In a sobering note to employees, Delta CEO Ed Bastian shared about the sudden and rapid collapse in demand that is posing the greatest threat ever to face Delta Air Lines. Now Delta wants a handout from Uncle Sam.
In the letter, Bastian shares that Delta is in consultation with the White House and Congress to see what “support they can provide to help us through this period.” Bastian is “optimistic” that support will occur, though he is not relying upon it.
In order to rally employees, he also announced he is forgoing his salary for the next six months.
As shared by View from the Wing, here is the full letter:
To: Delta Colleagues Worldwide
From: Ed Bastian, CEO
Subject: THE CHALLENGE FACING US – COVID-19 IMPACT GROWING RAPIDLYEarlier this week, I updated you on the steps we are taking to protect our people, our customers and our business amid the COVID-19 (coronavirus) outbreak. In just the few days since, the situation has worsened considerably, with large public events cancelled, businesses suspending travel, and popular destinations facing heightened government travel restrictions, including a 30-day ban to continental Europe announced Wednesday night.
Demand for travel is declining at an accelerated pace daily, driving an unprecedented revenue impact. Cancellations are rising dramatically with net bookings now negative for travel over the next four weeks. To put that in perspective, we’re currently seeing more cancellations than new bookings over the next month.
The speed of the demand fall-off is unlike anything we’ve seen – and we’ve seen a lot in our business. We are moving quickly to preserve cash and protect our company. And with revenues dropping, we must be focused on taking costs out of our business.
In order to do this, we are taking difficult but determined actions to protect the financial position of the company. These include:
- An overall capacity reduction in the next few months of 40 percent – the largest capacity reduction in Delta’s history, including 2001.
- Elimination of flying to continental Europe for the next 30 days, which could be extended. We will maintain service to London.
- Parking up to 300 aircraft as our reduced capacity requires a substantially smaller fleet.
- Deferring new aircraft deliveries to manage our reduced capacity and preserve cash.
- Reducing capital expenditures by at least $2 billion for the year, including delaying aircraft mods, IT initiatives and other opportunities to preserve cash.
- Immediately offering voluntary short-term, unpaid leaves as well as an immediate hiring freeze.
- Substantially reducing the use of consultants and contractors.
We’ll be making more critical decisions on our response in days to come. The situation is fluid and likely to be getting worse. But what hasn’t changed is this: Delta remains better-positioned to weather a storm of this magnitude than ever before in our history. We’ve spent a decade building a strong, resilient airline powered by the best professionals in the business. We will get through this, and taking strong, decisive action now will ensure that we are properly positioned to recover our business when customers start to travel again.
In coming days and weeks, every one of us will have an opportunity to contribute to Delta’s durability. That ranges from considering a voluntary leave that works for you and your family, to identifying opportunities to save money in your division or department, to volunteering for the Peach Corps to help our customers and colleagues at the airport. I ask all of you to see what you can do to help us save cash.
In light of these developments, I’m foregoing 100 percent of my salary, effective immediately, for the next six months.
We are in discussions with the White House and Congress regarding the support they can provide to help us through this period. I’m optimistic we will receive their support. That said, the form and value is unpredictable, and we can’t put our company’s future at risk waiting on aid from our government.
Above all, nothing is more important than the care, safety and health of our customers and each other. That includes the many steps we are taking to keep our planes and facilities clean and disinfected, as well as our never-ending commitment to flight safety even among these distractions. We need to assure our customers it is safe to fly in all respects, now more than ever. We also understand the need for social distancing as a means to protect our customers and each other, and we encourage all of our people to be mindful of every opportunity to reduce the risk of transmission at work and in your daily lives. This is a severe crisis.
I know many of the newer members of the Delta family have never experienced this level of uncertainty in our business. Your veteran colleagues will tell you that we have been through turbulent times before, and what has always carried us through has been our commitment to our values, our culture and each other. I am confident that we will emerge from this crisis as a strong, trusted global brand that truly connects the world like no other. And we will be stronger for having gone through this experience.
I continue to be honored and humbled to lead this team. I will give you another update early next week. Thank you for all that you are doing, and will continue to do in the days ahead, to care for the Delta family and our customers.
Ed
What Would Government Aid Look Like?
