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After an earthquake temporarily closed Salt Lake City International Airport on Wednesday, Delta Air Lines — which provides 73% of the flights from there — announced that a sort of financial earthquake is hitting it because of the coronavirus.
It is parking half of its fleet and reducing its flights by 70%, Delta CEO Ed Bastian announced in a memo to employees made public by the airline.
“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,” he wrote.
“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 percent of flying reduced over the next two to three months.”
The airline is also deferring all its aircraft deliveries and other capital spending “until we have better clarity on the duration and severity of the situation,” he said.
He explained other steps the airline is taking to try to find $4 billion in cash savings during the upcoming quarter. That includes parking many of its aircraft.
"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,” Bastian said.
He added it will reduce any maintenance that is not needed for safety. It is also is closing the majority of its Sky Clubs “until demand recovers.”
Bastian is going without salary for the next six months and said Delta officers will take a 50% pay cut through June 30, with directors and managing directors taking a 25% cut.
Bastian also encouraged workers to consider taking voluntary leaves.
“Voluntary leaves are one of the best and most immediate ways you can help as we strive to protect jobs and pay,” he said. “I want to thank each of the roughly 10,000 Delta people who have already volunteered and I urge everyone, especially our merit employees, to seriously consider whether a temporary leave makes sense for you and your family right now. Please remember that you will continue to have access to your health and flight benefits while on leave.”
Despite the severe steps, he predicted that Delta will survive.
“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,” he said.
He said the actions occurring now will help Delta once the coronavirus threat ends.
“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, he said. “All of our work over the past decade to fortify our company and transform our business model will serve us well in the weeks and months ahead, as we endure and, eventually, recover.”