Delta's 1Q was bad, but it will get worse for US airlines

biggest and most profitable U.S. airline just posted its first quarterly loss in more than five years. w things are going to get really b.

Delta Air Lines Inc. reported Wednesday that it lost $534 million in first three months of year, when it suffered a glancing blow from coronavirus pandemic during March.

For most of first quarter, virus seemed like an abstraction to many Americans. Sure, it sounded dire, but it was an ocean away. Life in U.S. unfolded rmally. ecomy was humming, people took business trips and leisure flights, planes were nearly full.

Since n, virus brought restrictions on travel and stoked fear of being trapped in a flying aluminum tube while sharing recycled air with people who might be infected. Travel has plunged about 95%.

Delta's first-quarter revenue dropped 18% from a year ago. airline forecast a much grimmer picture for second quarter, when full impact of global pandemic will be felt. Revenue is expected to plunge 90% for Delta, and things will likely to look just as bleak or worse for its competitors.

It could be a long time before travel returns to pre-outbreak levels. “Wher it's three years or two years or four years is anyone's guess,” said Delta CEO Ed Bastian.

Here are some vital signs to watch in airline industry:

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TRAFFIC HAS VANISHED

If re is one chart that captures implosion of U.S. airline industry, it might be number of people screened each day at nation's airports by Transportation Security ministration.

About 2.3 million people passed through security checkpoints on March 1, unchanged from same day last year. numbers careened sharply lower from that point on, plunging below 100,000 by early April — a drop of about 95%. Airline officials say most of people still flying are health care workers fighting COVID-19 outbreak and individuals reuniting with family members.

Ar telling statistic captures emptiness of airline planes that are still flying. Airlines for America, industry's tre group, said that over past week flights within United States have carried an aver of about 12 passengers — it was nearly 100 in early January, when virus outbreak was largely limited to Asia. aver on international flights has dropped from 150 to 26 in same time.

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BOOKINGS TOO

Airlines have responded to drop in traffic by canceling thousands of flights. That triggers refunds to passengers who h tickets and can't or don't want to be rebooked on ar flight. Delta and or airlines are spending more on refunds than y are taking in from new bookings — that's called negative net bookings.

percent of seats sold on U.S. airline flights dropped from 80.2% in January to 13.1% in week of April 13-19, according to Airlines for America. That includes both domestic and international flights.

Demand for future air travel in U.S. was down 98.4% in second week of April compared with a year earlier, according to industry tre group.

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FEWER FLIGHTS

With fewer passengers, it makes sense for airlines to operate fewer flights. Worldwide, re were about 111,000 commercial flights a day in early January. numbers, which include cargo flights, started dropping sharply in March, and y are w down to about 28,000, according to tracking service Flightrar.24.

By canceling thousands of flights, U.S. airlines have cut ir passenger-carrying capacity by about 81% from a year ago, according to Airlines for America. But that isn't deep eugh to match plunge in passengers, which explains why planes still flying have so many empty seats.

Delta reported a 13% drop in revenue per seat for every mile flown during first quarter. That's a closely watched indicator in airline business that rarely moves more than a couple points up or down in one quarter. Look for much sharper declines later this year.

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FEDERAL AID

All major U.S. airlines have reached agreements with Treasury Department for billions in grants and loans to help m cover payroll costs through September. Among biggest carriers, American Airlines will get $5.8 billion, Delta has alrey received half of $5.4 billion it was promised, United Airlines will get $5 billion, and Southwest Airlines will receive $3.2 billion.

What happens to employees after federal money runs out isn’t clear. Delta, United and American expect to be smaller when y emerge from pandemic. y are encouraging employees to take early retirement or unpaid or partially paid leaves of absence, but analysts say layoffs are inevitable in October unless federal aid is extended.

Many international airlines have furloughed workers. y too are asking ir governments for help. Richard Branson, who owns a mirity stake in Virgin Atlantic, told employees this week that carrier needs a loan from U.K. government to survive.

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AT LEAST FUEL IS CHEAP

Airlines, like motorists, are catching a break with cheaper fuel prices. Delta paid 12% less per gallon in first quarter than it did a year earlier — a savings of $383 million — and that was before latest collapse in energy prices.

But just like people who are stuck in ir homes, Delta isn’t able to take full vant of lower prices because it is canceling so many flights.

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BUSINESS TRAVEL OR ZOOM?

Stay-at-home orders have boosted demand for video conferencing. Some forecasters think services like Zoom could steal market share from airlines by replacing in-person meetings with virtual ones.

Airline executives say that will be true for a time, but corporate travel — a lucrative and critical part of ir business — isn't going away.

“We will have some portion of travel that will move over to telecommuting," Delta's Bastian told CNBC. But, he said, “Business travel is going to come back. People need to be face-to-face, doing business toger, when it's safe.”