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Delta cuts global capacity by at least 15% on coronavirus impact

March 10, 2020
3 min read
Delta cuts global capacity by at least 15% on coronavirus impact
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Delta Air Lines is cutting global capacity by at least 15% following a drop of more than a quarter in bookings worldwide due to fears of the novel coronavirus.

The SkyTeam Alliance carrier will make the most drastic reductions across the Pacific where capacity will be cut by roughly 65% year-over-year, Delta said in an investor presentation Tuesday. Transatlantic capacity will be reduced by 15-20%, domestic capacity by 10-15%, and Latin America capacity by roughly 5%.

Delta did not provide a timeline for the cuts, though it did say that it was "prepared to take more aggressive actions" through the summer.

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Related: Coronavirus-related U.S. airline flight suspensions and waivers

(Image courtesy of Delta Air Lines)

“This clearly is not an economic event," said Delta CEO Ed Bastian at the J.P. Morgan Industrials Conference Tuesday. "This is a fear event probably more akin to what we saw at 9/11.”

Traveler fear of the COVID-19 outbreak has prompted airlines around the world to slash flights and parking jets. American Airlines, JetBlue Airways, Spirit Airlines and United Airlines have all made U.S. domestic capacity reductions, while Lufthansa and Qantas Airways have said they will park some -- or all -- of their Airbus A380 superjumbo jets.

Airlines are making the capacity cuts, and subsequent fleet reductions, to preserve cash as they see bookings plummet amid fears of the virus.

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Net bookings at Delta have fallen by 25-30% since the last week of February, said Bastian. This month, the load factor -- or the percent of seats that are full -- on the airline's flights is forecast at only 65-70%, a 20 point drop from March 2019.

“As we learned in 2009, the demand drop will be sharp but so will the recovery," he said. However, Bastian added that Delta is taking a conservative approach to what he described as a still "fluid" situation.

In conjunction with Delta's planned capacity cuts, the airline will temporarily park both narrow-body and wide-body jets. It is also considering retiring older aircraft -- potentially including its McDonnell Douglas MD-88s and MD-90s -- early if the impact of COVID-19 are drawn out.

Related: US airline execs warn coronavirus impact ‘could be worse than 9/11’ downturn

The carrier has also suspended share repurchases and hiring until it has a better sense of the duration of the demand slowdown, said Delta chief financial officer Paul Jacobson.

Delta is allowing passengers booked on flights through April 30 a fee-free, one-time itinerary change.

Featured image by Alberto Riva

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3XEarn 3 Points per $1 spent at Restaurants and Supermarkets
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    For a limited time, earn 80,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening

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The Citi Premier’s 3 points per dollar spent across a wide range of popular categories is one of the more lucrative offerings in the world of points and miles. The Citi Premier comes with a $95 annual fee and is currently offering a solid sign up bonus of 80,000 points after you spend $4,000 on purchases within the first three months. It also has some valuable transfer partners to make the most of your rewards. Add in access to Citi Entertainment plus a $100 hotel credit for any single-stay hotel booking that exceeds $500 or more, excluding taxes and fees, booked through the Citi travel website, there are few reasons why the Citi Premier should not be in every traveler’s wallet.

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  • Earn 3 Points per $1 spent at Restaurants and Supermarkets
  • Earn 3 Points per $1 spent at Gas Stations, Air Travel and Hotels
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  • 80,000 Points are redeemable for $800 in gift cards when redeemed at thankyou.com
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  • No Foreign Transaction Fees on purchases