Whatās Going On Here?Delta Air Lines reported its fifth quarterly loss in a row on Thursday, but the world's biggest airline reckons the cabin fever might finally have broken. What Does This Mean?The beginning of the year still looked bleak for the airline industry, with coronavirus cases and travel restrictions on the rise. So investors werenāt exactly surprised when Delta reported a $1.2 billion loss last quarter. But they finally got some good news: bookings have been climbing as more potential jetsetters get their vaccines, and Delta even started generating cash again for the first time in a year last month.
Thatās come as a relief to the airline, which now thinks itās officially turned a corner. And with its domestic leisure bookings at 85% of pre-pandemic levels, it might well be right. So even though international and business travel are some way off getting back to normal, the airline was willing to double down: it stuck to its previous forecast that itāll turn a profit in the third quarter of the year. Why Should I Care?The bigger picture: Delta chops off one head, two grow back.
Deltaās massively boosting its capacity in anticipation of a bumper summer, and itās not the only one: American Airlines is planning to offer 90% of the domestic seating capacity it did before the pandemic. Combine that with the arrival of two new low-cost airlines ā Avelo and Breeze Airway ā that are starting US flights this year, and competition in the industry could be about to get hot hot hot this summer.
Zooming out: Stimulus checks are the gift that keeps giving.
Then again, there are more than enough itchy-footed customers to go around ā especially now they have a $1,400 government stimulus check burning a hole in their pocket. If they have any of it left, that is: new data out on Thursday showed US retail sales rose by nearly 10% in March, suggesting theyāve been more than happy to spend big already. | 