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Delta Air Lines is burning through cash and expects to post a massive shortfall in revenue in the second quarter after the coronavirus pandemic brought its business to a standstill, CEO Ed Bastian said in a letter to employees on Friday.
Bastian said the airline is losing more than $60 million in cash every day and “we still haven’t seen the bottom.” Financial relief for U.S. airlines included in the $2.2 trillion coronavirus stimulus package helped airlines avoid initial layoffs but aren’t a sufficient check against the industry’s bleak short-term outlook, he added.
“We appreciate the decisive action of our nation’s leaders to protect our people,” Bastian said in the letter. “But those funds are not nearly enough. We are expecting our revenue in the second quarter to be down 90 percent. Without the self-help actions we are taking to save costs and raise new financing, that money would be gone by June.”
Delta shares sank nearly 7 percent in after-hours trading. The airline’s stock is down more than 60 percent so far this year.
|DAL||DELTA AIR LINES INC.||29.82||-3.02||-9.20%|
In the letter, Bastian said the embattled carrier will operate a schedule at roughly 80 percent below expected capacity in April due to sweeping flight restrictions in the U.S. and abroad.
The stimulus package included $25 billion in funds to assist U.S. airlines with payment of employee salaries and benefits and $25 billion toward loans and additional tax relief measures. As a result, Delta employees won’t face pay cuts or furloughs before September 30.
Bastian said more than 30,000 Delta employees had taken voluntary unpaid furloughs. Other employees are operating on reduced schedules, while top executives have taken pay cuts.
“My deepest thanks goes to every single one of you,” Bastian said regarding the employees who took voluntary unpaid furloughs. "That is the most important action you can take to support our company. We continue to need more volunteers, and this week announced longer-term opportunities of leaves lasting six, nine and 12 months. Please consider whether a short- or long-term leave makes sense for you and your family at this time."