Rising COVID-19 Cases Weigh On U.S. Travel Demand, Airline Cash Burn

Delta Air Lines warned on Thursday that it would lose about $2 million more than forecast each day in the fourth quarter due to slowing travel demand amid a spike in COVID-19 cases, but kept a target to halt its cash burn next spring.

“We’ve seen some slowing of demand and forward bookings as COVID cases have risen across the U.S,” Chief Executive Ed Bastian said in a memo to employees.

Delta now expects its cash burn to hover between $12 million and $14 million per day in the fourth quarter, more than the $10 million to $12 million range it forecast in October.

Airlines are hoping that vaccine prospects will start lifting demand throughout 2021 but do not expect a full recovery for some time. Delta’s fourth-quarter revenue could fall to just 30% of 2019 levels, which was $11.44 billion, it said.

Meanwhile, the Atlanta-based carrier is partnering with the Centers for Disease Control and Prevention to keep international customers informed of potential COVID-19 exposure through contact tracing.

Delta said it will ask customers traveling to the United States from an international location to voluntarily provide five pieces of data to aid contact tracing and public health follow-up efforts beginning Dec. 15.

New York-based JetBlue Airways also lifted its cash burn estimates this week, citing recent booking trends and a delay in cash tax refunds, and launched a share sale aimed at raising more than $500 million.

No-frills carrier Spirit Airlines is more upbeat.

It said it still expects to burn about $2 million daily in the fourth quarter and projected its load factor would average about 70%, but warned of significant pressure on ticket revenue and a choppy recovery that will be difficult to predict.

Disclaimer: This post has been auto-published from an agency feed without any modifications to the text and has not been reviewed by an editor

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