Delta considers early MD-88, MD-90 retirements as possible coronavirus response
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
It is probably tense times in the executive suite at Delta Air Lines’ campus on the north side of the Atlanta airport. The spreading coronavirus outbreak poses the most significant threat yet to the decade-long expansion at U.S. carriers, with travelers and investors alike looking to the likes of Delta for a sign of things to come.
Paul Jacobson, chief financial officer of Delta, spoke to investors at the Raymond James Institutional Investors conference on Monday on the airline’s plans if the spreading outbreak takes a bite out of travel demand for an extended period. First up: retire older jets, namely the airline’s fleet of McDonnell Douglas MD-88s and MD-90s, early.
“We believe it is too early to sound… alarm bells,” wrote Raymond James analyst Savanthi Syth in a report Tuesday on Jacobson’s comments. “Delta indicated willingness to retire early its MD-88s, MD-90s, and possibly some older [Boeing] 757s/767s.”
Delta has no timeline to retire either the 757 or 767, which it has yet to identify a replacement for.
The potential fleet changes come as all eyes are on the airline industry to see if Americans stop traveling amid fears of the coronavirus-family disease COVID-19. Since the end of last week, Delta is seeing a “notable” decline in domestic bookings but not a “dramatic” decline, Syth wrote about Jacobson’s presentation.
Many fear a more drastic drop in domestic travel demand following blanket travel waivers from Alaska Airlines and JetBlue Airways last week, and more limited ones from American Airlines and Delta since the weekend. In addition, Hawaiian Airlines and United Airlines both cancelled their investor days scheduled for early March. United said they could not have a “a productive conversation focused on its long-term strategy” in the current environment.
Many flights across the globe have been cancelled due to the outbreak. One European airline executive told The Air Current on Saturday that they had seen minimal commercial impact from COVID-19 until last week, when demand fell off a “cliff.”
Travelers concerned that their flights might be canceled in the fallout from COVID-19 will benefit from the peace of mind offered in the latest change-fee waivers from some airlines for domestic flights. But if demand remains low going into the summer, airlines could take advantage of their more drastic options — like the possibility of Delta accelerating the retirement of its MD-88s and MD-90s — and cut growth plans.
Travelers concerned about their travel plans — but not COVID-19 — will, in all likelihood, benefit from airline waivers to change or cancel their flights if U.S. travel demand does fall off. That said, if demand remains low going into the summer, airlines will likely take advantage of their more drastic options — like Delta accelerating the retirement of its MD-88s and MD-90s — and cut growth plans.
Syth reiterated what other Wall Street analysts — not to mention public health experts — keep saying about the impact of the COVID-19 outbreak: “It will get worse before it gets better.”
Featured image by Robert Alexander/Getty Images.
Welcome to The Points Guy!
Earn 90,000 bonus miles after you spend $3,000 in purchases on your new Card in your first 3 months. Offer ends 8/3/2022.
With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.
- Limited Time Offer: Earn 90,000 bonus miles after you spend $3,000 in purchases on your new Card in your first 3 months. Offer ends 8/3/2022.
- Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs up to two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
- Earn 3X Miles on Delta purchases and purchases made directly with hotels.
- Earn 2X Miles at restaurants worldwide including takeout and delivery in the U.S., and at U.S. supermarkets.
- Earn 1X Miles on all other eligible purchases.
- Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. Payment of the government imposed taxes and fees of no more than $80 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
- Enjoy your first checked bag free on Delta flights.
- Fee Credit for Global Entry or TSA PreCheck® after you apply through any Authorized Enrollment Provider. If approved for Global Entry, at no additional charge, you will receive access to TSA PreCheck.
- Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
- No Foreign Transaction Fees.
- $250 Annual Fee.
- Terms Apply.
- See Rates & Fees