As One Mile at a Time notes, the government aid (at this point at least) will likely be in the form of allowing airlines to keep the 7.5% federal excise tax on airfare or the $4.50 US Passenger Facility Charge.
I’ve seen loads…they are so horrible it is simply tragic. What happens to an airline with over 86,000 employees when people decide to stop flying?
The problem comes because of the hypocrisy, which is more than just perceived. Delta would argue that this is not a state bailing out its inefficient flag carrier, but unique circumstances in a moment in time that present a threat to survival rather than any sort of reflection of efficiency or viability attributed to the airline.
I don’t disagree. And yet here were have Delta asking U.S. taxpayers for a bailout when it just reported a tremendously profitable year and distributed a $1.6 billion profit-sharing bonus (amounting to about two months of pay for each employee) last month.
Consolidation did not lead to this mess. But the U.S Congress should condition such aid on a number of concessions. What might those include? Perhaps relaxed change policies, a cap on ancillary fee increases, and generous compensation for flight delays, similar to what Canada and the EU have. I’m just thinking out loud here. Perhaps the proposed tax credits should be given in the form of a loan, not just a gift.
CONCLUSION
I’m not, in theory, opposed to government aid. But there’s a certain (and healthy) degree of skepticism that is warranted. After years of record profits and consumers cutbacks (baggage fees, basic economy, mileage devaluations), airlines should not be given aid with no strings attached.
Give them support but take a huge ownership stake in them. The shareholders need to get diluted massively. That is how risk in capitalism works.
But we know republicans are not capitalists. They use those terms when it’s convenient for them. But they are just thieves. Like everyone else they want to preserve their wealth and get more of it when they can. Now watch them lose their capitalisst swagger and look for handouts. They are just like everyone else looking to preserve a good life. No different than Democrats looking for a good life.
What i am saying is when Democrats ask for healthcare for all, they are not asking for a favor. They are asking for their rights that Republicans have suppressed. And they should seize their rights through politics or force. By denying healthcare, Republicans are the assholes. Democrats are not freeloaders by expecting to get it.
Capitalism is not the problem. Republicans are the problem.
Bailout that’s ridiculous, the profits they have made over the years especially after 9/11 when they rode the backs of the passengers with the billions in fees they charged us. $1.6M in profits should have been used wisely with a pending pandemic on hand … now a bailout to ride the taxpayers backs now … hell no
Well said. If these transportation companies are too big/too important to fail, then re-regulation ia the answer. Bastian wants to privatize his golden parachute while sticking debt and risk to the taxpayer.
It is a free market as the republitards would tell you, let them fall 6 months no pay how about forever no salary. They made record profits yet after just 2 weeks bankrupt. No one bails us out when our debtors come to collect. Why should i pay again and you double dip after i already paid your ridiculous prices for a ticket in a cramped seat, and deal with a delay every other flight. Pay absurd fees for carry ons, change fees. Even now you wont lower your flight cost below a certain point. So yeah no you dont deserve my money. You should fall like anyother business, we do not bail out small businesses we didnt bail out kmart sears or other large company and we really should have never bailed out gm greedy motors, they laid off loads of their workers to fatten their profit margin. So i say no to bailing you out. Reduce flights below the threshold get rid of all the fees and liquidate and if you survive great if not welcome to the game of life you win some you lose some. Live in a cardboard box for all i care.
Could not agree more. There is no “Uncle Sam” money. It’s our money. We can bail them out if they treat us nicely and turn any amount of profit back to us in the future for several years. Maybe some of that 1.6 billion should have gone to a rainy day fund last year.
If Delta is going to ask for and take our money they should immediately allow cancellation and full refunds for any tickets purchased in advance not just rebooking with no change fees
1.6 billion profit is nothing when your expenses are over 40 billion.
That is their profit margin. It means above operating cost. You clearly dont know how to read or do not understand economics.
