Delta makes deepest-ever cutback: flights to fall 40%, Europe dropped

By Kristen Leigh Painter

Star Tribune (Minneapolis)

Delta Air Lines will cut its flying by 40% and suspend all flights to Europe except London for at least 30 days, the deepest capacity cut in company history and far more than it planned just a few days ago.

The airline is asking many workers to voluntarily take unpaid time off. It will also park 300 of its approximately 900 airplanes as global demand for travel deteriorates at an alarming rate because of fear about the spreading coronavirus.

“The speed of the demand falloff is unlike anything we’ve seen,” Delta chief executive Ed Bastian wrote in a memo to employees Friday. “We are moving quickly to preserve cash and protect our company.”

The decision came just three days after Delta announced a 15% capacity cut and other cost savings across the company, highlighting the downward economic impact the pandemic is having on businesses, particularly airlines and those in other travel-related industries.

Since Tuesday, the number of Americans who have contracted the virus has risen sharply, numerous public events have been canceled and President Donald Trump ordered a 30-day ban on air travel from Europe except the United Kingdom.

The broader reduction is even more than Atlanta-based Delta scaled back after the 9/11 in 2001.

“Demand for travel is declining at an accelerated pace daily, driving an unprecedented revenue impact. Cancellations are rising dramatically with net bookings now negative for travel over the next four weeks,” Bastian wrote. “To put that in perspective, we’re currently seeing more cancellations than new bookings over the next month.”

It’s a stunning turn for Delta, which has been the world’s most profitable airline and one month ago doled out a record $1.6 billion in profit-sharing to its 90,000 employees.

Additional steps Delta is taking to slash spending include deferring new aircraft deliveries and reducing capital expenditures by at least $2 billion for the year, including delaying aircraft modernization and IT initiatives. Delta spent about $5 billion on capital projects last year.

The airline will also substantially reducing the use of consultants and contractors and Bastian said he will forfeit his salary for the next six months.

“We’ll be making more critical decisions on our response in days to come. The situation is fluid and likely to be getting worse,” he wrote.

But he added Delta is in a stronger financial position than at any point prior in its 95-year history. “We’ve spent a decade building a strong, resilient airline,” he said.

Even so, Bastian said Delta will ask the federal government for financial relief.

“I’m optimistic we will receive their support,” Bastian said, but added, “the form and value is unpredictable, and we can’t put our company’s future at risk waiting on aid from our government.”