Good morning, everyone, and welcome to the Delta Air Lines September quarter financial results conference call. My name is Cassidy, and I will be your coordinator. At this time, all participants are in a listen-only mode until we conduct a question and answer session following the presentation. As a reminder, today's call is being recorded. I would now like to turn the conference over to Jill Greer, Vice President of Investor Relations. Please go ahead.
Thanks, Cassidy. Good morning, everyone. Thanks for joining us for our September quarter earnings call. Joining us from Atlanta today are our CEO, Ed Bastian, our President, Glen Hauenstein, and our CFO, Paul Jacobson. Our entire leadership team is available for the Q&A session. Ed will open the call with an overview of Delta's performance and strategy, Glen will provide an update on the revenue environment, and Paul will discuss cost liquidity and our balance sheet. We'll then go to our Q&A and ask you to limit yourself to one question and a brief follow-up so we can get to as many analysts as possible. Today's discussion contains forward-looking statements that represent our beliefs or expectations about future events. All forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements.
Some of the factors that may cause such differences are described in Delta's SEC filings. We'll also discuss non-GAAP financial measures, and all results exclude special items unless otherwise noted. You can find a reconciliation of our non-GAAP measures on the investor relations page at ir.delta.com. With that, I'll turn the call over to Ed.
Well, thanks, Jill. Good morning, everyone. Appreciate you joining us today. This morning, we reported a $2.6 billion adjusted pre-tax loss on a 79% decline in revenues for the September quarter. We ended the quarter with over $21 billion in liquidity, having brought our cash burn down to $18 million per day in the month of September. While we still have a long road ahead of us when you look through the large toll that the pandemic has taken, we are showing progressive improvement across the business, performing well on factors within our control and ensuring the company is well-positioned as demand starts to return. There are signs that customers are becoming increasingly confident in returning to air travel with TSA counts growing each week.
We are still running at a fraction of our normal capacity and expect that our December quarter revenues will be 30%-35% of what we saw a year ago. To put that improvement in context, our revenues bottomed out in the second quarter at only 10% of prior year levels. We're at 21% of prior year levels in the third quarter, we expect them to be roughly 1/3 of prior year levels in the fourth quarter. Steady improvement as Q4 is expected to generate three times the revenue of Q2, still a long way to go. To see a meaningful step-up in demand from here, we'll need business travel to further improve, local quarantines to end, and international restrictions to lift.
That will only come with widespread advances by the medical community and offices reopening, which many expect will start to happen in the first half of next year. As we all know, the path to revenue recovery is dependent on demand returning at scale. Until then, our focus is on doing a great job at what we can control, taking great care of our people and our customers, protecting our liquidity, and managing our cost performance. For our customers, we continue to emphasize safety and health with the Delta Care Standard, our multi-layered approach that includes intense cleaning protocols, blocking middle seats, and requiring masks on board our planes.
According to IATA, with over 1 billion air travelers worldwide in 2020, there have only been 44 documented cases of suspected COVID transmission on board an aircraft, and virtually all of them were in the early months of the pandemic before masks and revised safety protocols came into existence. We carry at Delta over 1 million people a week and have had no documented transmission on board any of our aircraft. The Delta CareStandard works, and it's keeping our customers and our employees safe. As a result, customers are increasingly becoming comfortable returning to the air. Our customer-focused approach is producing record Net Promoter Scores, which reached 75 in September, which is up a staggering 22 points over the prior year levels. This is a testament to the Delta people who have continued to shine throughout this historic crisis.
By restoring customers' confidence in travel and investing in their long-term loyalty and trust, we're creating a path to sustainable revenue growth in the future. We do believe it could still be two years or more until we achieve a normalized revenue environment. Until then, we will be smaller in the short term, but also more agile and more efficient. Today, we're already 20% smaller than we were at the start of this year, having reduced our fleet, our headcount, and our overhead. These were difficult but essential decisions that positioned Delta to emerge as a more resilient airline. We have resized our ground and flight attendant workforces by 20%.
I'm grateful to all those employees for the sacrifices, from those taking early retirement decisions to the 40,000 staff who took unpaid voluntary leaves throughout the pandemic, thus reducing our labor cost for our non-pilot groups by more than 40% over the past six months. This was the driving factor that allowed us to avoid furloughs and protect their jobs. We are still working with ALPA, hopefully, we can achieve that same result with our pilots. If not, we will be furloughing roughly 1,700 pilots on the 1st of November. We've reduced our fleet by retiring more than 200 aircraft this year, accelerated our fleet simplification to retire nearly 30% of our fleet, or 400 aircraft, by 2025. Along with our revised Airbus order book, this cuts years off the timeline to achieving a higher gauge fleet with lower seat cost and a better customer experience.
