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Delta (DAL) Hopes for Positive Cash Flow by Spring 2021

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Per a Reuters report, Delta Air Lines’ (DAL - Free Report) CEO Ed Bastian continues to believe that the company will achieve positive cash flow by this spring.

In a New Year note to employees, Bastian stated that the company will likely “experience two distinct phases during the next 12 months.” The first phase will be quite similar to 2020. Meanwhile, “the second phase will begin only when we reach a turning point with widely available vaccinations that spur a significant return to travel, particularly business travel.”

Amid coronavirus-led suppressed air-travel demand, Delta is burning millions of dollars in cash each day. During the third quarter of 2020, the carrier’s daily cash burn averaged $24 million. However, on a positive note, the airline’s cash burn has been improving with effective cost-control measures. The third-quarter cash burn represents an improvement from $43 million daily cash burn in the June quarter. Delta estimates cash burn to average around $14 million per day in the December quarter.

With travel demand at an unprecedented low level, Delta’s revenues declined 76% year over year in the third quarter due to 83% drop in passenger revenues. Looking ahead, Bastian stated, “As difficult as 2020 was, in many ways I expect the next 12 months to be even more challenging.”

 

 

Zacks Rank & Key Picks

Delta carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Transportation sector are ArcBest Corp. (ARCB - Free Report) , Ryder System, Inc. (R - Free Report) and Herc Holdings Inc. (HRI - Free Report) . While Ryder carries a Zacks Rank #2 (Buy), ArcBest and Herc Holdings sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of ArcBest, Ryder and Herc Holdings have gained more than 56%, 15% and 37% in a year’s time, respectively.

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