More than 650 of Delta’s planes are parked, but in another sign that airlines believe their future is going to be smaller than their past – at least for the foreseeable future – the airline has decided to retire its fleet of 18 Boeing 777s.
This is a large plane that carries many passengers, and it’s a small fleet. So taking the opportunity to simplify their business is one way to reduce costs especially when the aircraft aren’t likely to match travel demand for some time.
Delta CEO Ed Bastian sent a memo to the airline’s employees about the decision. In it he not only explained the grounding but also shared that the airline has refunded $1.2 billion in tickets to customers since the start of the pandemic.
That’s something American Airlines has been willing to honor its obligation on when cancelling flights as well, but that United has had to be repeatedly warned over by the Department of Transportation.
Here’s the internal Delta memo that’s been shared with me by a source.
Ed’s Newsfeed: Protecting Our Future
Published Date 5/14/2020 8:30 AM
In my latest memo, I share our company’s plans for the future including the retirement of our MD-88, MD-90 and Boeing 777 fleet.
To: Delta Colleagues Worldwide
From: Ed Bastian, CEO
Subject: Protecting Our Future
With the unprecedented drop in travel demand amid the COVID-19 pandemic and global economic slowdown, we continue to take action to protect Delta’s cash, Delta jobs and Delta’s future. Our principal financial goal for 2020 is to reduce our cash burn to zero by the end of the year, which will mean, for the next two to three years, a smaller network, fleet and operation in response to substantially reduced customer demand.
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-88s and MD-90s, and parked more than 650 jets total. With international travel expected to return slowly, we’ve also made the difficult decision to permanently retire our Boeing 777 fleet – 18 aircraft – by the end of the year. Our A330s and A350-900s, which are more fuel-efficient and cost-effective, will perform long-haul flying as international demand returns.
Retiring a fleet as iconic as the 777 is not an easy decision – I know it has a direct impact on many of you who fly, crew and service these jets. The 777 has 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.
However, parking this fleet will provide significant cost savings over the next several years. Delta is currently burning about $50 million every day, and steps like this help us stem the bleeding, in an effort to safeguard Delta jobs and our future. Delta went into this crisis in a position of strength, and this will be an important step to ensure we remain in a relatively strong industry position as demand recovers.
We continue to hear from our customers about the great work you are doing every day. I’ve received many emails and messages in recent weeks thanking us for the amazing work of our Reservations and Customer Care professionals, particularly as they’ve assisted with processing refunds.
Delta has refunded more than $1.2 billion to our customers since the pandemic began, including $160 million so far this month. It reflects an enormous volume of cash refunds that our people have handled with their renowned professionalism and empathy.
As one customer put it in a survey response, “I was anticipating a hassle from previous customer support experiences with other companies, but my concern was addressed in a way that felt very good as a consumer. This was my best support experience ever.”
Thanks to the Reservations and Care team – you are the best in the business.
In addition to protecting our cash and positioning Delta for the future, our other top priority – and the most important one – is protecting the health and safety of our people and customers. That includes mental as well as physical health. May is Mental Health Awareness Month, and in stressful times like these, we should be particularly mindful of our mental and emotional well-being. Delta has resources available, including our Employee Assistance Program, that can help with almost any mental health issue or concern. There’s information available on Deltanet on how to access these programs, or you can contact the Human Resources department.
I want to thank you all for the hard work and sacrifices you are making to secure the future of our airline. That includes those who have taken voluntary leaves of absence – more than 41,000 so far – as well as our people on the front lines taking care of our customers during this stressful period. You continue to inspire me every day as we work to build Delta’s future together.
Please continue to stay healthy and safe, physically and mentally, at work and in your personal lives. Nothing is more important. I’ll be in touch soon with another update and will continue to answer your questions at our virtual Town Halls on SkyHub.
It’s my honor to serve alongside you.
@Gary–is it my imagination, or didn’t you recently post about Delta placing an order for something like 30 new A350s? I’m betting that this retiring of the 777 and MD aircraft is merely a temporary move (belt tightening) in a down market, and as the market starts to pick up again those A350s should be coming off the assembly line.
DL is finally simplying the fleet and now is a great time to do it. 777’s gone, MD-80/90;s gone and I am sure the very old A320 (DL has newer 737’s) , older than dirt 767-300’s and 757-200’s, the 10 737-700 (never understood that fleet) and the 717 (which is sad, love that little plane) will be gone before too long.
DL will be A220/A319/737-800/ A321ceo/neo and 757-300 for narrow body with some newer 767; A330-200/300/900 and A350 for their wide body fleet. It makes good sense and right now the can write off leases and planes to take advantage of reduced taxes (losses) going forward when they need them. I also see the CRJ-200 finally (FINALLY) going away. DL and AA are following a similar strategy which will make sense long term. I do think AA has an advantage with the A321XLRs since boeing will NEVER make the 797 as everyone predicts or atleast not for another 10 year or so. DL will will likely swap out some A321neo for the XLR but AA will get a better price. Big question will DL add the MAX post COVID-19. . .they really need to share the wealth. Time will tell, but sad to see DL go further away from Boeing.
I wonder if they will get $10 million for each 777 they can sell?
The 787 might be a great replacement for 777s considering its greater fuel efficiency and the lower demand for international travel. Delta should stay away from 737Max for the time being.
Hopefully Mr. Bastian at Delta can keep the lay offs to a minimum. Also hope Delta will bring back any work that is done outside the country that can be done here in the United States we need to keep Americans working
Delta had recently renovated their 777 and kept economy at 3-3-3. I had hoped that would do well for them.
@sunviking DL will retire the 737s before any A320s are taken out of the fleet, and there is zero chance of DL buying any Boeing product moving forward. Ed’s goal is a Boeing free operation. Delta has early position 787 orders from NWA, but they canceled those.
Tyrone- Really? DL has parked all A320’s but few 737’s. I think 777-9’s fit well when they start buying again in 3 years.
Whilst fuel is cheap at the moment, the 777-9 cannot touch the A350 for efficiency
What the comments miss here is the unquestionable superb management style of DL’s CEO that would make Drucker smile.
CEO Bastian clearly understands how to directly and factually communicate with the employees, unlike AA’s and UA’s CEOs who speak with forked tongue. Indeed, what is so important, but seldom done, is to share financial situations, and decisions to address them.
Surely, unlike the EU carriers and UA, DL can take a bow how it has decided to refund customers; not push worthless paper them.
Glad to hear Delta is processing refunds. My 80 year old mother has yet to see a dime of her $1300 once in a lifetime flight to Italy refund. She’s called numerous times and had her credit deadline extended but no refund. Granted, she bought the ticket back in November and did cancel it herself but, then again, what made anybody think she shouldn’t have cancelled given the situation in Italy in March? Guess I’ll be calling delta for her as I have compiled a list of similar “we are refunding” stories and want her to be included.