By making these structural changes to our cost base in this constrained environment, we will have significant cost and margin tailwind ahead of us as higher yielding business travel does return and our load factor CASM begin to ease. We are seeing early signs of our cost efficiency steps paying off as our fourth quarter all-in CASM is projected to be roughly flat despite a 40% reduction in capacity year-over-year. It's an incredible result and creates nice momentum heading into 2021. The challenges of this year have reinforced our belief in the importance of an investment-grade balance sheet, and our top financial priority will be to regain that as soon as possible. The first step in that process is getting back to break-even cash flow.
We had initially hoped to be there by the end of this year, but as the virus has had greater impact on our business than expected, that goal has shifted a few months. We expect to average a daily cash burn rate of $10 million per day into December month, with good line of sight to positive cash flow by the spring. Once we achieve that milestone, we'll have a heightened focus on paying down debt. Putting all this good work into perspective, it's been about positioning Delta to accelerate into a post-COVID recovery. Do we know exactly when that recovery will happen or what it will look like? No.
By taking out complexity, simplifying our cost structure, improving our products and service levels now, and maintaining strong employee morale in the face of this challenging time, we do know that we'll be even more customer-focused with a stronger brand and a solid financial foundation. With that, we will be well positioned to adapt and to win. Now, I'll turn the call over to Glen.
Thanks, Ed, and good morning, everyone. Since we last spoke in July, we've seen a steady progression in demand. This has resulted in our net cash sales improving from $5 million to $10 million per day at the beginning of the quarter to approximately $25 million-$30 million per day at the end of the quarter. That said, demand strength varied in different regions and segments of our business. Corporate demand has shown signs of modest improvement. While the volume of corporate travel at the end of the quarter was 15% of last year's levels, corporate volumes are trending upward across all industries, and we expect this to continue into 2021. Apart from the Caribbean and Mexico, international demand remains weak. This is largely due to government-imposed restrictions in key markets.
In the U.S., we've seen demand recover to 35%-40% of pre-pandemic levels, with strength in leisure markets like Florida, the Mountain West, and the beach destinations. However, cities that are under quarantine requirements, like New York and Boston, are recovering more slowly and are now just above 20% of pre-pandemic levels. As we approach the holiday travel period, we've been pleased with the recent booking trends for Thanksgiving and Christmas, which show that customers continue to gain confidence in booking further out. Our non-ticket businesses have held up relatively well during the quarter, with both loyalty revenue and cargo outperforming passenger revenues. The strength in our loyalty revenue stream is in large part due to the spend on the Delta co-brand card. American Express has stated that the spend on our co-brand card has held up better than other Amex cards.
We recently launched a card acquisition campaign after putting those efforts on hold and have had excellent response to this offering. This, in combination with spend trends that Amex has seen, suggests that our customers' aspirations to travel remain intact. As Ed mentioned, we focused on making sure Delta is well positioned for a future recovery. We've been accelerating redevelopment projects in our airports, and we were excited to open Concourse A in Salt Lake City. This was the first new U.S. hub airport to open in 20 years. In New York and Los Angeles, we're taking years out of our construction timelines, getting our customers a faster path to a better terminal experience while also lowering our construction costs. I'd like to call out our properties and facilities team for the excellent work they've been doing across the network on accelerating all of our airport projects.
We've made it easier for customers to do business with Delta, eliminating most domestic change fees, extending Medallion and Sky Club benefits, and refunding approximately $2.8 billion back to our customers so far this year. We're also rebuilding the network by leveraging our strengths, focusing on connecting customers through our core hubs and adding capacity to coastal hubs only as demand returns. In the domestic network, 80% of our current capacity is in our core hubs of Atlanta, Detroit, Minneapolis, and Salt Lake City. In those hubs, we're using our most cost-efficient, highest gauge equipment as we retire less efficient aircraft. Internationally, a majority of our long-haul capacity is in our JV partner hubs, where we are able to efficiently connect traffic.
Similar to the domestic entity, we're moving towards using our most cost-efficient wide-body aircraft in our international operations. By leveraging the A330s and the A350s and eliminating the subscale 777 fleets and sunsetting the 767-300ERs. While the longer network rebuild is underway, we are also tactically managing the network in the near term. We are increasing capacity around the peak leisure holiday periods like Thanksgiving and Christmas, while reducing it during off-peak periods like Halloween and the election week. This approach will result in our December quarter capacity being 40%-45% lower year-on-year, or approximately 60% lower when you factor in our block seats. By doing so, we're aligning capacity with the emerging demand environment and our expectation that December quarter revenue will be down 65%-70% versus last year.
Before I turn the call to Paul, I'd like to just thank our entire commercial team for all they've done in managing through these extraordinary times. We all know it's been a difficult six months, but we feel like we're very well positioned for where we stand and where the pandemic is. With that, I'd like to turn the call over to my good friend, Paul.
