Delta Airlines made dramatic cuts to its August onward planned schedules following a severe downturn in forward bookings, as COVID-19 spreads like a plague throughout the United States and the Administration continues to show zero leadership. State Governors are being left to decide what to do creating a haphazard approach.
With so many differing rules and regulations passengers are less inclined to fly and the threat of infection is already a massive deterrent.
Delta also posted a gigantic loss, for the second quarter of 2020 some $5.7 billion, far higher than it or its shareholders and many analysts feared.
There are now worries over what United, American and Southwest will post for the same period in the coming days.
The loss would have been less of a concern if business was returning at the rate it was, but bookings have fallen 50% in two weeks, turning genuine hope into an existential crisis.
Delta is by no means out of money and it still hasn’t accessed the $4.6 billion allowed under the CARES Act, having until 30 September to claim it.
The airline was quick to point out that so far 17,000 staff have taken voluntary severance packages and they are keen to encourage more, aiming to reach 22,000.
So far the entire 777, MD88/90 and 737-700 fleets have been retired. Older 757, 767 and A320’s are now in the firing line.
Delta had planned on 1000 flights a day in August, but has cut that to just 500. It’s also planning on accelerating airport reconstruction projects and new terminal buildings at various sites. The faster they are built, the cheaper the overall project cost, and the risk to operational recovery is reduced by construction delays.
Delta also said it was still aiming to cut is operating cash loss from $50m per day to $27m per day by December. it has blocked all discretionary spending.
One of its biggest problems is that business flyers, which represent 50% of its revenue simply haven’t returned. Corporate travel was described as virtually non-existent.
The question for Delta and airlines globally, is will business travel ever return to its previous levels? The advance of apps like Zoom which have become almost ubiquitous in the past six months, may well have changed perceptions permanently.