Over 17,000 employees for Delta Airlines have signed up for early retirement or buyouts after having a $5.7 billion net loss for the second quarter due to pandemic.
What We Know:
- Delta Airlines is having to cut back on their staffing due to a $5.7 billion net loss for the second quarter. More than 17,000 employees have signed up for early retirement or buyouts, which is about 20% of the company’s workforce. According to Delta CEO Ed Bastian, the company offered voluntary departure options to reduce the need for involuntary furloughs or layoffs, which a lot of people have faced, resulting in over 1.4 million people filing for unemployment since the virus started.
“I’m optimistic if we do have a furlough, it’s going to be relatively small numbers,” Bastian said during remarks on CNBC Tuesday. The quarterly loss is a reflection of how the pandemic negatively impacted a lot of businesses. Monday, Vox Media informed its unions to prepare for company-wide layoffs. Similar to Delta, Vox employees who hadn’t already taken buyouts when offered will be laid off.
- Delta Airlines is based in Atlanta and because the virus is spreading in the South, the airline cut it’s flying by 85% but its passenger count declined 93%. “With the virus spreading in the South, it’s put a pause on demand growth,” Bastian told The Atlanta Journal-Constitution. They announced on Tuesday their plans to retire some of their planes like Boeing 737-700, entire Boeing 777 fleet, some of its Airbus A320s, and Boeing 767-300ERs. They have already retired all of its MD-88s and MD-90s.
- Last year, Delta had a second-quarter operating revenue of $12.5 billion, which declined in the most recent quarter by 88% to $1.5 billion. The company managed to cut back on it’s second-quarter operating expenses from $10.4 billion to $6.3 billion by parking planes, asking workers to take unpaid leave, cutting hours, and pay and reducing other expenses.
- The company has benefited from government rescue funding for airlines, getting $5.4 billion of grants and unsecured loans through the CARES Act and they raised billions in other loan financing’s for a cash position of $15.7 billion at the end of June. The company did burn through an average of $27 million a day in cash in June, but they expect to break even by the end of the year.
According to Bastian, the amount of money the company has should last them for 19 months. Delta has said that if they aren’t able to get enough people to voluntarily leave, they will resort to layoffs.