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CEO: Delta Is Operating At Less Than 5% Capacity And Will Be A Smaller Airline

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Delta CEO: Airline Is Operating At Less Than 5% Capacity; Will Be A Smaller Airline

Over the past week, we’ve seen airline CEOs discussing the future of their industry and companies.  In a memo to employees, Delta Air Lines CEO Ed Bastian told employees the recovery could take 2 to 3 years and that the airline is operating at 5% capacity.  That’s not surprising given recent takes by economic analysts, but it is worrisome for airline employees.

CNBC reports:

We are confident that people will begin to travel again,” he told employees in a memo.  “We don’t know when it will happen, but we do know that Delta will be a smaller airline for some time, and we should be prepared for a choppy, sluggish recovery even after the virus is contained.  I estimate the recovery period could take two to three years.

In an interview on Wednesday with CNBC, Ed Bastian said, “The challenge in the business right now is demand, with all the stay-at-home orders and the challenges with respect to travel.”  Bastian continued by saying, “We’re operating right now at less than 5% of the normal passenger load.  I think today we’re operating with about 30,o00 passengers on our books.”  Bastian noted that those passengers are mostly essential workers.

What Other Airline CEOs Are Saying

Last week, Southwest Airlines CEO Gary Kelly told employees he wants to avoid furloughs.  But Kelly also said that avoiding furloughs requires a rebound in passengers.  At the end of March, United Airlines CEO Oscar Munoz painted a sad picture of the airline industry’s short term future.  In remarks, Munzoz said employees should expect layoffs after government bailout strings end in September 2020.  He also said the impacts will last beyond this year.

Delta Quarter One Losses

This morning, Delta reported its quarter one earnings.  Delta lost $534 million over the quarter, its first loss in five years.  While the news is not good, Delta stocks moderately increased after surpassing expectations.  United Airlines announced a loss of $2.1 billion in quarter one earlier this week.  Airlines are bracing for more severe losses for quarter two.  It will be the first where the entire quarter is impacted by coronavirus.

Bottom Line

There is nothing entirely shocking in Ed Bastian’s remarks.  Data shows that airlines around the world are operating at a much lower capacity, so much so that Southwest Airlines recently became the world’s largest airline.  But they stand again as a stark warning that worse days are ahead for those in the airline industry.  In particular, airline employees will have a period of uncertainty.  That will only increase after September 30, 2020, when airlines will no longer have to keep people working as a condition of stimulus money.

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About Jonathan (503 Articles)
I love traveling, politics, history, and baseball!

10 Comments on CEO: Delta Is Operating At Less Than 5% Capacity And Will Be A Smaller Airline

  1. Flying Delta tomorrow, flew them last week. Great airline.
    Flying them every week for the next 5 weeks – and booked a bunch of International flights for the fall on them.

    Also 100% non-essential travel, just for fun.
    Doing my part to help out DL, you guys have been good to me, so I will keep the money flowing.

    Gang, everyone else should pitch in and get on a plane.
    We’ve got to support these companies now, it’s go time.

    • Thank you! Very happy to hear that as I am wanting to travel as well and have a few trips coming up looking very forward to! This is WAY overblown everybody needs to relax. 99% of people think it’s a snakebite and you die within an hour when the reverse is true, 99% of people will be just fine

      • yeah and to go along with the misery of air travel ,now you get to wear a mask to restrict your breathing and comfort…. no thanks,stick a fork in em airlines are cooked

        • I miss flying, traveling.
          Even moreso I miss looking forward to flying/traveling!
          And meanwhile, since new cards in January were prior to all this…I can barely recall who offered the most (or other multiple) points for dining or gas, groceries, gifting, or whatever!
          I don’t believe “airlines are cooked”. Do you really plan to sit around in Hometown, USA the rest of ur life?! (Maybe u just luuuvvv TV/Internet?!) Or golf? (That’s it! Ur going to spend the rest of your available free time golfing…good luck.)

          Oh yeah—-we’re in different cohorts. I’m in the too-old-to-fly butnotreally group (waititout). While you seem to be in the “I can’t deal with inconvenience” group (perfectly valid)…but I think you’ll be back
          P.S. The virus is fatal (and not really “optional”) you get what u get. If you think this is bad financially—-you would have really enjoyed the last one (with much smaller $ bailout besides)

  2. You’re an idiot.
    100% non-essential travel. Just for fun.
    I’m sure all the flight attendants that have gotten sick and passed, really appreciate you just having fun.

    • If you want to support Delta you don’t have to fly. You can buy tickets and throw them away. That would be responsible than being out there interacting with Delta employees possibly spreading disease.

  3. If flight attendants are scared they can take a LOA Air travel is still safer then going to the grocery store

  4. Safer than the grocery store, I disagree. NON ESSENTIAL flying is picking up due the incredibly low fares so the planes are more full. No social distancing and not everyone wearing masks. A person can’t buy a $20 airplane ticket and then expect to have it all to themselves and takes pics when it’s not. As a crew member this is very frustrating. I’m fortunate and am able to take a LOA to protect myself and my family, but not everyone can. Single parents, kids in college, ect ect, the reasons are endless. #STAYHOME

  5. You can thank the liberal media for the
    worst of the worst reporting that has
    scared the hell out of America. The virus
    no where near as bad as the overreacting
    that causing financial disaster

  6. Earl Dennis, Jr // May 3, 2020 at 10:10 pm // Reply

    What a sick joke. I used to believe in Air Grits. But no more. Delta has become a below order feeder that is not comepetive with other airlines. if I were to fly tomorrow I would book on Southwest and leave Delta setting at the gate.

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