Delta Air Lines suffered its first quarterly loss in five years in the wake of lowered travel demand due to the global coronavirus pandemic.
The Atlanta-based carrier this morning posted a pretax loss of $607 million for the first quarter ending March 31 and said the second quarter that will end on June 30 will be even worse.
"These are truly unprecedented times for all of us, including the airline industry. Government travel restrictions and stay-at-home orders have been effective in slowing the spread of the virus, but have also severely impacted near-term demand for air travel, reducing our expected June quarter revenues by 90 percent, compared to a year ago," Ed Bastian, Delta's chief executive officer, said in a statement.
"Delta is taking decisive action to prioritize the safety of our employees and customers while protecting our business and bolstering liquidity. I am especially proud of the incredible work the Delta people are doing to keep our nation's airways open, playing an active role in the fight against the virus."
The airline industry has come to a virtual shutdown, and while $607 million sounds like a humongous loss, it could have been worse - President Trump didn't restrict travel to China until the end of January, and the virus didn't fully rear its ugly head in the U.S. until into March.
Imagine what it would have been like had all three months been dominated by COVID-19?
Well, Bastian and his fellow CEOs are already imagining it for the April-May-June earnings period.
To address the challenges of COVID-19, the company said it will take the following actions for the second quarter: is taking the following actions:
- Making significant capacity reductions for the June quarter versus the prior year with total system capacity down 85 percent, including domestic down by 80 and international capacity down by 90 percent
- Adopting new cleaning procedures on all flights, including fogging on all aircraft overnight and sanitizing high-touch areas like tray tables, entertainment screens, armrests and seat-back pockets before boarding
- Taking steps to help employees and customers practice social distancing, including blocking middle seats, pausing automatic upgrades, modifying the boarding process and moving to essential meal service only
- Extending 2020 Medallion Status an additional year, rolling Medallion Qualification Miles into 2021, and extending Delta SkyMiles American Express Card benefits and Delta Sky Club memberships
- Giving customers the flexibility to plan, re-book and travel including extending expiration on travel credits to two years
Delta and nine other domestic airlines reached an agreement with the government on $25 billion in government grants and loans to be used to pay employees through Sept. 30.
"I would like to thank the President, members of Congress, and the Administration for their bipartisan support of the Payroll Support Program under the CARES Act, which recognizes the important role the airlines play in the U.S. economy," Bastian said. "The Payroll Support Program will help safeguard Delta jobs while positioning our nation for recovery."
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