Thank you, Glen. Good morning, everyone, and thank you for joining us. This morning, we reported an adjusted pre-tax loss of $2.6 billion on revenue of $2.6 billion. This quarter's results exclude one-time charges that are due to our response to the COVID-19 pandemic, including $2.2 billion in fleet-related charges, a $3.1 billion charge from the voluntary separation and early retirement packages, and a $1.3 billion benefit from the CARES Act grant funds. Our results this quarter were underpinned by a strong focus on cost as we reduced operating expenses by $5.5 billion or 52%, similar to the decline achieved in the June quarter, despite flying 23 points more capacity. We also expect our December quarter operating expenses to be approximately 50% lower year-over-year, producing a December quarter consolidated CASM that is flat to down on 40%-45% lower capacity. A truly remarkable outcome.
We've gotten here by resizing the airline by 20%. First, we had approximately 18,000 of our coworkers opt to take either a voluntary separation or early retirement package earlier this summer. In addition, we still have over 12,000 employees on a voluntary unpaid leave of absence who will return at various times over the next 12 months. In total, the voluntary exits, the voluntary leaves, hour reductions, and other employee initiatives have saved Delta over $1.9 billion in salary costs so far this year. Second, we accelerated our fleet simplification with our intention to retire our CRJ200 fleet by 2023 and our 717 and 767-300ER fleets by 2025. We've also reached agreement with Airbus on the restructuring of our order book. This restructuring reduces our aircraft purchase commitments by more than $2 billion in 2020 and by more than $5 billion through 2022.
Our fleet actions will result in the retirement of almost 400 aircraft by 2025, including more than 200 this year alone. This will eliminate four fleet families, reducing complexity and driving meaningful cost savings in areas like maintenance and pilot training, while also producing a far better customer experience. While some of the cost actions we have taken this year are temporary and will come back as we rebuild the business, the changes we have made on headcount and fleet are structural. Those actions and the eventual easing of our load factor caps will allow us to bring capacity back in a measured way and at lower incremental costs, providing future margin tailwinds for the business.
Our strong cost focus has also allowed the increase we've seen in net sales, which is tickets purchased versus tickets refunded, to flow directly into an improvement in our daily cash burn, which improved from $27 million per day in June to $18 million per day in the month of September. Looking forward, we expect to see a progressive trend in our daily cash burn and currently expect to exit the year with an average daily cash burn of $10 million-$12 million for the December quarter. Turning to the balance sheet. We ended the September quarter with $21.6 billion in liquidity and adjusted net debt of only $17 billion, up $6.5 billion since the end of the December quarter 2019. During the quarter, we raised $9 billion backed by the cash flows and IP of our SkyMiles program.
The financing was nearly six times oversubscribed and priced at a blended rate of 4.75%, an amazing outcome for the largest debt offering ever by an airline. Really great work and amazing execution by our finance, SkyMiles, and legal teams, all working together to get that done. With our cash burn trajectory on track to achieve break even by spring and a solid liquidity position, our balance sheet work has already begun. Last week, we repaid the $3 billion outstanding under our 364-day term loan due in March of next year. We also paid down $2.6 billion we had drawn on our revolvers earlier in the year, and that capacity remains available in the future. We have now flattened our near-term debt maturities with $2.3 billion of obligations due through the end of 2021.
Our actions also freed up more than $3 billion in collateral tied to the term loan. As a result, we now have $9 billion-$10 billion of unencumbered assets, including newer vintage aircraft. We are on track to end the year with more than $16 billion in liquidity and adjusted net debt of approximately $19 billion. In closing, we've made significant strides over the last six months. However, more hard work is still ahead to ensure that we build the foundation for Delta's recovery. I'm confident that with the Delta spirit and values that our employees exhibit every single day, the airline will pull through and emerge stronger and more resilient. With that, I'll turn the call back over to Jill to begin the Q&A.
Thanks, Paul. Cathy, we are ready for the analyst question period, if you could give the instructions on how to get into the queue.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. Our first question comes from Joe DeNardi of Stifel.
Hi, good morning. Paul, you talked about all-in CASM being in line with 4Q19 despite the lower capacity. Can you talk about what level of ASMs you think you need to fly for ex fuel unit costs to be in line with 2019 levels? Is it 70% of 2019 capacity? Is it 90? Is it 105%? What's the right way to think about that?
Yeah, Joe. We're looking at everything obviously on an all-in cost basis going forward, and I think it's important to note that we've managed to keep our total operating expenses flat or the reduction flat over the last few quarters as we continue to ramp up capacity of the airline. As I mentioned in my comments, I think it's important to note that some of what we've done is obviously temporary, and the balance here is making sure that we're bringing costs back at the same pace or at a measured pace with demand returning and our capacity decisions as well. Fuel price is going to be an important part of that, but as we look at where we're positioned today, fuel matters. We've got to make sure that we take that into account.
The important thing is that we're flying, as we said, with capacity down roughly 40% - 50% in the fourth quarter. We don't have all of that available for sale, even though we're absorbing all of the cost of it. As we think going forward, we're positioning the airline to make sure we're all in CASM at a reasonable level that can be absorbed as we grow capacity. I think the team's done a good job of that.
