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

Mar 10, 2020

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.

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.

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.

Sign up for the free daily TPG newsletter for more airline news

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/TPG.

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.

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.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
  • 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 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 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 $75 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 Pre✓®.
  • 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
Regular APR
15.74%-24.74% Variable
Annual Fee
$250
Balance Transfer Fee
N/A
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.