Delta Prepares For Steep Losses As Coronavirus Outbreak Keeps Passengers At Home
A Delta Connection jet lands at Salt Lake City International Airport, Wednesday, April 22, 2020, in Salt Lake City. (AP Photo/Rick Bowmer)
More than one-third of Delta Air Lines’ workforce will be taking voluntary unpaid leave, and some 650 planes in the Delta fleet remained parked as the airline slashes expenses in response to the drop in traffic caused by the coronavirus.
Atlanta-based Delta is predicting a 90% drop in revenue over the next three months. The company’s first earnings report since the pandemic started revealed an 18% decline in revenue over the first three months of 2020, as the airline lost $534 million.
“We’re going to spend the time in these next few months, as we build the company that we want for the future – not necessarily rebuild what we have,” said Delta CEO Ed Bastian.
Bastian says it could take years before the airline industry returns to something close to normal.
“Ultimately, it’s going to be what does it take to inspire confidence in air travel and the safety of that,” said Bastian. “Maybe it’s a vaccine in two years on a widespread … I don’t know.”
Bastian says the 50% reduction in spending announced Wednesday will help save $5 billion. This includes voluntary unpaid leave for 37,000 employees, ranging from 30 days to one year. The company says it has also received about half of the $5.4 billion it’s expecting in federal relief aid.
Transportation industry analyst George Hamlin says the unprecedented nature of the coronavirus pandemic makes predicting the future nearly impossible. But he thinks Delta can weather the storm.
“Of the three, American, Delta and United, I suspect Delta is positioned probably about the best,” said Hamlin.
But for the time being, Hamlin says, airlines will be reducing the size of their footprint.
“Less capacity, less service, and, yes, consumers, that will probably translate into, on average, higher fares. That’s not to say there won’t be some relatively cheap fares around,” said Hamlin.
He says the speed of the recovery will depend on two factors: whether passengers are confident they won’t get sick while flying and how deeply consumers feel the financial crisis brought on by the pandemic.
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