Okay. Ed, along with the SkyMiles transaction, you provided revenue and profitability disclosures for the loyalty program, which highlighted how profitable and durable that portion of your business is. I'm not seeing any of those disclosures being provided today. That's something you alluded to doing at your June investor day pre-COVID. My question is, will you commit to starting in 2021, begin disclosing those same metrics, revenue, EBITDA, cash proceeds for the loyalty program on a quarterly basis?
Well, thanks, Joe. Yes, we are continuing to improve our disclosures. I frankly haven't gotten to the 2021 disclosure list yet. We're trying to get through 2020 first. Yes, you're right. When you look at the transaction and you start to get a sense for the importance of the loyalty program to not just our balance sheets, but our overall future. It's a strategic competitive advantage, one of the most important ones we have, and we'll do, I think, continue to do a better job of giving our investor base an appreciation for that. At the same time, we also have to be mindful of the other sensitivities around that data.
Thank you.
Our next question comes from Hunter Keay of Wolfe Research.
Hi, good morning, everybody.
Good morning, Hunter.
Paul, Good morning. On the fourth quarter CASM ex, the flat CASM ex, how much do we need to strip out for the third-party refinery sales? What's been driving that line up so much over the last couple of quarters? More broadly, how do we think about the overall ancillary business expense on the P&L into 2021?
Yeah, sure. Thanks for that question, Hunter. The refinery sales, as you know, we had managed a lot of that through exchanges for jet fuel. Obviously, with jet consumption down, we've had more volatility and just the pure third-party sales as we're not able to exchange that. We're managing through that going forward, and we expect that that'll be a little bit noisy as we continue through our recovery before things normalize, both in terms of capacity at the airline and then as well as production and normalization at the refinery as well. As third-party expenses go, obviously, we continue to see improvement on the horizon in our MRO business. We've talked about that before with the opportunities ahead of us with the Pratt and the Rolls-Royce agreements going forward. Obviously, there's been some noise around that in the midst of the COVID-19 pandemic.
We'll continue to see expenses related to those go up as volumes increase. That should really be viewed as a separate kind of independent business as we think from the cost base of the airline itself.
Okay. Then how many aircraft deliveries do you have now planned in relation to the 383 that you have coming out over that same time horizon?
We've reduced with the deal that has been announced today and the numbers in our fleet tables. We've taken out about 77 aircraft through the end of 2021 and kind of redistributed that over time as we continue to work through the impact of the pandemic.
Thank you, Paul.
Our next question comes from Brandon Oglenski of Barclays.
Hey, good morning, everyone, and thanks for taking my questions. Paul, just a quick clarification. I think you said you want to end the year with about $16 billion in liquidity, but I think you ended Q3 at about $21 billion. Can you just help us bridge that? Maybe off that last question, how are you thinking about CapEx into 2021, please?
Thanks, Brandon. Obviously, the two sort of impacts here are the cash burn, which we're reducing to $10 million-$12 million a day, which is roughly $1 billion for the quarter. We also had $3 billion that we paid down the term loan. There's some of the residual one-time payments to employees who are under the voluntary early retirement separation programs, et cetera, that we'll continue to pay out into the fourth quarter. That's the reconciliation.
Okay. Then any view on CapEx next year?
I think it's too soon to tell at this point. I think what you heard in Ed's comments is that we're going to continue to focus on paying down debt as soon as we get to cash breakeven. I think you're going to see similar discipline to what you've seen in the past that led to the balance sheet strength that we had pre-COVID. I think that's reinforced by this pandemic, and we'll manage CapEx accordingly.
All right. Thank you.
And then-
Just one quick follow-up, Brandon. I also failed to mention, apologies, the $450 million maturity in December is also a cash reduction.
Thank you.
Our next question comes from Jamie Baker at JP Morgan.
Hey, good morning, everybody. A couple of questions for Glen. Can you remind us pre-pandemic what the top 3 or 4 types of businesses were that make up your corporate demand, and maybe what percentage of total revenue they represent?
Sure. Banking, of course, financial services, and manufacturing and transportation.
Roughly what percentage of total revenue does that account for?
Did that account for?
Would that account for? Yes.
This is an off-the-cuff number because I don't have that at my hand.
If we can follow up.
Let's get back to you on that.
Okay. Fair enough. Second, can you discuss sort of the evolution of the booking curve since March? More importantly, what do you think has to happen to the curve in order to bring Delta closer to cash breakeven? Do you see any structurally permanent changes in the curve post-vaccine?
I think it's too early to tell what permanent changes there are in the booking curve. What we saw, of course, at the beginning of the pandemic was no bookings at all and cancellations to new bookings were like 100 to 1 in favor of cancellations. As we moved through this, we saw net positive in terms of bookings. That was the first gate we had to get through in the early parts. Then to positive booking in the second quarter, where we're actually generating positive cash flows. Now in the third quarter, I think we're still seeing a very condensed curve, but people really willing to book further out. We're seeing good booking momentum for Thanksgiving and Christmas, and really even into the off-peak periods in December and into early January, we're seeing more activity than we had in the last month.