Rainy day is here ding dong! What people been doing with their profit sharing is their problem now. Most started as part time with no benefits and sticking around for 10 years after making full time back to part time and sacrificed to save the company to be hit with 9/11 take huge pay cuts and watch fellow workers get laid off. To go through rough times and after 7 years slowly get back to profitability and getting our salaries back and finally raise our salaries. People rather pay fees and pay for better service all around. No one put a gun to their heads to fly Delta. Jealous much? Sad your job don’t share profits? Delta employees have brought Delta to it’s greatest success and superb management and smart business period! Bailing out car companies simply because their automobiles are crap and Japanese cars have always been better and out selling the American name brands was pathetic. Assembly line employees making $75 an hour who couldn’t even take a pay cut. Garbage!
“Delta would argue that this is not a state bailing out its inefficient flag carrier, but unique circumstances in a moment in time that present a threat to survival rather than any sort of reflection of efficiency or viability attributed to the airline.”
No different than an otherwise healthy individual not carrying health insurance, getting sick and then looking at hospital bills they can’t afford. In real life we let this people die. Republicans are murderers. They hide behind terms that sound like fiscal policies and other economic crap but they are just plain murderers. No different than nazis throwing statistical terms at wannsee conference.
Delta is just an airline. And bankruptcy doesnt mean it stops flying. Just that the owners change.
Any government assistance should be tied to a requirement that airlines reinstate full interlining agreements/ticket endorsements with no exceptions.
As an Indian, completely agree even if its not my business to. Despite having third world incomes, we manage to give healthcare to any citizen who needs it. Sure its not 100% efficient, but at least we are trying.
And btw, that doesn’t make us some communist nation. We also embrace the markets and have insane competition in most industries.
But competition to profit of a man’s suffering… That is just WRONG
I’d like the government to pony up some cash to my privately owned business if things take a nosedive. That’ll happen, it’s not just the airlines (which can declare bankruptcy yet again and still remain in business) that get handouts, right?
I REALLY hope they do not give anything to any of the US3, but especially Delta . If they do it better be under such bad terms that they have to say no.
Bastian has been such a hypocrite in all of this – Not showing up to WH meetings with the other airlines, complaining about ME3 but then investing in Chinese airlines and now is happy to take tax payer money if the terms are right.
What a joke.
Delta has a stockpile of cash, they can make it a year.
The US taxpayer should get a massive equity stake in return for bailout money. or Delta can turn to the capital markets. Capitalism 101.
Bailout money in exchange for regulation, management pay limits and passenger rights!
How ironic!!! Ed Bastian ignored the two invitations to meet with the president at the White House. Now he is crying for help.
No bailout. Sink or swim.
It’s strange that in your bio about yourself it states that you are an avid traveler…fine we will take your opinion and not help the airlines…they, in turn, will go out of business…go get your frequent traveler card on Greyhound…
@Tommy.. ABSOLUTELY! Transportation is what keeps all of those “businessmen” in their multi billion dollar meetings … Who will also cry foul and file bankruptcy but still continue to operate… Talk about hypocrisy… If the airlines fail, we all fail… Everyone better get a tune up on their cars and plan for long road trips if we don’t support the industry.
Funny how all these capitalist companies turn into socialists when the going gets tough. All they want is free money and assistance.
“…and generous compensation for flight delays, similar to what Canada and the EU have.”
The Canadian APPR is a joke. On paper the compensation levels look, but in fact the loopholes in favour of the airlines are so large, they will probably payout very little. You should hope that USA implements something stricter the EC261/2004.
As big a as catastrophe as it might be, one less airline wouldn’t hurt… the others may wake up and try harder!
There were 19 airline bankruptcies last year. There are four left in US and Delta had the least debt. Profit comes from 22 percent of passengers — the business class. Nonbiz profit per passenger is about $12 each year. Horses look good now but there’s the wolf problem
As a nation, we should first help the hourly workers who have lost their ability to earn with the closure of restaurants, bars and other places. Or the affected workers in travel and hospitality industries.
After that we can provide assistance to the businesses with concessions.
Here is an opportunity for the federal government to make an investment in the future of our aviation industry with funds borrowed from the Social Security trust fund.
If Delta sells stock to the trust fund at its average market price over the previous 30 days prior to their acceptance of the offer, Delta will have all the funds they need, and when the crisis abates, the Social Security trust fund can sell the stock and use the profits to shore up its reserves.
The 1980s bailout of Chrysler could be looked at as a model.
