Airlines took $54 billion in direct taxpayer cash during the pandemic. They also received $25 billion in subsidized government loans, tax relief, and subsidies for their partners like airports and contractors. This was all needed, they said, so that ‘airlines were ready to fly when travelers returned.’
The main requirement was that airlines had to keep everyone on payroll, so they’d remain connected to the airline. However airlines acted in bad faith.
- They used the cash to pay employees to retire early
- They pushed more employees out the door
- And they paid employees to stay home (meeting their legal requirement) instead of staying trained, certified, and ready to fly.
Delta even declared it wouldn’t have to fire anybody before the second bailout, but took the second and third payroll support payments anyway and they still didn’t honor the pledge. They shed over 30% of their workforce (‘voluntarily’).
The airline declared they effectively did not need a bailout, since they didn’t need furloughs or layoffs, in order to survive – and even in order to avoid reorganization in which shareholders and creditors might have taken a haircut. Yet they took an addiitonal $4 billion in taxpayer money anyway – and didn’t keep their end of the bargain, even though they acted legally. If they had, they would have enough staff now to operate more flights and make more money, meeting customer demand.
Now Delta CEO Ed Bastian is making excuses for his airline’s poor operational performance that results from lack of staff, and loss of experience among middle management that runs the airline. His explanation? Delta tried too hard to deliver for customers.
Delta CEO Ed Bastian said Wednesday that the company’s recent mixed earnings report came about because the airline industry “stretched itself” to capture as much demand as possible coming out of the pandemic, creating a “fair bit of operational stress.”
“We pushed too hard,” the head of Delta Air Lines (NYSE:DAL) told CNBC.
With travel overall still below 2019 levels, if they’d honored their commitments to keep everyone attached to the airline they probably wouldn’t have had nearly the same challenges. Some small percentage of delays and cancellations are attributable to air traffic control staffing, and getting through the airport is a challenge because of the combination of reduced airline airport staffing and reduced TSA staffing (plus airport concessions may not be fully staffed, either).
But the biggest reason for challenges? Delta just cares about its customers so darned much and wanted to fly them when they were interested in travel again so the airline ‘stretched’ and pushed themselves too darned hard. Now they need to give themselves a break, not hold themselves to the same standard of flying so many trips, in order to sort things out.
Bastian is just like the job candidate who answers the question, “what’s your greatest weakness?” with “I work too hard, and don’t focus enough on outside interests.”
In truth Delta has tarnished its reputation for being better than competitors, on which its revenue premium relied, and its brand that drove credit card revenue despite a less lucrative loyalty program than competitor products.
Sure Jan
Another load of crap from Delta.
It has not ruined its revenue premium, as said premium was based on relative product advantage and relative operations advantage.
The product is still better than AA, and most of UA. The operations are still better than UA/AA. (DL in 2022: 85% on time rate vs 78% AA vs 78% UA).
I think it’s more surprising to see lesser performance from DL, and Bastian’s excuse falls flat, but they’re still a step above the (pitiful) competition.
Paging Tim Dunn, Paging Tim Dunn…
And they fired too many who chose not to get the failed injections…..
@James – You’ve got your facts wrong, and not just on vaccines. Delta didn’t fire unvaccinated employees.
@ Gary — This guy is full of crap. But don’t worry, Delta will make up for its poor performance by screwing its elite customers. That is their go-to play.
@James…Where did you attend medical school?
Congress is the one who shoveled cash at their union friends without asking for accountability. Don’t blame Delta for taking free cash with no strings attached.
BTW – Congress (both parties) hates the American people. $50 billion for airlines $60 billion for Ukraine , a trillion here, a trillion there but we let criminals rule the cities and just watch while our Southern border is overrun. Inflation printed 9.1% (41 year high), equities down 20%+, bonds down 20%+. Congress? Blame Putin, spend trillions more.
I think you know how this ends….
Here comes a complete SOB story from Tim Dunn in 3.2.1….
RBJ – it ends when Americans vote the socialist DemocRat bastards out of office, starting this November and ending with the Republican Presidential landslide in November 2024 – that is, if there is an America left in 2024.
Marriott says us too
Your daily Delta snark is tiresome. I expect more from a “thought leader”
I flew to BOS last weekend from Orlando. Late arriving bags outbound and return. Was quickly awarded Sky Miles for the delays. 4 hours before my return yesterday I got a text from the mother ship informing me that my itinerary had been cancelled and I had a new one. I wasn’t happy with it. After choosing one of my own, I called the Diamond desk. I gave the agent the flight number, nonstop itinerary, departure time, and arrival time. Never having received an email confirmation, I checked my account. The agent had booked me on the wrong itinerary. Fortunately I was able to call the Diamond desk again and correct the mistake.
If you’re flying this summer expect the unexpected. Have a backup plan. And a backup plan for the backup plan. Keep a smile on your face and keep your fingers crossed
I knew Bastian was a huge piece of – umm – work but somehow he continues to impress by reaching new lows. This is also the same guy who gave the green light to multiple Skymiles devaluation in a single year in the middle of a global pandemic amongst his plethora of other fiascos.
