A Delta Air Lines Boeing 767-300 landing in Amsterdam.
Nicolas Economou | NurPhoto | Getty Images
Delta Air Lines said Tuesday that it will make deep cuts throughout its network to reduce costs as the coronavirus outbreak drives down demand for air travel.
The carrier’s announcement follows similar measures taken by American, United and JetBlue.
The Atlanta-based carrier said it is reducing its international flying by as much as 25% and domestic capacity between 10% and 15%, among some of the deepest cuts announced in the U.S. so far.
With so much uncertainty, the airline suspended its financial outlook for this year.
It will halt its stock repurchase program and delay in $500 million in capital expenditures and $500 million in voluntary pension funding. Hiring is also being frozen throughout the company and it is offering voluntary, unpaid leave. Delta also may park aircraft and look to retire some planes earlier than expected.
Demand has dropped sharply in the past few days as more cases of coronavirus have been reported in the U.S. and booking trends will likely worsen, CEO Ed Bastian said at the J.P. Morgan Industrials Conference.
As the virus spread outside of Asia, Delta registered a “25%-30% decline in net bookings and are prepared for it to get worse,” he said. “We expect demand erosion to continue in the near-term and have built a plan that prioritizes free cash flow generation and preserves liquidity.”
President Donald Trump on Monday said his administration is working with industries hard hit by the coronavirus, including airlines, hotels, and cruise lines, but he did not provide specifics on what aid could look like.
Airlines are also being help by a drop in fuel prices. Delta said Tuesday that it expects to realize a benefit of $2 billion from the decline.
Delta’s Bastian said Tuesday that there was “no question” we’ll see some form of government intervention in the sector around the world to soften the impact of the virus.
Delta shares were trading up more than 2% in premarket trading. The stock, which has a market value of nearly $28 billion, is down more than 25% since the start of the year.
