Delta Air Lines Chief Executive Ed Bastian warned employees and investors to brace for rough times ahead, writing in an internal memo Wednesday that the carrier expected March revenue to be down $2 billion from March 2019 and that April revenue could crater even more.
The company plans to cut back on 70 percent of the its domestic flights as demand softens, Bastian wrote, and will cut international flights by 80 percent in the next two to three months.
Delta’s stock was down nearly 30 percent in another volatile day on Wall Street. It’s share price, around $22.50, was off almost $37 per share from its value at the start of the year.
“Cash preservation remains our top financial priority right now,” Bastian wrote. “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.”
In that vain, he wrote, the company plans to hunker down and try to save $4 billion in cash in the coming quarter. It is idling more than 600 aircraft and closing down the majority of its Delta Sky Club premium lounges. Various company leaders have taken voluntary pay cuts and the company’s board of directors agreed to forgo its salary for six months.
Bastian also encouraged employees to take voluntary leave, writing that such breaks are “one of the best and most immediate ways you can help as we strive to protect jobs and pay.” The company was not yet at a point, he wrote, to make any assurances over job cuts and compensation security.
But Delta’s plan to weather the coming financial hardship is reliant upon bailout funds from Congress to support the airline industry. The Trump Administration has floated a plan to send $50 billion to the airline industry as part of a $1 trillion conoravirus-rebound stimulus package.
The airline industry’s advocacy group said carriers needed another $25 billion in loans and tax relief. Airports have also asked for their own bailout program.
Bastian wrote that he was “optimistic that our industry will receive support to help address this crisis.”
But Democrats have signaled they’re not on board with that kind of rescue package without “major strings attached,” said Sen. Edward J. Markey (D-Mass.), including protections for consumers, front line workers and regional carriers.