MIAMI – Delta Air Lines (DL) has made the decision to permanently retire by the end of 2020 its Boeing 777 fleet, comprised of 18 aircraft, due to the unprecedented drop in travel demand amid the COVID-19 pandemic and global economic shutdown.
Delta’s CEO Ed Bastian states today in an internal memo that the airline continues to take action to protect Delta’s cash, jobs, and future, mentioning that the carrier’s principal financial goal was to reduce its cash burn to zero by the end of the year.
According to Bastian, reducing DL’s cash bleeding means that for the next two to three years, the airline will have a smaller network, fleet and operation in response to the substantially reduced customer demand.
The CEO said, “An important tool to help us achieve these goals is retiring older aircraft and modernizing our fleet as we plan for the future. We’ve already accelerated the retirement plan for the MD-88 and MD-90 and parked more than 650 jet total.”
Earlier than it had been planned in its retirement schedule, DL announced on April 30 that it would withdraw MD-88 and MD-90 from its fleet in an effort to reduce its capacity systemwide.
What does the Boeing 777 retirement mean for Delta?
Prior to the withdrawal of the MD and current Boeing 777 types, the airline had already reduced about half of its active aircraft due to the COVID-19 crisis. As a result, around 600 mainline and regional aircraft were parked.
Regarding today’s move, Bastian said that with international travel expected to return slowly, the decision was difficult “to permanently retire DL’s Boeing 777 fleet.
For DL, retiring a fleet “as iconic” as the 777 was not an easy decision, as Bastian noted in the memo that he understood that the move had a direct impact on many DL staff who fly, crew and service the type.
The CEO wrote, “The 777 played an important role with Delta since 1999, allowing us to open new long-haul markets and grow our international network as we transformed into a global airline. I’ve flown on that plane often and I love the customer experience it has delivered over the years.”
How to put out a US$50m daily fire
According to the memo, parking the Boeing 777 fleet will provide significant cost savings over the next several years, in addition to closing the tap on DL’s cash hemorrhage.
Delta is currently burning about US$50m every day, which makes the Boeing 777 retirement understandable, as it will help the airline “stem the bleeding, in its effort to safeguard Delta jobs and our future,” says the CEO.
Bastian went on to say that Delta came into this crisis in a position of strength and that retiring the 777 is an important step to ensure the carrier remains in a relatively strong industry position as demand recovers.
Almost two years ago, DL unveiled how its Boeing 777-200(ER/LR) fleet would look like with the new DeltaOne Suites that the Airbus A350-900 inaugurated the year.
Since then, all of the 18 Boeing 777-200 in DL’s fleet have been enhanced and fitted with the Suites as well as the new Delta Premium Select cabin.
A major network agreement regardless of fleet retirements and capacity reductions
On March 13, Bastian announced a 40% reduction in overall capacity for the foreseeable future, the airline’s largest at the time since the 9/11 attacks, in order to minimize costs for the carrier.
Yet, on a more recent and hopeful note for the company, just last week, DL and the LATAM Airlines Group and its affiliates signed a trans-American Joint Venture Agreement that will marry the airlines’ complementary route networks throughout the Americas.
The agreement, pending regulatory approval, will offer a seamless travel experience and extensive connectivity throughout the region.
Delta CEO Ed Bastian stated that as of late last year, Delta had set out to build the leading strategic alliance in Latin America together with LATAM, adding that “while the industry landscape has changed, our commitment to this joint venture is as strong as ever.”
As many in the industry are grappling with the impact of COVID-19, Bastian assured that the company, while protecting the safety of its customers and employees, is also “building the airline alliance we know they’ll want to fly in the future.”
It is therefore understood from today’s memo that once international demand returns, taking over DL’s Boeing 777-200’s long-haul operation, including that from the new trans-American network agreement, are the carrier’s more fuel-efficient and cost-effective Airbus A330 and A330-900.