Delta Air Lines has submitted an application for federal stimulus grants, telling employees Friday that business conditions are worsening.
The Atlanta-based airline expects its second-quarter revenue to be down 90% and is burning through more than $60 million in cash a day.
And, Delta CEO Ed Bastian told employees, “we know we still haven’t seen the bottom.”
Bastian told employees in a Friday memo that the federal grants “are not nearly enough,” and if it did not take steps to save costs and raise new financing, “that money would be gone by June.”
About 30,000 of the company’s 90,000 employees have volunteered to take unpaid leave.
Bastian said Delta still needs more to volunteer to take unpaid time off and is also offering longer leaves of six months, nine months or 12 months.
The airline, which has more than 36,000 employees in Georgia, is cutting flights 80% this month.
The company has also reduced pay of hourly ground workers and merit employees 25% by cutting their hours.
Delta is eligible for a portion of $25 billion in worker protection grants for passenger airlines. The first deadline for airlines to apply for funds from the CARES Act was the close of business Friday.
“We submitted our application this morning to Treasury Secretary Steven Mnuchin for our share of the worker-protection grants,” Bastian wrote to employees. “We appreciate the decisive action of our nation’s leaders to protect our people.”
In order to be eligible, the stimulus program requires airlines to "refrain from conducting involuntary furloughs or reducing pay rates and benefits until September 30, 2020" for employees other than corporate officers, as well as curb shareholder payouts and maintain a minimum number of flights.
Although Delta is cutting hours and total pay, it says it is not cutting "pay rates," per the wording of the bailout package.
Also Friday, Warren Buffett’s Berkshire Hathaway, a major shareholder in Delta, disclosed the sale of a portion of the millions of Delta shares it owns. Buffett’s firm also sold a portion of the Southwest Airlines shares it owns.
The stimulus package also includes $25 billion in loans and loan guarantees for passenger airlines. Airlines would qualify for the loans if they can't get credit otherwise.
Delta is focusing on cutting costs by slashing payroll expenses, halting capital projects, consolidating airport facilities, “delaying non-essential maintenance” and looking for other savings.
The company has parked more than 450 of the 600 planes it will ground this month.
“We know that the second quarter will be even more difficult than the first as the pandemic continues to evolve,” Bastian wrote.