Every month we move through this, we see more and more customers with more confidence booking both close in and further out. That's what we continue to need to see, that development and confidence. I think when you think of what we've done with the brand and what we've done with the seating and the cleanliness and all the protocols we've put in place, it's all about building consumer confidence, because without consumers being confident, we can't do that. I think we've made a lot of great progress as an industry. Certainly more to go, but we're on a good path and hopefully, well, we know we're closer to the end of the pandemic than we are to the beginning, but we don't know exactly how it's going to evolve from here to the end, so we'll stay nimble.
If I can just squeeze in a third, what stat are you looking at to determine when you'll lift the load factor cap or set of statistics, I suppose?
Jamie, this is Ed. We haven't made that decision yet. We continue to watch it. Obviously, it's going to be conditioned on consumer sentiment and confidence in air travel. I think as each week goes by, as Glen said, that confidence is improving. We've got a lot of studies coming out from experts about the safety of air travel. Sometime in the first half of next year, I have no doubt we will be lifting those caps. We haven't picked a date yet, and I'd say we will continue to start the new year with the caps in place.
Thank you, gentlemen. Take care.
Again, if you would like to ask a question, please press the star key followed by the one key. That was star one. Our next question comes from Savi Syth of Raymond James.
Thanks. Good morning. I think, Ed, you've said that it's not about building back to what was, but building for the future, although you probably put it a lot more eloquently than that. I was just wondering, have your teams had substantial conversations with corporate customers to kind of get an idea of what the makeup and size of business travel may look like once kind of pandemic fears are behind us, especially now that customers have had a chance to see both what video conferencing technology can and cannot deliver?
Hi, Savi. Yes, we are in frequent daily conversation with all of our corporate customers. A couple interesting stats. Today, we have roughly 90% of our primary corporate customers who do have travelers who are traveling. Small numbers in many of those, but they're getting their own sense for what the new travel experience is. Anecdotally, they're coming back to us with really strong reviews of safety and confidence in restoring their travel spend. How video technology is going to impact long-term business travel, I'm of the view that it will have some impact, but it's not going to be a substitute. It will be a complement to business travel. It won't be a substitute for business travel. I don't think anybody knows. There's lots of experts out there that put dates out as to when the new normal will be achieved.
My sense is that we could be looking at anywhere from 10%-20% reduction in the next couple of years, when we get to that new normal of business travel. The one thing I'll also tell you, Savi, having been in this business for a long time, every crisis that I've been part of, and it's been a lot of crises over that 20+ years, this was the first thing that people always talked about, was that this is the death knell of business travel, and technology was going to replace the need for travel. Every single time, business travel has come back stronger than anyone anticipated. I think we're going to see that same consumer behavior. It will undoubtedly be different, but I think it's going to come stronger than most of the pundits fear.
Helpful. Then if I might ask a clarification question on the cash burn. Is the kind of the improvement from what you saw in September to what you're kind of thinking that you'll see in the fourth quarter, is that from has to come from all revenue given most of the retirements happened in August, or are there some other drivers in that improvement?
That's principally revenue.
Okay. Thank you.
Our next question comes from Duane Pfennigwerth of Evercore.
Duane. Thanks for the time. Just on Savi's question there, maybe some longer-term perspective from Ed or whomever, because I think you guys have been fairly thoughtful about the potential for longer-term impairment in corporate. My question is, if that does play out, how will Delta offset that and work to restore its earnings power? Is this strictly a cost challenge? Obviously, we've got some good news on that front in terms of what you've given us for the fourth quarter. Is this strictly a cost challenge, or do you think the industry can think about how it prices leisure travel differently than it has in the past?
Well, there's a lot of speculation in that question, Duane. Today, we're 20% smaller as an airline. That certainly gives us a chance to resize the demand set. What impact that will have on international is still an open question mark. We are very well-positioned with our hub structure. We feel good about that base of travel. We're really getting great comments and compliments back from our corporate customers about the travel they're doing. While small, share is very strong, and we'll see. I wouldn't go out to try to suggest what kind of changes. Certainly, there will be some interesting opportunities to look at a new business model around pricing and competitive markets. We're doing what we do here. We're playing the long game.
Over the long term, I'm confident that the strength of our service level, the focus of our people on taking good care of our customers will be the most important thing of anything out there.
Thanks. Maybe if I could sneak in a shorter-term one, just on the down 40 capacity in the fourth quarter. Would you be willing to talk about the cadence by month and any early look into the first quarter? Appreciate you taking the questions.
Duane, no. We don't have a good enough crystal ball in this environment.
It does feel like it implies a bit of a pickup into November and December.
Modest. Again, very small.
