With the moves, the COVID-19 crisis is reshaping the most profitable U.S. airline into a significantly smaller company in the near future.
It's an historic disruption for Delta, which has for years been one of Atlanta's most prominent and successful employers and corporate citizens, with broad reach and influence across the region. Just a month ago, the airline celebrated a record $1.6 billion profit sharing payout to employees.
Delta is now offering voluntary unpaid leave to employees and putting in place an immediate hiring freeze. The company has its headquarters near Hartsfield-Jackson International Airport and has 90,000 employees around the world, including more than 36,000 in Georgia.
Bastian said he will forgo his salary for the next six months.
In the memo to employees, he wrote that in the last few days, "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 rapidly, "driving an unprecedented revenue impact," with more cancellations than new bookings for the next month.
Delta has put in place broad waivers of change fees to allow travelers to more easily alter their travel plans due to coronavirus concerns.
Requests for flight changes have come at such high volumes that they have overloaded Delta’s website and led to hours-long waits for customer service calls. The backlog of requests caused Delta to ask customers to “refrain from contacting us” unless they are traveling in the next 72 hours.
The bottleneck is so severe that some customers trying to cancel trips may not be able to reach Delta at all before the scheduled departure. The airline is telling customers that if their flight is covered by a change fee waiver, they can get a refund or change a reservation for an unflown ticket if they can’t get through to reservations in time.
In addition to halting flights to most of Europe Delta has already cut back on flights to much of Asia, and demand for domestic travel has dropped precipitously.
"The speed of the demand fall-off is unlike anything we've seen — and we've seen a lot in our business," Bastian wrote. "The situation is fluid and likely to be getting worse."
The company will also delay deliveries of new planes it has ordered, saying the reduced capacity “requires a substantially smaller fleet.”
Other airlines, including United and American, have also announced steep flight cuts. Carriers have sought to reassure customers with details on their cleaning protocols and assurances that it’s safe to fly, but that has not prevented the sharp drop in travel.
Delta will also cut capital expenditures by at least $2 billion and substantially reduce its use of consultants and contractors.
The company is also in discussions with the White House and Congress regarding relief, and Bastian wrote that he is “optimistic that we will receive their support,” but that what form it will take is unpredictable.
Bastian said the company, which emerged from bankruptcy in 2007 to rebuild into an airline industry juggernaut, aims to “preserve cash and protect the company” and asked employees “to see what you can do to help us save cash.”
Analysts expect the billions of dollars the company has stockpiled through recent years of profitability will give it more leeway to weather the effects of the calamity. However, the plummet in travel will test all airlines, including Delta.
Bastian told employees the airline “is better-positioned to weather a storm of this magnitude than ever before in our history.”
“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,” he wrote.