Delta Air Lines Bookings Have Stalled Once Again

Delta Air Lines Inc. (DAL) is trading lower in Tuesday’s U.S. session after reporting a Q2 2020 loss of $4.43 per-share, $0.19 worse than consensus estimates. Revenues matched low expectations at $1.47 billion, which marks a stomach-churning 88.3% year-over-year decline. The company warned that bookings have stalled once again after April and May upticks due to the surging pandemic in more than half of the American states.

Delta Air Lines Bookings Stall

Company executives now expect Q3 revenue will be just 20% to 25% of income posted in Q3 2019, adding to a cash burn that’s undermining the balance sheets of nearly all airlines around the world. They also warned that business travel may never return to pre-pandemic levels due to the rapid adoption of virtual meeting spaces by hundreds of corporations. Finally, they announced that middle seats would remain blocked, unlike rivals United Airlines Holdings Inc. (UAL) and American Airlines Group Inc. (AAL).

In a Tuesday interview, CEO Ed Bastian admitted the company will be forced to raise additional capital in the next few months, further diluting current shares. He indicated that cash burn currently stands at $27 million per day but insists the company has at least 19 months of cash left, even if they don’t raise additional capital. Remarkably, Bastian also noted that corporate travel is now less than 5% of total revenue, highlighting the exodus of their most important profit source.

Wall Street And Technical Outlook

Wall Street consensus now rates Delta Air Lines as a ‘Strong Buy’, assembled from 9 ‘Buy’ and 3 ‘Hold’ recommendations. Oddly, no analyst is recommending that shareholders sell their positions at this time. This unbridled optimism seems unwarranted, given obvious industry challenges in the next one to two years. Price targets range from a low of $26 to a street high $47 while the stock is now trading just a few cents below the low target.

Technically speaking, there isn’t much to love about Delta Air Lines, which has struggled to book positive returns since January 2018. It broke down from a multiyear topping pattern in the first quarter and fell to a 7-year low in May while the bounce into June failed to remount a single broken support level. As a result, a decline from the current price could easily reach and break the second quarter low, continuing the developing downtrend.