The coronavirus crisis will end quickly when a drug is found to treat it. There are several likely candidates being tested that have demonstrated effectiveness under laboratory condituons.
The number of disgruntled commenters to this opinion piece is quite staggering! Ed Bastian and a Delta Airlines have been leading the charge of all major airlines in the United States for several years. The customer experience flying Delta — in every class of service — just keeps getting better.
What a number of folks may not realize is that packages and mail are part of what nearly every airline transports daily. Failure / bankruptcy of our airlines in the United States is bad for everyone, not least of which are the hundreds of thousands of employees that rely on modern aviation for their livelihood (including a multitude of people than just those working for the airlines).
… but then, this may be the first, but won’t be the last to ask in the coming months.
After years of record profits and consumers cutbacks (baggage fees, basic economy, mileage devaluations), airlines should not be given aid with no strings attached.
Government should set minimum standards for seat pitch, some limits on bag and change fees and mandatory compensation for delays and cancelled flight similar to those enacted in Europe. These should be CONDITIONS of ANY financial lifelines extended. Airlines have been reaping record profits & employee bonuses for a decade or more after wiping out their debts via bankruptcy in the early/mid 2000s.
A retired airline employee.
With 90,000 employees, and employs another 180,000 indirectly worldwide. Self insured.
One of the top ten companies in the u.s. that employs so many people. Bankrupt them and small busines is to follow shortly.
Hello Wade Matt Hayek msp
Delta employees make a tremendous salary. Plus they have been getting thousands of dollars each year in profit sharing. Why hasn’t Delta been savong for a rainy day, especially after they files for bankruptcy just about 15 years ago? I suggest all employees should take a paycut of 10 to 20 percent each. Delta will not learn from this.
I left a comment but it looks like it has been deleted. Why?
So it is not ok to aid the ailrines but it was ok to bail out the banks, the most corruptive and oppressive entities in our society. What an irony.
These comments are bazaar. This is a global disaster. Bankrupting one of the best airlines I have flown wont help any of us. Just another blow to our economy that all of you will regret when you all suffer from the result. A loan like the ones issued by Obama adm during last crisis in 2008 would be prudent. Your political hatred is obvious and distorts your judgement.
I am a retired Delta Flight Attendant. (41 years) You are all right Delta has gouged the public with added fees and also nicked and dimed customers. $2.00 for headsets? Sky high prices for a beer or sandwich on flights. When I was flying this was embarrassing.
I lived through 9/11. So did Delta. Why did Delta not set aside money for a contingency like the Coronavirus? This could just as easily have been another terrorist attack. My family set aside money. Any bailout for Delta should have strings attached. Most carte blanche
Delta must remember what he did to Pan Am. Karma exist and i awaiting to see it downfall.
Bastian reportedly made about 15 Million last year in total compensation.. only 900, 000 of that was “salary”. His pledge of 6 months with no salary would mean he gives up less than 1/30th of what he took home last year…. the irony is that he is still planning to pay himself the last half of the year while at the same time begging for money from the government. A small business owner wouldn’t have the luxury to pay himself while his business went under. I hope that they get nothing. Let the leaders of the company dig into their own pockets and ride this out or go down with the ship.
Is a good thing that the decision on the government help does rely on your personal opinion as I’m sure right now many employees depend on this help to continue having a job
So disappointed with these comments!
Delta employees do and give the best customer service along with going out volunteering raising money for a cure for cancer . Delta has always been active in all communities helping when ever others need help. That is why it is the number one Airline. I’m am so disappointed with all these hater comments . How about this why don’t you come down on your president for putting your country in this situation! Delta employees are on the front line everyday helping customers cancelling or using their tickets at a later date losing money losing money not profiting and at the same time maintaining safety.Delta has been totally accommodating to all passengers in this time In need and passengers have been very kind and understanding. Delta employees are sitting ducks everyday with the virus face to face on a daily basis!! And guess what they show up everyday for work so people can continue to fly. Delta is and always be the safest and one if the greatest companies to work for!
