In a letter to employees, Delta Air Lines CEO Ed Bastian today announced that the company is parking at least half of its fleet as demand for flights during the current COVID-19 pandemic has plummeted both in the U.S. and internationally. In total, Delta is cutting 70% of its capacity and 80% of its international operations. It is also closing the majority of its Sky Club airport lounges, making it the first major U.S. airline to take this step.
Bastian notes that he expects revenue for March to decline by $2 billion compared to last year, with the expectation that April's revenue will be even lower.
"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," Bastian writes. "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."
Delta also notes that it will accelerate the retirement of some of its older aircraft, specifically some of its 767s and MD-88s and 90s. In addition, Bastian says that the company is reducing maintenance spend for anything that is not necessary "to support the safety of our operation."
Delta executives are taking pay cuts during this period. About 10,000 employees have already volunteered to take leaves from the company. "I know everyone is concerned about the security of your jobs and pay. Given the uncertainty about the duration of this crisis, we are not yet at a point to make any decisions," says Bastian.
Yesterday, United Airlines also announced drastic schedule reductions for both its domestic and international operations. It's decreasing international flights by 85% and 42% of domestic flights and to Canada will be scrapped.