Delta Air Lines DAL shares slumped after the Atlanta carrier said it would reduce capacity by 70% worldwide in response to the coronavirus pandemic.
Delta, which many analysts see as the strongest of the U.S. big three airlines, also said it expected revenue to drop $2 billion in March from a year earlier. And it predicted that revenue would slide even further in April.
“Therefore, we will continue to make significant capacity reductions, with a 70% systemwide pullback planned until demand starts to recover,” Chief Executive Ed Bastian wrote in a letter to employees.
“Our international operation will take the largest reduction, with over 80% of flying reduced over the next two to three months.”
Delta is in “constructive discussions” with the White House and Congress for aid, Bastian said. “[We] remain optimistic that our industry will receive support to help address this crisis.”
Still, cash preservation is currently Job 1, he said. “Making swift decisions now to reduce the losses and preserve cash will provide us the resources to rebound from the other side of this crisis and protect Delta's future.”
Delta will defer almost all its capital spending, including all new aircraft deliveries, until it has better clarity on the duration and severity of the crisis.
The carrier plans more than $4 billion in cash savings for the June quarter. That includes 50% pay cuts for Delta officers through June 30. Bastian has cut his own salary to zero for the next six months.
At last check, Delta shares traded at $22.34, down 30%. The stock on Wednesday has traded as low as $19.10, down 40%.