Delta Air Lines’ CEO has said, in a recent web conference, that he believes the airline crisis has reached its bottom level and that it will return to normal from here. The airline is currently struggling with reduced load factors and trying to stay solvent during this tough time.
What are the details?
As reported by The Points Guy, Delta Air Lines’ CEO Ed Bastian believes that the current aviation crisis has reached the point where it cannot get any worse.
“I think we’re pretty close to the bottom, You can’t get much lower than where it’s at today.”
Last month, the CEO of Delta took extra steps to shore up the company’s position and reassure employees (and fans of the airline) that it was doing everything it could to weather the crisis
“The coronavirus is a challenge that is the biggest challenge this company has ever faced in our history,” he said on the web conference. “It feels like a war that is at hand.”
Below is the amount of passengers passing through the TSA per day, with Delta estimating that its flights are operating with a 25% load capacity.
|Date||Total Traveler Throughput||Total Traveler Throughput
(1 Year Ago – Same Weekday)
What steps has Delta taken?
Delta is currently earning less than 10% of its revenue and has taken radical action such as:
- Parking a significant chunk of its fleet on Hartsfield–Jackson Atlanta International Airport, closing the south runway.
- Delta has also closed terminals around the United States, such as LAX terminal 3 and JFK terminal 2.
- Team members have been asked to cut their workweeks to only three days to reduce the wage spend by around a quarter.
“[The actions are] a meaningful contribution to the crisis at hand, and I thank you for making these sacrifices to protect Delta.” the CEO said when he outlined the plan.
Dozens of commercial airplanes are parked along a runway at @ATLairport, as @Delta cuts flights 80% and grounds more than 600 planes due to the coronavirus pandemic: https://t.co/cn3X0eTAGv pic.twitter.com/WdNUQJ0cSx
— AJC (@ajc) March 22, 2020
Will these actions be enough to save the airline?
It is hard to say if the actions that the CEO is taking will be enough to survive the storm, as it assumes one thing – that he is right.
As the CEO mentioned in his address, with demand for air travel below 5% (in some places of the world it is almost 0%) it can’t get any worse for airlines. Unless, of course, the crisis goes on for longer than anticipated.
With the peak of the crisis expected to pass (fingers crossed) over the next few weeks, airlines and other businesses in the industry are hoping that service can slowly return to normal. Optimistically, this could be as soon as the end of the summer period.
Additionally, we can’t forget about the potential USD 50 billion lifeline in loans that have been outlined by the US government. This money will be divided up equally and made available to the airlines to ensure that they remain operational (especially where they run essential regional services) as well keep as many team members employed.
On the aid to airlines…
The package includes $25bn in direct relief to "preserve aviation jobs and compensate [workers]… exclusively be used for the continuation of payment of employee wages, salaries, and benefits." pic.twitter.com/kAZVIONZo9
— Edward Russell (@e_russell) March 25, 2020
What do you think of this plan? Will it get any worse? Let us know in the comments.