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Delta considers early MD-88, MD-90 retirements as possible coronavirus response

March 03, 2020
4 min read
Delta considers early MD-88, MD-90 retirements as possible coronavirus response
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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."

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At the end of December, Delta operated 116 757s, 77 767s, 47 MD-88s and 30 MD-90s, its latest fleet plan shows. It currently plans to retire the MD-88s this year, and the MD-90s in 2022.

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.

Related: Could the coronavirus end the decade-long U.S. airline expansion?

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.

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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.

Related:The 10 longest (and 10 shortest) Delta Air Lines flights

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."

Related: American and Delta issue wide-ranging waivers, carriers announce more cuts

Featured image by Getty Images

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Go to review

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10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
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  • Intro Offer
    Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

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  • Annual Fee

    $550
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
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Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more