Thank you.
Our next question comes from Mike Linenberg of Deutsche Bank.
Yeah. Hey, good morning. Two quick ones here. Paul, just on CapEx 2021 and 2022. I think you said at least through 2021, you're going to take 77 more airplanes. At least on a gross basis, could you give us what CapEx, a rough forecast is for at least next year?
I think a little bit premature to give total numbers for next year. We talked about a $5 billion reduction. It's important to note in this environment, all of the aircraft are going to come with financing in place.
Okay
for that. We need to make sure, obviously, we'll have decisions to make as we go into 2021 depending on the balance sheet, the pace of recovery, cash, et cetera. We've got facilities in place to be able to backstop finance those aircraft if needed.
Okay. Fair enough. Just my second question, the headline out recently where it looks like the Brazilian regulators are going to put the Delta-LATAM deal on trial, and that's of course after they approved it. Can you still proceed and move forward, regardless of an ongoing trial? Does that prevent you from doing what you want to do?
Hey, Mike, it's Peter. Good morning.
Good morning.
A couple of things. One is our joint venture is under review, with the U.S. Department of Transportation.
Okay.
Ultimately, for that to go forward, we will need those approvals. We do have some codeshare agreements with them, which are ongoing. We do expect, we do anticipate that the Brazilian tribunal will approve the transaction. This is just a second look.
Okay. Very good. Thanks for that, Peter.
Our next question comes from Helane Becker of Cowen.
Thanks. Thank you very much, operator. Hi, everybody, thank you for the time. Completely unrelated to things that we've been talking about, you guys had an open pilot contract prior to COVID starting. I'm just wondering if the negotiations that you're undertaking prior to November 1st include updates to that contract or if that's just on hold.
Helane, we're not going to talk about negotiations publicly, but what I can tell you is that the focus is trying to find a way to eliminate the need to furlough 1,700 junior pilots. We've given ALPA, the union, a lot of different options, and I'm hopeful we can reach a resolution, but I'm not trying to suggest or forecast that.
No, I understand that. Just understanding that the main part of the contract is on hold until we get through this part. Is that right?
I would say that's a fair observation.
Okay, good. My other completely unrelated question is on the airport construction acceleration and all the other stuff that you're doing, which obviously will help improve customer experience as we come out of this. Can you just talk about some of those things? Are there thermal camera imaging going into place? Are there testing centers for COVID or other things? How is the airport going to look going forward? How should we think about the cost associated with landing fees changing next year? If you're smaller and everyone else is smaller, I guess we should think landing fees going up. Is that true?
Well, you asked a lot of questions in there.
One long question.
Our main focus is to take advantage of the reduced volume of travel to accelerate progress in getting our new facilities built in LaGuardia, LAX, Seattle, which has opened up the brand-new Salt Lake City Airport, which is magnificent, and hopefully, you all get a chance to get out there and see it sometime soon. That's been the single biggest focus. We are working on, particularly for international travel, protocols by which we can start to open up lanes of international travel, which I believe testing will be an important ingredient to getting there, and working with airport authorities as to how we would administer that. We're working both here in the U.S. as well as overseas, working with those authorities, working with the CDC in very close contact. I don't perceive them having big structural changes.
I don't see testing being conducted, for example, on a U.S. basis before people fly. I could see it for international. Relative to thermal and temp screening, we've asked TSA repeatedly to take that over as part of their screening services. Right now, we've been unable to convince them of that. I know a few airports are working on that, but again, I don't see that being a meaningful change to the airport infrastructure.
Okay. That's very helpful. Thank you.
Your question on landing fees, I don't know. I think our airports have done a very good job of minimizing their own cost and taking advantage of where they've received some government support, using that to reduce cost. 2021 is an open question.
Got you. Okay, thanks for your help.
Our next question comes from David Vernon of Bernstein.
Hey, guys. Thanks for the time. Paul, first question on the balance sheet. Can you tell us what the maturities look like over the next 24 months if we end the year at $15 billion, $16 billion? Is there anything that's going to be coming due, and is there any flexibility in renegotiating?
Thanks, David. The biggest maturities that we have, we've got a $450 million unsecured maturity in December that I referenced earlier. We have a $600 million unsecured maturity in April. Previously, we had already pushed out our revolver into 2022, and we've got primarily just, beyond those two, amortization payments now that we've paid off that bridge loan. I think it's very manageable, under $2 billion over the next 15 - 18 months.
All right. Thank you for that. Ed, maybe on the topic of testing, we've been looking at that quite a bit, I'm wondering what your perspective is on timing for when you think either through testing with partners or testing with other international entities, when you might start to think that corridors of international travel may start to open up. Is that something we should be thinking about in the next three months, six months, nine months? How are you thinking about that in general?
