Delta’s CEO, Ed Bastian sent a letter to employees outlining some of the measures the company will be taking in the weeks ahead.
DROP IN DEMAND IS UNREAL
The company says that they’ve seen demand for travel declining at an accelerated pace, driving an unprecedented revenue impact. The airline is experiencing negative net bookings for the next four weeks (in other words, they’re seeing more cancelations than new bookings).
Just to give you a sense of how dire they’re making the situation sound, here’s part of the note:
“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 has outlined the extreme action they’ll be taking to respond:
- Delta is reducing their overall capacity by 40% over the next few months (the largest capacity cut in the company’s history, including 2001)
- Delta is eliminating flying to continental Europe for the next 30 days, which could be extended
- Delta is parking up to 300 aircraft
- Delta is deferring new aircraft deliveries to preserve cash
- Delta is offering voluntary short-term, unpaid leave
- Delta is implementing immediate hiring freezes
- Delta is substantially reducing use of consultants and contractors
DELTA DEFERRING AIRCRAFT ORDERS?
Although the details about plane deferrals haven’t yet been published, Delta has quite some aircraft on order, including:
- 14 A220-100s
- 50 A220-300s
- 27 A321s
- 100 A321neos
- 32 A330-900neos
- 16 A350-900s
That’s a lot of Airbus planes. What is it Delta always says about protecting American jobs? 😉
Note: Although Airbus does have a manufacturing plant in the US, Airbus is based and made in Europe.
I imagine Delta is still in the early stages of negotiating aircraft deferrals, so I imagine we’ll find out more soon.
DELTA RECEIVING GOVERNMENT SUBSIDIES?
Delta has lead the smear campaign against the Middle Eastern airlines so count this as ironic.
Delta notes that they’re in discussions with the White House and Congress regarding any support they can provide throughout this period, and Bastian is “optimistic” that the company will get support.
He notes that the path is unpredictable, and they can’t put the company’s future at risk of waiting on government aid.
Delta has historically been by far the strongest of the “big three” US carriers, so their reaction should give you a sense of just how bad things are for the airlines. It’s one thing for the airline to ground planes and cancel flights, but they’re even asking for government aid. Very very interesting!