The CEO of Delta Air Lines warned Thursday of a continued “choppy recovery” and big losses even though 20% of its workforce departed voluntarily.
“Continued spread of the [COVID-19] virus causes our outlook to remain cloudy,” Ed Bastian wrote in an email to employees of Delta, which accounts for 70% of the departures at Salt Lake City International Airport.
“There are no clear insights into when demand will return in a meaningful way, and while we remain hopeful, we can’t count on a vaccine being widely available in the near future. With this in mind, we continue to plan for a long and somewhat choppy recovery”
He said the airline’s two major goals for the remainder of the year are to eliminate its “daily cash burn,” and to improve customer satisfaction and sense of safety to attract business when demand returns.
“We’ve already made a lot of progress in lowering our daily cash burn — it was at $100 million in March, and by June had dropped to $27 million each day,” Bastian wrote.
He said much of that savings came from the sacrifice of employees who saw work hours reduced as operations slowed, and tens of thousands who volunteered for unpaid leave.
Also last week, the airline bid farewell to one of every five employees who opted to accept incentives to leave voluntarily or retire early.
“The departure of 20% of our workforce was a difficult but necessary step towards Delta’s transformation into a smaller, more nimble airline that will be better positioned to endure the crisis and recover quickly,” Bastian wrote.
He added that Delta has eliminated more than 50% of its total operating costs since the start of the pandemic as flights and labor were cut.
Bastian said it is important to reduce its cash burn because “we’ve been funding those operating losses since March with borrowed money. The longer it goes on, the less strength we will have coming out of this crisis.”
Meanwhile, Bastian said Delta seeks to improve customer satisfaction, and is continuing enhanced efforts to ensure safety such as limiting capacity on flights to allow social distancing. Some other airlines, such as United and American, are back to trying to run full flights.
Delta has also banned scores of flyers for refusing to wear face coverings on flights.
“We hear from customers every day, telling us that they are switching their loyalty to Delta because of the safety practices we have in place, and the care we take to ensure cleanliness and comfort when they fly,” Bastian said.
His comments come as airlines have been seeking more federal aid as Congress negotiates possible additional pandemic aid. Under terms of previous aid, U.S. airlines were given $25 billion on the condition that they preserve jobs through Sept. 30. Carriers have told more than 70,000 workers that their jobs are at risk after that deadline passes.
United Airlines has warned it could furlough as many as 36,000 employees, and American Airlines has said it could furlough up to 20,000. Delta Air Lines has told nearly 2,600 pilots that they could be furloughed. Air travel nationally is down about 75%.