Hey Jim,
In what way is the Delta product better than AA?
Business Class All aisle access on widebodies: AA, not Delta with no plan to change that
High speed internet across the fleet: AA, not delta though they’re trying to catch up to AA
Minimum 30″ pitch in Economy: Delta & AA despite Delta’s comments about changing that (they have not nor do they have any plans to do it)
First class pitch: Delta goes as low as 35″, AA doesn’t go below 37″
Premium Economy on all widebodes: AA, not Delta
Personal TVs at each seat on narrowbodies: not aa, Delta certainly has that but not even across the fleet with no plans for consistency (Hello 717), to say nothing of their regional fleet where they don’t seem to care about consistent experience there.
Device based entertainment: AA & DL
First class lounges above AC or Sky Club: AA, not Delta
Ability for their own club members to access a Club they pay for when they want: AA yes, Delta no
Value of Mileage program: AA hands-down from value to redemption with other carriers
Network: More domestic destinations than Delta even without counting Alaska in OneWorld
If your entire idea of product is personal TVs, sure. Delta has that on much of their fleet but with no plan to be consistent on that even on the mainline fleet. But aside from that, DL product is deficient in plenty of ways to AA.
It is nice when people even mockingly expect me to respond.
first, Bastian did not say “Delta tried too hard to deliver for customers.”
It is hard to believe that anyone could have actually listened to what they said on their earnings call and come to the conclusion Gary did.
Delta DID say that they returned too much capacity to the market too fast in May and June – and that they are still struggling with too few TRAINED people in the right places.
They also said they have most of the people in place that they need -but not all are up to speed.
It is also false to say that Delta alone allowed high levels of attrition. American and United both bragged endlessly that they fired large numbers of headquarters – non-union – employees because those were not covered by the government rules.
Not a thing about how covid was managed in the US was done right including throwing billions of dollars to airlines.
It is also noteworthy that even in June, American had a higher cancellation rate and all of the big 3 were about the same.
Delta for the month to date is running its operation far better than the rest of the industry.
And JetBlue and Southwest over the past year have been far worse operationally than the big 3 but they cut earlier.
Southwest has made and sustained the biggest improvement
Legacy/multi-fleet airlines had a much slower timeline to ramp back up but they did not do any worse than low cost carriers throughout the pandemic that ran hot on the throttle and aggressively cancelled.
Max,
thanks for actually responding to the article.
You might want to sit tight before you brag on that list – even if it is correct, but it is not – until American reports.
American won’t report a profit anywhere near as much as Delta’s despite flying a whole lot more capacity.
The question is how much passengers are willing to pay to fly any airline – and Delta hands down wins that contest which is why they are and will remain the most profitable airline in the world.
Tim,
Your lame attempts at misdirection are always amusing, but thanks for admitting Delta has an inferior product to AA. That must’ve taken a lot of courage. No one is talking about financial results expect now you, apparently. Margins have a cost & and a revenue side. You don’t seem to understand either.
Ed Bastian is just a Circus Clown.
Even if AA had a superior hard product to DL, which they don’t, this article is not about hard product.
It is about Delta’s operational performance which they admit was pushed beyond the limit.
The reason for Delta’s apology was because Delta knows that they get a revenue premium because of their service.
American has NEVER surpassed Delta in operational reliability and they didn’t in May or June. Go read Cranky Flier where he documentated that American ran a worse operation than everyone else for the first 26 days of June – and the same trend continued for the rest of the month which he did not document.
The world is accustomed to sucky service from American. They aren’t from Delta which is why their comparatively smaller shortfalls have grabbed so much attention.
For today, as of right now United has cancelled 39 flights, American 27, Southwest 18, JetBlue and Delta 4. Yesterday, Delta had no cancellations.
Your made up claims don’t make American a superior product because it isn’t and everyone knows it.
There is a lot more to why people buy airline service than the hard product – and American vastly underperforms on those metrics.
Excuses are tools the incompetent. As is gaslighting…
You must be on Crack if you actually believe Delta or just about any US company actually cares about their customers.
They all say that but the reality is something else.
Such PS.
Ed Bastion is one of the biggest wankers in God’s all creation. Really. Drove me away from his airline as an enthusiastic Diamond by doing exactly what @Gene says: ” by screwing its elite customers.”, or frankly, letting them know they really couldn’t give a flying f*ck about their business. His predecessor, Richard Anderson, got it IMO. Even answered his own mail.
But, in the long game, the market’s reaction to Delta’s results presages not the best for the whole travel/leisure industry.
What nonsense. DL failed its customers, failed its employees, and ran a lousy operation. It got lucky thanks to surging demand that will level off quickly after the summer and the recession arrives. Still the most overrated airline.
Ironic that trolls like David Miller talk about “if there is still an America in 2024”, when he slurps the failed former two-time loser / impeached insurrection-causing POTUS, and refuses to acknowledge the legitimacy of current one (despite, you know, every single Republican SoS certifying & saying it was basically the cleanest election ever). What a mouth-breathing douche.
