Delta hits the ‘pause button’

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In a memo to all Delta employees on Wednesday, March 18 CEO Ed Bastian outlined additional steps the company is taking to endure the COVID-19 crisis.

He wrote: “First and foremost, I want to remind everyone of the importance of your health and safety. Following the national emergency that was declared by the US president, demand for travel has dropped significantly. Revenue for the month of March is now expected to decline by almost $2 billion over last year, with our projection for April falling even more. Therefore, we will continue to make significant capacity reductions with a 70% systemwide pullback planned until demand starts to recover. Our international operation will take the largest reduction, with over 80% of flying reduced over the next two to three months.”

He continued: “We are having constructive discussions with the White House and Congress, and remain optimistic that our industry will receive support to help address this crisis. That said, we have to continue to take all necessary self-help measures. Cash preservation remains our top financial priority right now. Making swift decisions now to reduce the losses and preserve cash will provide us the resources to rebound from the other side of this crisis and protect Delta’s future.”

The airline is deferring nearly all of its capital spending, including all new aircraft deliveries, he continued, until there is better clarity on the duration and severity of the situation.

“In addition, we are looking to secure more than $4 billion in cash savings in the June quarter alone. This will include capacity-related savings as we suspend flying.

“All Delta officers will take a 50% pay cut through June 30, with directors and managing directors taking a 25% cut during that same period,” he wrote

He continued: “I’ve cut my own salary by 100% through the next six months. We are reducing our active fleet size by parking at least half of our fleet – more than 600 aircraft. We also will be accelerating retirements of older aircraft like our MD-88/90s and some of our 767s.

“As we draw down our operation, I know how painful it is to essentially hit the “pause button” on so many things that are core to what we do for our customers and our mission to connect the world. But what will never stop is the spirit of the Delta people, which is shining through brighter than ever even in this dark moment.

“Make no mistake – we will get through this. This is a temporary health crisis and an end will, hopefully soon, be in sight.”