If you don’t appreciate what Delta does please …. take greyhound drive you car to your next destination go buy a boat ( if you can afford one) and float across the ocean for your next European travel. Not just Delta is suffering but all the other airlines are too. So if one sinks everyone sinks. One again this is not a Ed Sebastian problem its a global problem . He is a great leader of a great company! Can you say that about your president ???? NO you can’t! One man will be responsible for the death of his own country and he doesn’t care he has money and everything he needs with the country or without. His concern isn’t the country only himself ! So instead of bashing Ed And Delta blame the source. Oh and guess what Delta employees will stand up and back Ed and continue to give great customer service with a smile making sure that safety comes first ! Delta employees over 80,000 people. if Delta goes down everyone goes down including you!!!!!
So disappointed in America and our People now when we all need to stand together and help each other.
God Bless
I was a Delta Airlines ramp agent for almost 17 years and most of them working for a company owned by Delta and we never saw those big money bonuses that Delta people got every year .
And we just recently got a big slap on the face from Delta las month when all of the employees got another big bonuse, 2 month worth of it and the below wing workers who do the heavy , dirty and outdoors work for the airline didn’t even get a dollar.
And Delta always say but you have flight benefits, benefits that are worthless and getting worse by the day and got to see it last month when I tried to use them and saw my self at the bery bottom of every standby least and even having almost 17 years doing their dirty work for them.
So don’t help this ungrateful company that forget about us.
Any bail out for any company should have significant strings attached. Airlines in particular are vulnerable to many unforeseen risks. The market should always keep that in mind with its valuation. This isn’t the first, in recent times, that airlines have experienced unexpected risk to revenue. However, when are they going to learn from experience? I support Dealt employees, but Dealt employees should also support a company and management that can weather a storm. I’m sure a portion of profit sharing over several years would have made a decent rainy day fund. As the rest of us have to plan for unexpected events why are companies so vulnerable to things outside their control not doing a better job?
My daughter is a new employee, just got first apartment, what happens to her? She did not receive 2 months profit sharing bonus. That depended on your level of seniority. I’m very worried for her.
Delta asking for help during a global pandemic with governments closing airspace is SO MUCH different than a nationally owned airline propped up during good travel conditions. Can you not see the difference? At the same time, I’m not standing up for Delta’s fight vs ME3 but come on, this is a very different scenario.
I don’t feel bad for airlines, at least not the major carriers. They have had plenty of opportunity to build healthy weather the storm funds. I feel bad about America’s small businesses. If the government is going to spend aid that is where it should focus.
Let them try to bail themself out, if they cant a better company will replace them you want business lower your ticket price. I bet if you lower the ticket from detroit to hawaii to 200 dollars even current times you would sell out flights, instead you have a threshold you wont go because you continue to fatten your bottom line even when you provide a decent deal you up charge a carry on to ridiculous rates. You are a rip off and deserve to go belly up. Republitards were all for a free capitalist market then after a bit of hardship you cant have your million dollar bonuses and now you want to tax me for your irresponsible salaries bonuses and reckless spending to bail you out how about no. Suck it up and dead gracefully.
Hey wait i got a better idea hey airlines let me rack up my credit card debt and you can pay it all. Come bail me out. I am doing good for everyone i am helping the economy by doing so. Now with those record sums you can come bail me and everyone out pay everyones student loan cost and credit card debt. Okay do that and i will bail you out and eye for an eye.
JUSTICE DELAYED…
Delta Air (and several other airlines) sabotaged and decimated Pan Am after she was attacked by terrorists at Lockerbie. The govt and airlines participated in the dismemberment of the greatest airline the world ever knew. Nothing that happens to Delta and their ilk could be penalty enough for their cowardly debauchery against Pan Am. Here’s a short sad story of the Killing of Pan American World Airways. [A must read!] click: http://www.renocitizen.com/panamerican.htm
Delta asks for a bailout yet my son and wife had to cancel their flight with them due to the government closing down overseas now Delta will not refund them, yet they want their taxes to bail them out, we will never use Delta Airlines ever again!
My husband 80 and myself 75 will not be flying the rest of the year but Delta will only issue a credit till the end of the year for our return flights we were unable to take. We requested our credit to be transferred to our granddaughter who will be traveling this year and they replied no transfers. SO WHY WOULD I WANT MY TAX DOLLARS TO BE USED TO BAIL THEM OUT.
They are never flexible on their policies no matter what the crisis is