Delta Air Lines retires more jets amid shaky outlook, nearly $6B quarterly loss
Delta Air Lines is moving forward with efforts to cut costs, retiring more jets fresh off a nearly $6 billion loss during the second quarter.
The Atlanta-based carrier will retire its 10 Boeing 737-700s, as well as some of its 62 Airbus A320s and 56 Boeing 767-300ERs in a long-term cost savings effort, Delta said on Tuesday. This is on top of the Boeing 777s and McDonnell Douglas MD-88s and MD-90s that it has already retired.
"In this environment, we need to resize our business and build resilience to create a new, stronger Delta," Delta chief financial officer Paul Jacobson told staff in a memo Tuesday viewed by TPG. "That means streamlining our company, simplifying our fleet and reducing our fixed cost base in ways not feasible in the past."
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More from Delta's Q2 earnings: Delta says air travel recovery has stalled, hopes more flyers return by end of summer
The fleet moves come after a grim three months for Delta. The airline saw operating revenues plummet by more than $11 billion, or 88%, year-over-year to $1.5 billion during the quarter ending in June. However, expenses only fell 40% to $6.3 billion.
Delta reported a $5.7 billion net loss during the period. While not unexpected — and likely just the first of steep airline industry losses — it is a dramatic reversal from its $1.4 billion net profit during the three months ending in June 2019.
Jacobson was not optimistic about the outlook for the current quarter that ends in September. The airline was losing $27 million a day in June that, while a significant improvement over past months, is still a sizable sum. At the same time, rising coronavirus case numbers and new travel restrictions have hit July and August hard, with Jacobson saying new bookings have declined in recent weeks.
"Increased bookings are key to achieving our goal of breaking even on a cash basis by the end of the year, and we’re working to manage that volatility through tight management of our capacity and costs," he said.
Related: Delta likely to pull flights as number of US coronavirus cases rises
Delta's staff also face the impending likelihood of furloughs or layoffs come October. CEO Ed Bastian told the Financial Times on Tuesday that, with more than 15,000 staff taking voluntary exit packages by July 13, the number of involuntary departures "will be much smaller than the numbers at United or American."
The carrier has already sent notices of possible involuntary furloughs to more than 2,500 pilots. Similar notices could still be sent to other members of its workforce with federal rules only requiring at least 60 days notice, or by the beginning of August.
United Airlines has warned 36,000 staff of possible furloughs, and American Airlines has told staff that they could have as many as 8,000 flight attendants more than they need by the end of the year.
Related: United Airlines may furlough up to 36,000 staff as coronavirus forces drastic cuts
Delta accepted $5.4 billion in payroll assistance from the federal government's coronavirus aid package, or CARES Act, in April. The funds came with rules that barred the airline from letting staff go, as well as from suspending flights to most U.S. cities, until after Sept. 30.
In addition, the airline is evaluating taking another $4.6 billion in general loans from the CARES Act.
Delta's management team will present their second quarter earnings and discuss the carrier's outlook later on Tuesday.
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| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
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There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.