In an April 3rd memo to employees, Delta CEO Ed Bastian revealed that the airline is losing over $60 million each day. With an 80% reduction in flight schedules, Delta is further anticipating revenue for the second quarter to be down a whopping 90%.
Losing $60 million each day
Delta CEO Ed Bastian’s publicly available letter reveals the unfortunate circumstances that the airline is currently in. The pandemic continues to take its toll on tourism and air travel globally. However, Mr. Bastian was upbeat saying that Delta will “get through it by sticking to our shared values of honesty, perseverance and service to each other, our customers, and our communities.”
However, alongside this optimism, Mr. Bastian laid out, quite starkly, the state of affairs at the airline. Currently, Delta is burning through more than $60 million in cash every day.
However, the airline is taking steps to reduce its cash burn. This includes an 80% reduction in flight schedules– or a total of 115,000 cancelled flights. Alongside this, 30,000 Delta employees volunteered to take unpaid leaves of absence. Unfortunately, this is not enough. Thus, the airline is now offering additional leave opportunities lasting for up to one year.
In addition, for merit and hourly ground-based employees, Delta has reduced working hours by a total of 25% in the short-term. This makes sense given the scheduling cuts. Delta is also pausing capital projects, consolidating airport facilities, and delaying non-essential maintenance among other actions in a quest to save billions of dollars and survive this crisis.
What does the future hold for Delta?
The airline was one of the first in the United States to sound the alarm and leave open the possibility for government assistance. Now, with the passage of the CARES (Coronavirus Aid, Relief, and Economic Security) Act, Delta has applied to receive a worker-protection grant. Previously, Mr. Bastian committed with other airlines to delay layoffs if the airline receives government funding.
Unfortunately, the industry is in a wait-and-see position at the moment. Other airlines, such as American Airlines, have some hopes of a restoration of demand by this summer and, eventually, a decent rebound in the fall.
Most likely, Delta will take a more conservative approach. In recent years, airline has lagged behind competitors when it comes to launching new long-haul and ultra-long-haul routes. In addition, the situation with some of the airline’s partners is unstable. And, it is anyone’s guess what the market will look like this fall.
What do you think about Delta losing $60 million in revenue per day? Let us know in the comments!
Simple Flying reached out to Delta, however a spokesperson declined to offer additional information.