Delta Air Lines, one of the largest carriers in the United States, announced today that it was taking some extreme measures amid plunging demand due to the coronavirus pandemic. In a memo, CEO Ed Bastian indicates that the airline will park up to 600 aircraft.
Delta will park over 600 aircraft
In a memo, CEO Ed Bastian announced that Delta will be altering its operations and practices amid the global coronavirus (or COVID-19) pandemic. With new travel restrictions and directives across 40 countries, Delta is facing reduced demand and opportunities to fly.
With revenue in March expected to be close to USD$2 billion lower than last year and April’s projections even more, Delta is making a 70% systemwide pullback. International operations will see an 80% reduction in flying over the next couple of months.
Amidst this, Delta is focusing on preserving its cash while it seeks assistance from the US government. One of the ways Delta can do this is by parking about half of its fleet – or more than 600 aircraft. This number likely includes some Delta Connection regional jets. This is double what Delta had planned to ground earlier this month.
As Delta suspends more long-haul international flying, a number of these aircraft will likely be widebodies. Some are already parked. Delta also announced that it will suspend flights between Atlanta and Paris during the travel restriction.
Furthermore, Delta is suspending flights from JFK to Accra on Friday, March 20th. Delta’s longest international route from Atlanta to Johannesburg will suspend on Sunday, March 22nd. Service to Santiago, Chile, will suspend from March 25th through April 1st. Moreover, Delta is also suspending service from Los Angeles to Sydney.
Delta to defer aircraft deliveries
One of the big ways Delta can preserve cash is to defer new aircraft deliveries amongst other capital spendings. This will primarily impact Delta’s A321neos and A220 aircraft slated for delivery this year. However, the airline will still take new aircraft once it has more clarity on the duration and severity of the situation.
Retiring more aircraft and cutting maintenance
Older aircraft, such as MD-88s, MD-90s, and Boeing 767s will see an early retirement.
Any unnecessary maintenance has been cut to reduce spend. Delta has made it clear, however, that this will not impact maintenance that is necessary to support safe operations.
Closing more Sky Clubs
With fewer customers in the air, Delta does not need to operate as many of its airport facilities. As a result, a majority of Sky Clubs will be closed until demand recovers.
Options for employees
CEO Ed Bastian has always had a lot to say about Delta’s employees. And now, amidst this crisis, Delta is offering its employees some additional benefits. Over 10,000 employees have volunteered to take temporary leave while maintaining health and flight benefits. In addition, the airline is encouraging its staff to minimize risk of contracting the virus– including social distancing. More important, however, is the following statement from Delta:
Be aware that if your doctor advises you to stay home because you may have been exposed to COVID-19, you will be paid and won’t have to deduct that time from your PPT bank
This comes as CEO Ed Bastian and the Board of Directors will not take pay for the next six months. In addition, all Delta officers are taking a 50% pay cut through June 30th while directors and managing directors are taking a 25% pay cut through June 30th.
This is a major step on Delta’s part. However, as the crisis continues to take its toll, Delta is amending its operations in order to better match demand and support its customers and crew. Parking over 600 aircraft is no small feat and just represents how much demand has plunged over the pandemic.
What do you think of Delta’s new measures? Let us know in the comments!