Did you see Ed Bastian's email today? I’ve seen several airline CEOs now say the decline in bookings and revenue (and therefore planned capacity cuts) is greater than after 9/11, which is generally what I’m referring to. I think we will see more planes parked and larger revenue losses over the next 6-9 months than the 6-9 months following 9/11. Thank God we at least have a bunch of retirements this time, and the proliferation of RJs and age 65 won’t add to the issues that plagued the lost decade. And hopefully the economy snaps back after this passes...but even if it does, there will be lasting damage to the industry that will take a few years to recover (namely sustained lower demand).
Anyway, here is most of Ed’s email if you haven’t seen it:
“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.”