Delta Air Lines CEO Ed Bastian says traveling by air in the time of coronavirus can be done safely, but that restrictions that now cover 40 countries during the pandemic are forcing the airline to drastically slash services both domestically and abroad.
International flights will be cut back by 80 percent, part of a 70 percent reduction of systemwide capacity amid flagging demand during the state of national emergency, Mr. Bastian wrote in a memo to employees.
Delta’s revenues for March fell by $2 billion compared to the same month a year ago, with April looking like it could be even worse as Covid-19, the disease caused by the virus, hits most countries around the world, he wrote.
“We are having constructive discussions with the White House and Congress, and remain optimistic that our industry will receive support to help address this crisis,” he wrote, a nod to the $50 billion-plus in relief airlines have petitioned from the Trump administration.
“That said, we have to continue to take all necessary self-help measures. Cash preservation remains our top financial priority right now. Making swift decisions now to reduce the losses and preserve cash will provide us the resources to rebound from the other side of this crisis and protect Delta’s future.”
Mr. Bastian and Delta’s board members are forgoing their salaries for six months, and officers are taking a 50 percent pay cut through June 30, with managing director and directors seeing their salaries reduced by 25 percent during the same period.
“Never underestimate the power of travel as an essential service to our world.”
Delta will park 600 aircraft, about half its fleet, while more speedily retiring older aircraft, consolidating space in airports, closing most Sky Club lounges and reducing spending on maintenance and contractors.
Mr. Bastian called for employees to consider joining the 10,000 already taking voluntary leave of absence, which he said would help the company conserve jobs. Delta has not yet made any “painful’ decisions about layoffs, he said, noting that employees advised to stay home would be paid, without it counting against their leave time.
He expressed empathy with those affected by the illness, particularly those on the Delta team, praising them for their response so far.
As we draw down our operation, I know how painful it is to essentially hit the “pause button” on so many things that are core to what we do for our customers and our mission to connect the world. But what will never stop is the spirit of the Delta people, which is shining through brighter than ever even in this dark moment. I have received hundreds of emails and messages from my Delta colleagues over the past week, and your passion, commitment and confidence in our future is truly inspiring.
Delta is in an altogether different financial situation than during the crisis of 2008, when it had just emerged from bankruptcy. It has posted record profits in the last few years as it has expanded its reach globally, often through acquiring minority stakes in foreign carriers with which it can integrate flights and systems. Delta is the largest private employer in Georgia.
Mr. Bastian has made a point to emphasize Delta’s mission of connecting the world, which carries vulnerabilities in times of global recession. The health crisis is already straining international cooperation in some areas. Oxford Economics has predicted travel industry losses of $450 billion for 2020 and a “protracted recession” based on the downturn in travel alone.
But Mr. Bastian was confident Delta’s future would brighten as the outbreak abates.
“Never underestimate the power of travel as an essential service to our world. All of our work over the past decade to fortify our company and transform our business model will serve us well in the weeks and months ahead, as we endure and, eventually, recover.”