As the coronavirus pandemic continues to pummel the flight industry among widespread event cancellations and calls for decreased travel for those particularly at risk, Delta Air Lines is now experiencing a crippling demand fall-off that its CEO described as “unlike anything we’ve seen” in an email to Delta’s global workforce.
The message from Delta CEO Ed Bastian cited a number of unfortunate circumstances that have converged to create a perfect storm of demand fall-off, including the conference and event cancellations as well as restrictions on travel imposed by businesses and some governments, as with President Donald Trump’s spectacularly messy announcement of a ban on travel from Europe earlier this week. These factors, Bastian said, have resulted in travel “declining at an accelerated pace daily, driving an unprecedented revenue impact.” The situation has become so dire that the CEO said he’s taking a pay cut of “100 percent of my salary, effective immediately, for the next six months.”
“We’re currently seeing more cancellations than new bookings over the next month,” Bastian said. “The speed of the demand fall-off is unlike anything we’ve seen—and we’ve seen a lot in our business. We are moving quickly to preserve cash and protect our company. And with revenues dropping, we must be focused on taking costs out of our business.”
The company appears to be entering high-gear survival mode. Bastian said Delta is taking cost-cutting and cash-preserving measures “to protect the financial position of the company,” including reducing contractors and consultants, cutting capital expenditures by $2 billion at minimum for 2020, deferring new aircraft deliveries, parking up to 300 of the aircraft in its fleet, and executing what he said was the “largest capacity reduction in Delta’s history,” including following 9/11. A spokesperson told Gizmodo this means less capacity of total seats.
In addition to reducing contract roles, Bastian said Delta is “offering voluntary short-term, unpaid leaves as well as an immediate hiring freeze.” It’s not clear whether this means the company is hoping staff will simply step away from their roles and not be paid for an unspecified period of time as the company weathers this financial storm, or if it’s related to providing time off for those who’ve been exposed to covid-19. The company did not immediately return a request for comment for further information.
Bastian said the company is currently in “discussions with the White House and Congress regarding the support they can provide to help us through this period,” adding that he’s “optimistic we will receive their support.”
The global coronavirus outbreak has wreaked havoc on the U.S. airline industry at large as covid-19 continues to spread. According to an estimate from the International Air Transport Association, the global airline industry could lose $113 billion in revenue in 2020 as a result of the outbreak. In his email, Bastian implored the company’s global workforce “to see what you can do to help us save cash,” which is not a great indication about what’s to come as the outbreak worsens.
Added additional comment from Delta.