Well, we're laying the tracks to create the testing environment. Obviously, the advancement in the development of rapid tests are key to that, not only in terms of a fairly quick turnaround, but also a relatively low cost. As you know, the U.S. government has already acquired large supplies in advance of that, so we're talking to the government about that. I think when you try to put a timeline on it, one of the big wild cards is how the virus is doing, both here in the U.S. as well as in other countries. The goal in all this is to eliminate the need to quarantine when you get to your destination. As we see going on in Europe right now, we're seeing another wave of the virus starting to spike across Europe. That is of concern to the local authorities.
Certainly, their concern likewise here is to seeing rising case counts in the U.S. I'd say that your timing has more to do with the state of the virus and the medical containment of it than it does any specific strategy that we could deploy to make certain that everybody stays safe, because the goal in this is that we want to eliminate quarantines.
Would there be some work you'd need to do to integrate some of the rapid tests and the QR codes and things like that into that boarding process, or is that stuff you guys have already figured out?
We are looking at how you could deploy rapid testing as part of the check-in and boarding process, yes.
Thanks very much, guys.
Thanks, David.
Our next question comes from Joe Caiado of Credit Suisse.
Hey, thanks very much. Good morning, everyone. Just a quick one first. Could you comment on the trends in American Express card spend in the third quarter, just how that compared with the second quarter? To the extent you can comment on it, how that's trending here in the fourth quarter month- to- date?
Well, we don't give specifics on it. I'd say the trends have been improving. I think we disclosed that we were down about 20%. We've seen that 20% come back up. Most encouragingly, we've watched the T&E lines within the card and their progression. At the worst of the crisis, the airline spend was actually a negative number. It was -103%. We've seen that consistently move up. Now we're down in the low 70s. That's another exciting sign for us. Not only is the total spend improving, but the spend on airlines itself is improving dramatically. I think that's about all the color we can share.
That's great. I appreciate that, Glen. Just maybe another quick one. For Paul, I think you had previously talked about the base level of investment just to maintain the business, so maintenance, non-aircraft CapEx as being maybe $500 million - $700 million a year. Obviously, you took that pretty much to zero this year, that's obviously not sustainable long term. My question is just, given all the structural cost reduction efforts across the enterprise, is that still roughly the ballpark for run rate maintenance CapEx two or three years out, is that run rate number now lower as well?
Well, I think certainly we're 20% smaller than we were before, so I would argue that it's probably a little bit lower than what it's been. A lot of this is going to be timing, and we see this in terms of what we're doing across the fleet and really optimizing. We're not missing out on the opportunity to accelerate where we can, particularly in technology and that space and the facilities that we've already mentioned. I think that probably $500 million is a good range, but I expect that we're going to want to drive the airline to better cash performance to enable us to invest more.
That's really the message here, is that we've got to continue to invest within our means while we have the additional goal now of paying down a substantial amount of debt over the coming years and through the recovery.
Understood. Thanks, Paul, and thanks for taking the questions.
Our next question comes from Andrew Didora of Bank of America.
Hi, good morning, everyone. Paul, as you get through the crisis and you implement your fleet simplification plan, what kind of unit cost savings can this give you, say, versus 2019? Is there anything that you're willing to share about where you would like your unit cost structure to be as the industry returns to a more normalized trend?
Thanks for that question, Andrew. When you look at the gauging potential, the fuel efficiency, the simplification of all overhead functions around training, around maintenance, tooling, et cetera, we have previously said as part of our investor day that it was worth billions of dollars a year as we complete that. What we've been able to do is, as today, probably accelerate that timeline by more than five years against where we thought we were going to be pre-COVID. I think as we position the airline going forward, there's no doubt that we are very focused on keeping CASM below pre-COVID levels. I think the jury is out as to how effective we can do that based on how demand returns and how capacity comes back.
I think the early returns, based on what we think we're going to be able to do in the December quarter, is going to be a pretty good early indication of our focus working in the right direction.
That's great. Thank you. Just sort of a near-term modeling question. When I just look at your pure salaries and wages line item, it's been at about $2 billion the last two quarters. Do you think that's a good baseline to work off of going forward here? Or can you get that down a little bit more with some further workforce actions? Thanks.
Well, I think, Andrew, as we've talked about, we're currently not anticipating any furloughs of ground and flight attendant employees. With the leaves that we've taken, we're approaching a pretty good run rate on where we'd expect to be going forward. Beyond the actions that we've already announced and potentially a transaction with the pilots or managing to get that cost out, there's a little bit more to go. I think, largely, we've done what we've needed to do to date.
Okay, great. Thank you.
Cassidy, we're going to have time for one more question from the analysts.
Thank you. Our final question comes from Myles Walton of UBS.
I know probably a little premature question, thinking about the long game, Ed, with the Airbus delivery schedule cleaned up, retirement plans set through 2025, is now the right time for opportunistic overtures to Boeing for thinking about an order, given the pro forma fleet in that out year is still 40% Boeing, obviously, your order book there is still essentially zero?
