UNITED STATES (AP) – Delta Air Lines will cut passenger-carrying capacity by 40 per cent to deal with a nosedive in travel demand, and it is talking to the White House and the United States (US)Congress about assistance to get through a downturn caused by the new coronavirus. The cut in capacity over the next few months is the largest in Delta’s history, surpassing reductions that were made after the September 2001 terror attacks.
Delta also said on Friday it will stop all flights to continental Europe for the next 30 days — possibly longer — ground up to 300 airplanes, delay deliveries of new planes to save cash, and cut spending by USD2 billion. It is freezing hiring and offering unpaid leave to employees.
The airline’s stock surged in afternoon trading to close up 13.8 per cent at USD38.36, recovering more than half of a 21 per cent drop the day before.
Delta’s moves come as the outlook for airlines continues to get worse.
“The speed of the demand fall-off is unlike anything we’ve seen – and we’ve seen a lot in our business,” CEO Ed Bastian said in a memo to Delta’s 90,000 employees.
“We are in discussions with the White House and Congress regarding the support they can provide to help us through this period. I’m optimistic we will receive their support,” he said, adding, however, that the airline “can’t put our company’s future at risk waiting on aid from our government.”
President Donald Trump, speaking in the Rose Garden nearly four hours after Delta’s announcement, said the government is willing to help the airlines but the companies haven’t reached out for help.
Trump was asked about assistance to the cruise line industry — it has been hit even harder than airlines.
“We will be helping them, and we will be helping the airline industry if we have to — assuming we have to,” he said. “So far people haven’t been asking.”
Earlier Friday, Treasury Secretary Steven Mnuchin said Washington wants to provide aid to the airline industry.
“We will be coming very quickly back on issues dealing with the airline industry,” Mnuchin told CNBC on Friday. “Just as after September 11, we are very committed to make sure that our US airlines have the ability and have the liquidity to get through this.” Neither Trump nor Mnuchin specified what the aid might look like. Among the most likely measures: relief from fees and taxes on airline tickets, which would make travel cheaper.
Delta is the world’s largest airline by revenue, and it has consistently been the most profitable US carrier over the past decade, making its actions even more startling.
Just over a week ago, airline CEOs who emerged from a White House meeting with Trump said they did not ask for help from Washington.
However, the combination of fewer bookings and more cancellations has picked up speed since then, and the airlines’ problems were made even more dire by Trump’s decision this week to ban most foreigners from flying from any of 26 European nations to the US for 30 days, beginning at midnight Friday.
Delta, American Airlines and United Airlines announced fresh rounds of flight cutbacks soon after Trump announced the ban. American will stop flying to continental Europe in about a week and suspend some service to South America, while United will cut its US-Europe flights by about half.