Delta’s CEO initiated a plan overnight (India time) and has enlisted the measures that Delta, which is one of the world’s best-run and most profitable airlines will take to ensure the airline gets through the CoronaVirus situation. The airline also made an SEC filing, so these are measures which are now in the public domain. This includes a Delta CEO salary moratorium for at least the next six months.
Demand is declining massively
Ed Bastian says that due to the cancellation of large public events, businesses suspending travel and heightened government travel restrictions, demand for travel is declining at an accelerated pace daily. Net bookings are negative for the next four weeks, which means more cancellations than new bookings over the next month.
Delta’s CEO says, “The speed of the demand fall-off is unlike anything we’ve seen, and we’ve seen a lot in our business. We are moving quickly to preserve cash and protect our company. And with revenues dropping, we must be focused on taking costs out of our business. ”
Delta is reducing 40% of its capacity for the next months & deferring aircraft deliveries
Delta is initiating an overall capacity reduction in the next few months of 40 per cent, the most significant capacity reduction in Delta’s history, including 2001. This would include Delta eliminating flights to continental Europe for the next 30 days, given the new travel measures in place for Europe/USA travel. Delta will, however, maintain service to London.
As a consequence, Delta will also park up to 300 aircraft for the coming days. To give context, that would mean grounding a whole Air Canada. Delta would also defer new aircraft deliveries. It is hard to figure out what orders will Delta pushback, but they have about 191 narrowbodies including A220s and A321s on order and 48 widebodies on order at the moment. Delta will also delay aircraft modifications, IT initiatives and other opportunities to preserve cash.
The HR impact is, of course, worse. Delta is offering voluntary short term, unpaid leaves.
Delta will ask for Government aid as well. Ed’s memo states,
We are in discussions with the White House and Congress regarding the support they can provide to help us through this period. I’m optimistic we will receive their support. That said, the form and value is unpredictable, and we can’t put our company’s future at risk waiting on aid from our government.
Delta cuts Europe flying & Mumbai flight
Delta will significantly reduce its US to Europe flying beginning Monday, March 16, 2020, following the US government directive restricting travel between the US and Europe.
The airline will continue to operate a nearly full schedule of flights from continental Europe to multiple US gateways through Monday, March 16, 2020, to ensure eligible customers can return to the US.
Starting Monday, Delta will operate one daily flight between the following cities:
- Atlanta to Amsterdam
- Atlanta to London-Heathrow
- Atlanta to Paris-Charles De Gaulle
- Detroit to Amsterdam
- Detroit to London-Heathrow
- New York-JFK to London-Heathrow
- New York-JFK to Dublin
This schedule will continue to provide customers access to multiple destinations throughout Europe through Delta’s expanded joint venture partnership with Air France, KLM and Virgin Atlantic. Air France and KLM plan to continue their operations to CDC-designated U.S. airports and are closely coordinating with Delta and Virgin Atlantic as adjustments are made.
Delta will also temporarily suspend service between New York-JFK and Mumbai starting Tuesday, March 17. The last flight from New York-JFK to Mumbai will operate on March 14, 2020. The last flight, for the time being, from Mumbai to New York-JFK, will operate Monday, March 16, 2020. Delta had earlier announced a cut from 5 weekly flights to 4 weekly flights on the BOM-JFK operation.
This announcement is a massive capacity cut from one of the biggest airlines across the globe and indicates the scale of the problem we are staring at, at the moment. Other carriers around the world will echo Delta’s moves, I believe.
What do you make out of the Delta CEO Salary moratorium and other steps being taken by Delta to conserve cash?
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