The head of Delta Air Lines has warned recovery from the Covid-19 crisis “may take years” and the carrier must “re-size” to survive.
Ed Bastian, Delta Air Lines chief executive, told analysts: “We need to negotiate the crisis. We are prepared to get through whatever time it takes. We will get through, but it may take some years. It’s going to be multi-phased. It’s going to be choppy.”
He warned: “This will be a smaller industry. To protect our company we will need to re-size our business.”
Speaking after announcing a pre-tax loss of $607 million for the three months to March, Bastian said: “Our recovery will be dictated by our customers feeling safe physically and financially. It could be up to three years before we see a full recovery.”
He insisted: “The most important thing to get people travelling is going to be confidence in safety – personal safety. We will make whatever changes to the business model we need to.
“We will do what it takes to restore customer confidence. Safety will no longer be limited to flight safety.
“Demand will be there when people feel it’s safe to travel. We have to inspire confidence to start travelling. Our estimate is domestic [traffic] will come back faster than international.”
Bastian insisted: “Travel will continue – business is done face to face and people enjoy experiences – but it may not continue in the same way.
“The path to recovery may take several years, but we believe customers will place a higher premium on quality of service than ever before.”
He agreed load factors would be lower and there could be fewer price variations, and said: “Whether we eventually get back to 90% [load factors] I don’t know.
“We will get back, but whether it means our margins get back to the same level I don’t know.
“There will be fewer aircraft flying for an extended time, and that will be an opportunity for us to focus on the quality of what we do.”
Delta currently operates about 20% of domestic services in line with US government requirements.
Bastian said: “We’ve reallocated a lot of staff to ensure cleanliness and hygiene and to reduce touchpoints.”
Delta chief financial officer Paul Jacobson said: “We’re beginning to think about how to reset the cost structure for the long term.
“We are prepared for cash flow to remain negative through to the end of this year. The uncertainty means we can’t rule anything out.”