Hey, Myles. I get asked that question by the press all the time, and I'll give you my standard response, is that we talk to the OEMs about all aircraft all the time and always looking for opportunities. I don't have anything to report on that, but you can rest assured that we're always looking for opportunities where we're at a little advantage at Delta.
Is there a reason for the 2025 dating of the retirement plan for the 67 and 17s in particular?
No, it's just a convenient five-year interval. Obviously, there'll be more retirements post 2025, but we figured five years is a pretty long look given what we've been through this year.
Okay, thanks.
Sure.
That's going to wrap up the analyst portion of the call. I'll now turn it over to Tim Mapes, our Chief Marketing and Communications Officer.
Well, in addition to welcoming all the members of the media to the call, in the few moments that we have here, Cassidy, if you wouldn't mind just reiterating the instructions for each of them to enter the queue.
Again, if you would like to ask a question, please press the star key followed by the one key. That was star one to ask an audio question. Again, that was star one. Our first question comes from Tracy Rucinski from Reuters.
That was repaid by GOL and how much-
Ms. Rucinski, if you don't mind just repeating yourself, we are now able to hear you.
Sure. About the Brazil GOL's loan that was refinanced last month, can you tell us how much was repaid by GOL and how much is outstanding and refinanced?
Hey, good morning, Tracy. This is Paul. We didn't actually have a loan to GOL. We had a $300 million guarantee, and what we did was restructured that guarantee and lent them $250 million. We've got amortization payments that are required, and they are current with that loan. That's where it currently sits.
Okay. Then just given your strong liquidity position now, are you planning to inject any cash into LATAM or Aeroméxico?
We have no plans at the present, Tracy. We need to get through our own crisis here first.
Okay, thanks.
Our next question comes from Alison Sider of Wall Street Journal.
Hi, thank you. Ed, I was wondering if you could tell us anything about what you're seeing or where things may stand in Washington over aid talks. We've seen a lot of your peers and other top airline executives spending a lot of time in Washington and pushing for more aid, and at least publicly, haven't seen you there as much and wondering why that is.
Well, we certainly support the extension of the CARES Act 2, as it's been labeled, for PSP, for airline workers, and I certainly hope g iven the strong bipartisan support that exists, that a vehicle for that extension can be found here soon to be able to bring 32,000 airline industry employees back to work. We're fortunate we haven't had to furlough anyone yet to this juncture. I do want to acknowledge the great work of the Delta team in making a real difference.
We are not facing furloughs in any work group with the lone exception of the pilots. We still have an overstaffed situation we're trying to work with the union on. Every other work group within Delta, we've been able to manage to mitigate it through all the voluntary leaves, 40,000 people taking unpaid leaves throughout the summer. 20% of our employees have opted to early retire. We've had reduced hours and work schedules, shared jobs. It's been incredible.
Excluding the pilots for the moment out of the labor cost, we've been able to save 40% of our employee costs over the last six months as a result, which has eliminated the need to undergo furloughs. That's my view on that. Where this goes, I have no idea. It seems to change by the day, if not many times within the day. We're still hopeful something will happen.
I guess, do you see it as less of a priority for Delta then, sort of given your success getting labor costs down in other ways?
I don't think it's less of a priority for Delta. I think that with the large numbers of furloughs that are at other airlines, it's a heightened priority there. We would be pleased to see that extension given to all the industry. However, the industry and everyone within the industry has managed the crisis a bit differently. The reality is, the virus is not at the level of containment that we all thought it would be when the first grant was issued, and we will all need additional time to get our businesses in a better spot over, to get ready for next year.
Thanks.
Cassidy, we need to get Ed and the members of the leadership team to an employee town hall. We have time for one final question, please.
Yes, sir. Our final question comes from Leslie Josephs of CNBC.
Hi. Thanks for taking my question. Good morning, everybody. Just a quick question on the loyalty program. You said you're seeing spending, or you expect spending to increase in the fourth quarter. Do you have any detail about where you expect spending to go in the first and second quarter and how that could contribute to you breaking even or even going cash flow positive?
Clearly the loyalty program and the American Express deal have been great advantages for us through this pandemic. We have seen continued spend improvement through the second, third, and now fourth quarter. I think it's too early for us to go out and say that what Christmas will be like or what the post-Christmas spend will be. The trends that we've seen today are very encouraging. I think a lot of that also has to do with does a stimulus bill gets passed, either in November or in January. There are a lot of factors that weigh into how people spend on those cards. I would say we've been very encouraged by the trends we've seen.
Okay. Would that contribute to you going cash flow or break even or cash flow positive?
Absolutely.
Do you know to, like, what degree or what the margin is on it?
No. No, we're not going to disclose that, but it's a significant contribution.
Okay. Thanks very much.
Great, Cassidy. Thank you very much, everyone. Appreciate everyone's time. We'll look forward to speaking with everyone in January.
Thank you, ladies and gentlemen. This concludes today's teleconference. You may now disconnect.