MIAMI – Delta Air Lines (DL) CEO Ed Bastian announced a 40% reduction in overall capacity for the foreseeable future, the airline’s largest since the 9/11 attacks, in order to minimize costs for the carrier.
In response to the now-pandemic COVID-19 (Coronavirus), Bastian sent out a company-wide memo outlining the steps the carrier is taking to cut costs.
In his internal memorandum, Bastian assured his employees that DL is taking steps “to protect our people, our customers and our business amid the COVID-19 (coronavirus) outbreak.”
With most large events being cancelled and a 30-day travel ban imposed by the United States Government regarding travel to and from Europe, DL is experiencing a travel reduction never before experienced.
“We’re currently seeing more cancellations than new bookings over the next month,” the chief executive emphasized, putting the business’ struggles into perspective.
While DL complies with the recent regulation barring travel between the United States and Europe, the carrier will continue to operate to and from London Heathrow (LHR) and Gatwick Airport (LGW).
Delta to park 300 aircraft
Less routes operated will necessitate a smaller fleet, forcing the airline to park up to 300 aircraft while the reduced capacity remains in effect, which is likely to be for several months. DL will also delay new aircraft deliveries, likely to hurt airline personnel, manufacturers and their employees.
Earlier in the week, the carrier also expressed that it would consider retiring its fleet of outdated MD-88s and MD-90s earlier than expected. Some Boeing 757s and 767s may also face early retirement as cancellations continue to mount.
Delta currently operates a fleet of 47 MD-88s, which it was expecting to retire by the end of this year. The airline’s 30 MD-90s were not expected to be grounded until 2022, and their retirement would surely signal further trouble within the company’s coffers.
How to eliminate non-critical expenditures
Altogether, DL looks to eliminate over $2 billion in capital expenditures for 2020, involving delayed aircraft modifications and IT initiatives, a large blow to a company that prides itself on offering cutting edge technology with its services.
In addition, the airline will offer voluntary short-term leave for employees during the global outbreak, although employees will not be eligible for pay during this time.
While the airline is looking to preserve cash through a number of avenues, Bastian remains confident that DL is well positioned to withstand the circumstances compared to competitors.
“We will get through this, and taking strong, decisive action now will ensure that we are properly positioned to recover our business when customers start to travel again,” the company’s leader reinforced. Nevertheless, Delta expects to make further adjustments to its business in the weeks to come.