The airline industry has suffered considerably as the coronavirus pandemic continues to drag on, and now Delta Airlines is slashing a part of its fleet as the airline looks to mitigate economic damages from the pandemic.
Delta announced Thursday that it may have a deluge of pilots this fall, as many as 7,000 more than necessary. As a result, the airline said it plans to retire its fleet of Boeing 777s, suggesting that Delta expects a lengthy downturn in international travel as the coronavirus crushes demand, and consumers avoid vacations and close quarters, where the virus can easily spread.
John Laughter, Delta’s senior vice president of flight operations, said in a note to pilots Thursday, “I recognize that is an alarming number so it’s important to know that our intent is to align staffing for what we need over the long term. By the third quarter of 2021, we will have between 2,500 and 3,500 pilots more than needed to fly the schedule. That accounts for the pilots who will reach the mandatory retirement age between now and next summer.”
CEO Ed Bastian stated in a staff memo that the airline plans to curtail its daily cash burn by the end of 2020 as the pandemic’s toll on air travel currently has no end in sight.
“Our principal financial goal for 2020 is to reduce our cash burn to zero by the end of the year, which will mean, for the next two to three years, a smaller network, fleet, and operation in response to substantially reduced customer demand,” Bastian’s memo said.
Delta said it has already made a 50% reduction in its daily cash burn to $50 million a day this month, as planned, by slashing flights and cutting back on other expenses.
“With international travel expected to return slowly, we’ve also made the difficult decision to permanently retire our Boeing 777 fleet — 18 aircraft — by the end of the year,” Bastian told staff. He said more “fuel-efficient and cost-effective” A330s and A350-900 planes, made by Europe’s Airbus will be used instead. “Retiring a fleet as iconic as the 777 is not an easy decision — I know it has a direct impact on many of you who fly, crew and service these jets.”
Other airlines and ETFs have been affected by the news Thursday as well. United Airlines stock is down almost 5%, American Airlines stock has lost 3.57%, while the U.S. Global Jets ETF (JETS) is down 2.51% on the news, as the coronavirus quarantine and shelter-in-place restrictions have continued to take a toll on airlines this year.
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