There is some light at the end of the tunnel for Delta Air Lines.
The airline sounded an optimistic note about traffic volumes rising this summer—and losses decreasing in the coming months—even as its CEO said 500 employees had contracted COVID-19, news that reignited worries about the safety of air travel.
Delta chief executive Ed Bastian said at the company’s annual shareholder meeting, held virtually this year, that the airline would add some 2,000 flights in July and August. That would still leave the airline’s domestic capacity down 55% and 60% from normal levels for those months. Last week, Delta abruptly canceled summer flights to smaller markets such as Juneau, before reinstating them a few days later as a condition of getting federal government assistance.
Bastian was cautious about predicting what would happen beyond the next couple of months. Delta will still be burning through $30 million a day in cash reserves at the end of June, but that’s better than the $100 million churn of a few weeks ago. The summer promises to be an improvement from the second quarter, when capacity was down 85%.
The Delta CEO said the business might need two or three years to get back to normal levels, but that with cost controls the company could return to a break-even point by next spring as Americans slowly return to air travel.
“We are in the process of recovery, there’s no doubt about it,” Bastian later told Bloomberg Television. “There are clear signs the momentum we have is meaningful and continuing to build.”
An average of 415,135 passengers were screened at U.S. Airports in the first 16 days of June, according to the Transportation Security Administration. While significantly higher than traffic volumes at the height of lockdowns in April, that number is still down more than 83% from the same period last year. The big test for Delta, Bastian said, will come after Labor Day when it becomes clearer how much business travel is returning.
In a sign of how fragile any new momentum can be, Delta’s stock and that of other airlines fell in premarket trading when Bastian said 500 employees had contracted COVID-19. (Delta had 90,000 employees as of its most recent annual report.) Those share declines were pared back after the market open. The stock market has been volatile in the past few days on concerns about infection rates creeping up again in several major states.
Delta, like other airlines, has implemented several measures to limit the virus from spreading on its flights. It has stopped booking middle seats until at least September. In May, Delta and its major peers started requiring passengers to wear face masks on its flights, though they have not always enforced those rules rigidly. But this week, an airline industry trade group said that could change, warning the public that passengers not complying with the rules could be barred from flights.
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