As a result of the impact of the pandemic on the travel sector, airlines had a difficult first half in 2020. Delta Air Lines was one of the stocks that suffered a hard hit during the period. According to the research data analyzed and published by ForexSchoolOnline.com, its revenue fell by 88% year-on-year (YoY) during the period.
Operating revenue for the quarter was $1.47 billion, compared to $12.54 billion in Q2 2019. The pre-tax loss was $7.01 billion, while during the same period in 2019, there was a $1.91 billion pre-tax income.
There was a GAAP net loss of $5.7 billion versus a $1.4 billion income in Q2 2019. In terms of revenue, the passenger component made a total of $678 million, translating to a -94% drop. Cargo revenue amounted to $108 million, a drop of 42% while other revenue components brought in $682 million, a 31% decline.
For the six-month period that ended on June 30, 2020, there was a drop of 56% YoY in operating revenue, equivalent to $12.95 billion. Once again, the biggest drop was in passenger revenue, which shed 60%, going from $20.62 billion in Q2 2019 to $8.25 billion in Q2 2020.
Cargo revenue declined by 31% while other revenues dropped by 23%. There was a total operating loss amounting to $8.37 billion and a loss per share of $9.83.
Global Air Travel Drops by 95%, Industry to Lose $84.3B in 2020
The global air travel industry as a whole has had a rough 2020. According to a UNWTO report, 217 countries globally had imposed travel restrictions in May 2020. Of these, 45% (97 countries) had closed their borders partially or totally. Meanwhile, 30% (65 countries) had suspended international flights partially or totally.
As a result of these restrictions, the average number of daily commercial flights went from 100,000 in January to a low of 23,923 in April according to Flightradar 24. For the first time since March, the number crossed the 50,000 mark on June 18. In comparison to May 2019, commercial flights declined by 71.7% in May 2020. The YoY drop was even higher in April, at 73.6%.
Based on the grim state of affairs, the International Air Transport Association (IATA) forecast that 2020 would be the worst year financially in the history of aviation. At the lowest point in April, global air travel dropped by 95% below the levels recorded in 2019.
Though the situation is gradually improving, revenue passenger kilometer-based traffic levels in 2020 will drop by 54.7% YoY. Moreover, passenger numbers are expected to drop to 2.25 billion, which is nearly half the 2019 figure and almost equal to the 2006 numbers.
Passenger revenues are also estimated to drop from $612 billion in 2019 to $241 billion in 2020. Based on estimates, the industry now loses $230 million every single day. By the end of the year, that would translate to an $84.3 billion loss. It would also result in a -20.1% net profit margin.
Similarly, IATA predicted a revenue drop of 50%, bringing the total to $419 billion compared to $838 billion in 2019. Basing its calculation on an estimate of 2.2 billion passengers in 2020, airlines expect to lose at least $37.54 for every passenger. However, it estimates that by 2021, revenue will rise to $598 billion and losses will drop to $15.8 billion.
In terms of regions, Asia Pacific will take the lead with an estimated loss of $29.0 billion. It largely has to do with the fact that it was the first region to feel the impact of the outbreak. North America comes in second with $23.1 billion while Europe is third with $21.5 billion. The Middle East will be fourth with a $4.8 billion loss, Latin America with $4.0 billion and Africa with $2.0 billion.
El Dorado Leads BEACH Stocks Market Cap Losses at -76%
‘BEACH’ stocks are among the worst hit during the COVID-19 economic downturn. These companies in the Booking, Entertainment, Airlines, Cruises/Casinos and Hotels/Resorts (BEACH) saw billions evaporate during the period.
According to data from the Visual Capitalist, during the period between February 19 and March 24, Norwegian Cruise Lines and El Dorado Resorts saw the highest losses in market capitalization. El Dorado Resorts took the lead with a 76% loss while Norwegian Cruise Lines was second with 72%.
However, for companies with multiple revenue streams, the impact was less damaging. For instance, Disney only reported a 31% market cap loss over the same period. Overall though, BEACH stocks lost over $332 billion in value during the less than one-month duration.