Delta slashes flight capacity by 40%, parks 300 planes in deepest cuts in company history

Dawn Gilbertson and Chris Woodyard, USA TODAY

Delta Air Lines announced the deepest service cuts in its history Friday amid the travel implosion due to the coronavirus crisis.

Delta will cut its capacity in the next few months by 40%, a reduction even deeper than the one in the wake of the 9/11 terrorist attacks in 2001, said CEO Ed Bastian. It plans to park 300 planes as a result.

The airline also said it will eliminate flying to continental Europe for the next 30 days, except for London. Bastian warned the flight cuts may last longer. 

Delta's move comes amid a stinging travel fallout from the coronavirus crisis continues, with multiple airlines announcing flight cuts, freezing hiring, slashing spending, cutting executive pay and other dramatic coping measures.

Delta's decision, however, was among the most dramatic.

"Demand for travel is declining at an accelerated pace daily, driving an unprecedented revenue impact," Bastian said in a memo to employees. "Cancellations are rising dramatically with net bookings now negative for travel over the next four weeks."

Bastian said Delta is deferring new aircraft deliveries and doing its best to preserve cash, including reducing capital expenditures by at least $2 billion a year. Employees will be offered short-term unpaid leave and he said he will stop taking a salary.

Delta isn't the only aiirline 

Top airline executives emphasized that the industry is on solid financial footing to withstand the severe shocks to their business, in contrast to airlines' weaker financial states during 9/11 and the recession.

Here's an airline-by-airline look at the dramatic steps airlines are taking to cope with a plunge in travel demand:

American Airlines cutting international flights by 10 percent, US flights by 7.5 percent.

American Airlines early Tuesday announced sweeping flight cutbacks. And unlike the significant cuts announced by United last week, they extend into the peak summer travel season.

Airlines started cutting flights to China in late January and have had to take a series of even more aggressive cuts since then as the virus spread around the globe and travelers grew anxious about flying.

American said it is reducing international seat capacity by 10% this summer, including a 55% reduction in flights across the Pacific. The airline won't resume flights to China  until late October, months later than initially planned.

Flights within the United States will be reduced by 7.5% for the month of  April. Travelers holding tickets for travel on the affected routes will be rebooked on other flights or offered the option of a refund, even if they are holding a nonrefundable ticket.

Specific flight cuts:

  • Suspending service to mainland China and Hong Kong from Los Angeles through the summer. 
  • Suspending service to mainline China from Dallas through the summer.
  • Suspending service to Hong Kong from Dallas through June.
  • Suspending service to Rome from Philadelphia effective immediately through the end of April.
  • Extending the suspension of service to Milan through early summer.
  • Suspending flights to Rome from Chicago and Charlotte, North Carolina, through early summer. 
  • Delaying the seasonal resumption of several summer flights to Europe, including New York and Dallas to Rome.
  • Reducing service to Paris and Madrid for parts of May and June.

American did not provide details on the domestic flight cuts but said it plans to reduce the number of daily flights on routes with several daily departures to affect fewer customers. 

American CEO Doug Parker said the industry would be worried about more than flight cuts and hiring freezes if the travel falloff happened several years ago. Weaker airlines would already be hiring restructuring firms and frantically figuring out how to stay afloat. Parker was the new CEO of America West Airlines after 9/11 and the airline had to ask the government for financial help to survive.

At a meeting with President Trump and Vice President Mike Pence in Washington, D.C. last week, Parker said, "not one CEO asked for government financial relief.''

Southwest Airlines CEO: "We're faced with a serious problem not seen since 9/11, and it may be worse''

Southwest canceled its presentation at the J.P. Morgan conference but CEO Gary Kelly late Tuesday sent a video message to employees about the coronavirus crisis.

Kelly said Southwest noticed an "alarming'' drop in bookings at the end of February. The airline already warned that the financial hit would total between $200 million and $300 million in lost bookings.

"Our customers are simply not making travel plans at the pace they normally would,''  he said in the video, a copy of which was obtained by USA TODAY.

Kelly said the "velocity and severity of the decline is breathtaking.''

"There is no question there is a severe recession for our industry and for us and it’s a financial crisis,'' he said. 

Southwest, which primarily flies within the United States, is considering flight cuts to combat weak travel demand but has not announced any. It is cutting spending, freezing hiring on certain positions and Kelly said he's going to take a 10 percent pay cut.

United Airlines President: "Hope is not a strategy''

United was ahead of the curve with its April and May flight cuts last week but the airline announced more steps on Tuesday. 

The airline said it will evaluate whether additional flight cuts are needed on a rolling 90-day basis and won't resume canceled flights or big expenditures until it sees signs that travel demand is back.

"Hope is not a strategy,'' he said.

Kirby said he doesn't expect the government to recommend that travelers don't fly as officials have suggested about cruising, at least based on the tone of conversations between airline executives and White House officials last week.

"I certainly hope it doesn't happen,'' he said.

If it does, he said, the airline has a contingency plan that goes beyond the dramatic measures United has already announced. He declined to provide details.

"We have contemplated that and have a plan on the shelf,'' Kirby said.

Kirby and Oscar Munoz, the company's chief executive officer, are foregoing their base salaries through at least June 30, the airline said in a filing with the Securities and Exchange Commission.

Alaska Airlines president: "These are material impacts''

Alaska President Ben Minicucci said the Seattle-based airline, whose flights are concentrated on the West Coast, has seen a reduction in bookings and a spike in cancellations.

The March math is sobering: Alaska's bookings are down 265,000 from a year ago and it has seen 270,000 more cancellations. That's more than half a million passengers, or 13 percent of the 4 million passengers it carries each month.

"So these are material impacts,'' he said.

March and April have been hit the hardest but there are declines in later periods, too, he said.

"It's difficult to predict what will happen going forward,'' he said.

Alaska hasn't formally announced any flight cuts but Minicucci said it expects to cut May flight capacity by about 3 percent by canceling some red-eye flights and exiting some markets.

On the bright side, he said: Alaska had a fare sale last week, including $99 one way fares from California to Hawaii, and travelers responded.

"There still appears to be demand for travel, which is good news,'' Minicucci said.

JetBlue Airways: "We're leaving no stone unturned''

JetBlue previously announced a 5 percent reduction in flights through early May but CEO Robin Hayes announced additional moves Tuesday including temporary pay cuts for executives, voluntary time off for employees, sharply reduced spending and other moves.

Hayes said the demand for travel deteriorated significantly over the last couple weeks. He said the both corporate and vacation travel has been affected. 

"It appears to be worse than what we saw after 9/11,'' he said.

Spirit Airlines CEO: "It's safe to say there will be some (seat) capacity changes for May.''

Spirit Airlines, a rapidly growing budget carrier that caters to vacation travelers seeking cheap getaways, is reducing flight capacity by about 5 percent.

Most of the cuts will be off peak flights, including those on Tuesday, Wednesday and Saturday, when fares are the cheapest, CEO Ted Christie said. 

Christie said Spirit began to "see a collapse in yields,'' a key measure of airfares, in late February as airlines worried about filling planes started filling more seats at Spirit-like prices. The airline hopes the need for discounting will be reduced as the number of flights is reduced.

Christie said the April flight cutbacks will be Spirit's first move.

"It's safe to say there will be some capacity changes for May,'' he said.

This article originally appeared on USA TODAY: Coronavirus: Delta cuts 40% of its capacity, parking 300 planes