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Delta to Ground Half Its Fleet as Coronavirus Slump Worsens

By Lou Whiteman - Mar 18, 2020 at 1:01PM

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Revenue is down $2 billion year over year in March, and the airline expects April figures to be worse.

Delta Air Lines (DAL 1.02%) said Wednesday it would ground at least half its fleet -- more than 600 aircraft -- as part of a plan to secure more than $4 billion in cash savings in the June quarter.

Airlines including Delta have been hit by a dramatic decline in travel volume due to the COVID-19 coronavirus pandemic, and with the global industry expected to take a revenue hit of more than $100 billion for the year the individual companies are trimming schedules, freezing hiring, and looking or other ways to cut costs.

In a memo to employees Wednesday, CEO Ed Bastian said the company will park at least half of its aircraft and accelerate the retirement of some older planes, while reducing contractor spending and consolidating airport facilities at its large hub airports. Bastian has already cut his base salary to zero for at least the next six months but said the board will also forgo compensation and all Delta officers will take a 50% pay cut through June 30.

A Delta A321 in flight.

Image source: Delta Air Lines.

"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," Bastian wrote. "Make no mistake -- we will get through this. This is a temporary health crisis and an end will, hopefully soon, be in sight. Never underestimate the power of travel as an essential service to our world."

Delta said that revenue for March is expected to decline by almost $2 billion year over year, with April expected to fall by more. The company is cutting about 70% of systemwide capacity until demand starts to recover, including cutting 80% of international flying.

Bastian said that layoffs haven't been decided upon yet, but "in this unpredictable environment we can't take any options off the table."

The airline industry is lobbying for a $50 billion support package from the government that it says will help preserve jobs, although some union leaders have argued that direct assistance to employees would be a better option.

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