What happened

Shares of Delta Air Lines (DAL -0.79%) plunged more than 5% in early trading on Tuesday before clawing their way back to about a 2.6% loss at the close, as the company reported Q2 earnings. Rivals United Airlines Holdings was almost even on the day, and American Airlines Group was down only a fraction of 1%, but neither company reported earnings.

3 red airplanes leaving contrails pointing down

Image source: Getty Images.

So what

Good news first: Delta is making headway in extinguishing cash burn that approached $100 million a day in the early days of the pandemic. Management reports that it ended Q2 with $15.7 billion in liquidity that it can use to finance its operations until things return to normal. And it now looks like Delta is going to survive to reach that point.

During the quarter, the average daily rate of cash burn was $43 million, falling to "only" $27 million a day in June. With 70% of Delta's flights still grounded for want of demand, and those that are flying at 50% to 60% of capacity, that's quite an accomplishment.

Now what

That doesn't change the fact that Delta's earnings numbers were much worse than feared. Heading into earnings, analysts had predicted that the air travel giant would report pro forma, pre-tax losses of $4.12 per share. In fact, Delta lost $4.43 per share pro forma, and $9.01 on a GAAP. basis. 

In total, that amounted to a staggering $7 billion pre-tax loss on sales of just $1.5 billion, with sales down 88% year over year. Adding insult to injury, Delta's revenue number was actually about $100 million more than Wall Street had predicted -- so the company lost more money despite suffering less revenue loss than anticipated.

CEO Ed Bastian wound up the report by saying, "Given the combined effects of the pandemic and associated financial impact on the global economy, we continue to believe that it will be more than two years before we see a sustainable recovery." Judging from the profit numbers Delta just reported, even if revenue come back faster than that, profits might not.