In a letter to employees today, Delta Air Lines CEO Ed Bastian revealed that the carrier is carrying nearly 94% fewer passengers than a year ago and losing $60 million per day. (In contrast United Airlines has publicly estimated they are losing $100 million a day)
In the letter Bastian also reveals:
- April’s Delta schedule has been reduced by 80%.
- They’ve cancelled 115,000 flights for April.
- They expect second quarter revenue to be down 90%.
- They’ve submitted their application for a government bailout.
- 30,000 employees (about a third of their workforce) has taken unpaid leaves.
- Those “merit and hourly ground-based employees” still working are taking a 25% reduction in hours.
- Net promoter score for reservations agents is up 11 points year-over-year (which I think says that people feel badly cancelling, and feel badly for airline workers)
- 450 of the 600 planes that are being parked have already been sent to storage.
While Bastian doesn’t say so explicitly, the work they’ve done to reduce their payroll means that the payroll grants they receive from the government could be more than they’ll actually spend on wages. The airline commits not to furlough workers through September if they take these grants, and not to furlough more than 10% of workers if they take government loans.
It is losing $60 million day net profit or not getting revenue of $60 million/day, very different…
So far no airline has taken the government loans. Their will be huge cuts come September. I wonder how the union heavy airlines will do verse DL? Will the unions now get a foothold in DL? Once the new air normal comes to play in late summer, the landscape will change significantly.
So will their 500,000 mile one way redemption’s to Australia be discounted to 299K as a fire sale?
Hit em while their down 😉
Whoever at Delta thought it was a good idea to spend cash in buying minority interests in other airlines should put alongside Doug Parker on the airline wall of shame.
Sky Pesos!
Good to know that Delta Airlines has committed to not furloughing workers through September if they take government grants and not to furlough more than 10% of workers if they take government loans. I believe Delta Airlines will need its full workforce to process refunds for thousands of customers who received restricted vouchers instead of a cash refund for their previously canceled or delayed flights.
This is what the first stages of a depression looks like. Wait until the banks fail because of a flu virus panic.
DL’s strategy of investing in other airlines is about to become a very costly lesson. I suspect their holdings will be seriously diluted / wiped out by the time this is done. Ironic, since DL itself is well run and would probably emerge strongest only for these investments
@DaninMCI — Banks can fail for various reasons, but panic runs on deposits will be backstopped by the Federal Reserve, simple as that. If the Fed can pump tens of billions into the Treasuries market to keep the stock market going, and if Congress can conjure up a trillion+ dollars in less than two weeks to keep the economy afloat during this pandemic, supplying a few billion dollars of printed cash to banks won’t be a problem either. But if anyone thinks they’re better off holding onto tens of thousand of dollars in cash, think about asset forfeiture.
Delta has a duty to shareholders to lay off all staff right now. There is no point in continuing operations which lose money. They can park their aircraft, pay their loans and leases (and try to get deferments from lenders) and pay only for the storage and maintenance of their aircraft. They don’t need any flight attendants or pilots earning 1 penny nor do they need market staff or 90% of office staff. Once this is over they start only routes which are projected to be profitable and hire back staff at fair market wages which will be less than before because there will be hundreds of thousands of flight attendants and many pilots looking for jobs. Shareholders lost big and employees need to as well in the form of lower pay to reflect this market environment. If only half of the routes they used to run we’re profitable then only run half the routes.
@Jackson. Did you not read the terms of the stimulus grants the airlines are receiving?
“Not paying a third of Employees” is click bait. A third took voluntary leave with Delta still paying their medical insurance. You continue the disappointing plunge into the mass of other bloggers.
@DR. C- it’s voluntary but the point is they’re not paying even as they apply for a grant from the government that is ostensibly meant for payroll
@Gary: You continue above “… they are not paying..” as if they have staff who are owed money for work performed but are not getting paid for that work. That is what you seem to want the internet mob to think from your title. The fact that they have asked staff to volunteer to take time off (after receiving a bonus of 2 months pay) is quite different from “not paying”.
I get you are outraged at Delta (and maybe even homeboy AA) asking for government support, but you can make your case without deceiving article titles.
@Dr C – Your 100% off base as far as what I was implying, not paying employees = not having payroll cost while seeking the bailout for that payroll cost.
@Luke vader: A few billion?
In the 1980’s after Henry Gonzales made a stupid comment that started a run on a Texas Savings & Loan, the fed was so worried it flew $1 billion in currency to DFW in case it needed to stop the run on that institution