidity.

Executives said on a call with investors that they would prioritise rebuilding the company’s balance sheet. So far Delta has repaid $5.6bn in debt that it has shouldered since March.

But there were no plans to inject cash into LatAm, the bankrupt Chilean carrier that counts Delta as its largest shareholder, or joint venture partner Aeroméxico.

“We need to get through our own crisis here first,” Mr Bastian said.

Delta shares were 2.1 per cent lower in afternoon trade in New York on Tuesday.

Via Financial Times