UA-NYC- Your take on impeachments and insurrection are DemocRat made up scenarios that have been proven false. I believe that you need to take your daily Summers Eve gargle – you are, once again, spewing lies.
@UA-NYC – What, are you expecting a reversion to following reason and facts? Why would trolls do that? They have no arguments that are based in fact, so spewing hatred is all they’ve got. That’s why they go with puerile insults rather than actually engaging.
Don’t usually follow these mud slinging battles, but I assume Tim Dunn ( or whatever his real name is) is either a Delta employee or a paid public relations/social media vendor, right?
This could be a subject for a different article, but you mentioned DL has higher yield due to their superior product. I wonder if that’s correlation and not causality.
Not doubting the higher yield, but I was under the impression it was due to large number of fortress hubs that allows them to charge higher fares vs AA and UA at their hubs with more competition. Also, less competition overall in the southeast, especially to the smaller cities that drive high fares.
I’ve seen CPE figures and the costs at ATL are much lower than the costs at other airline hubs, further helping yield.
Last, they tend to have large gauge aircraft, allowing them to bring in more revenue. This is an issue that Kirby says UA has historically had due to their smaller gauge fleet and large number of 50 seaters. Kirby said their aircraft order and upgauging across the system will be the biggest aid in narrowing the gap with DL.
If product drove yield improvements, AA would not have ended their MRTC experiment 20+ years ago. People like the enhanced product but won’t always pay more, especially on shorter domestic flights.
@MaxPower, the clear deficiencies of AA’s hard and soft products have been well documented both on this site and across the internet: Oasis, worst in class catering, Spirit level service (although that may be offensive to Spirit) etc.
Johhny (is that a correct spelling?)
I use my real name. If Gary and other bloggers are willing to use their real name to post their thoughts, it is respectful for others to do the same.
Those that post with made up names have to be viewed as such – if you (someone) aren’t willing to stand by what you write even with your own real first or last name, then your (anyone’s) thoughts have to be viewed skeptically.
Matt,
good thoughts and I largely agree.
No one knows (probably even Delta) how much any of the factors into Delta’s domestic yield premium contribute to its bottom line but it is certain that no self-respecting traveler or corporate customer is going to keep coming back to the same airline if they alone perform significantly worse than their competition. Part of JBLU’s financial problems and need for a merger are because they can’t operationally compete in the same major markets as other carriers do.
American has a lot of hubs where it has the majority of caacity – CLT, DFW, PHL, MIA – so it isn’t just Delta that has high local market share. Of course, many Southwest “hubs” such as DAL, HOU and MDW have far higher share for WN than any other airline has.
Yes, as a whole, Delta’s hubs have the lowest CPEs of the big 3 but that is also true of many of Southwest’s hubs. Having a consistent network strategy and working well with your airports helps to ensure you have the facilities you need in the markets that matter at costs that give you an advantage. Airlines that are building a lot of new capacity now will pay for that as overall costs including construction costs grow compared to 1980 when the passenger complex at ATL opened.
Gauge does matter financially but that isn’t as much about a yield premium – perhaps the opposite is true. United will face enormous financial challenges adding as much capacity as they are during what likely will be a recession and as interest rates rise.
And your final point is right. Hard product alone can’t win when all of the associated parts don’t support it.
The reason why Delta has done well historically is because all of the parts fit together very well. The reason why they have struggled this spring and early summer is because they got the operation out of sync w/ what their people could deliver.
Based on data so far this month, they are in a far better shape of fixing those problems than they have been since they ramped up capacity in the spring.
I decided to get rid of my Delta Skymile platinum card. Might be my last trip on delta.
I guess saying Delta was just trying too hard can be said about all the airlines which have been
Overscheduling while under delivering.
Leave it to Delta, packaging their press release in a way that can make one nauseous.
This is what I don’t understand about the click bait headline.
If you do an actual look at the data (yes it was ~ a month ago but still pretty on point) performance of DL was comparable to (or better than) AA / UA almost everywhere.
https://crankyflier.com/2022/06/02/delta-learns-the-downside-of-running-a-good-operation/
@WC8 Cranky writes “Delta’s performance absolutely has not been good” and he makes the point that I have been making, that Delta’s performance has *fallen drastically from where it once was* to being merely average [and that’s a low bar these days].
I fly Delta, AA and Southwest.
DL has the best service. And the highest costs today. And worst redemption rates.
AA has the best Caribbean routes. And best redemption rates.
SW has great US routes and improving Caribbean and Central America destinations. Not cheap but dependable. Good service. I hate lining up for the best seat. I typically plan my travel way in advance and this is a big negative for me.
So here’s to people travelling again. Making it more expensive. And the damn fuel cost too. Thanks Joe.
Maybe it is time to get another AA credit card bonus.
GD
Gary, you are extrapolating a conclusion that any one can see isn’t what Bastian stated. All the airlines over cut staff and took government money. Delta is far from the only one to do that. The loss of talented people happened at many American companies. That has more to do with worshipping profits than offering products and services. All companies do this not just Delta or any other airline.