Delta to Retire Boeing 777 Fleet to Cut Costs Amid Coronavirus
May 14 2020 - 8:59AM
Dow Jones News
By Dave Sebastian
Delta Air Lines Inc. said it would remove its 18 Boeing 777
aircraft from its fleet by the end of the year as it tries to cut
costs amid the decimation of travel by the Covid-19 pandemic.
The company said it expects to book impairment charges related
to aircraft retirement of $1.4 billion to $1.7 billion before tax
for the second quarter as a result. The company is also
accelerating its retirement plan for the MD-88 and MD-90s, which
will exit the fleet in June 2020, and has parked more than 650
jets, Chief Executive Ed Bastian said in a letter to employees
Thursday.
Delta's decision to retire old aircraft comes as it burns $50
million every day as its fleet remains idle, Mr. Bastian said,
adding that the company aims to reduce cash burn to zero by the end
of the year. Taking estimated future cash flows in consideration,
the Boeing 777 and MD-90 aircraft's carrying value is no longer
recoverable, Delta said.
"Steps like this help us stem the bleeding, in an effort to
safeguard Delta jobs and our future," Mr. Bastian said.
The company will rely on its more fuel-efficient Airbus A330 and
A350-900 aircraft for long-haul flying when international demand
returns, Mr. Bastian said.
Delta will consider further early aircraft retirements, it
said.
Mr. Bastian said the airline has refunded more than $1.2 billion
to customers since the pandemic started, including $160 million so
far this month.
More than 41,000 Delta employees have taken voluntary leaves of
absence, Mr. Bastian said.
(END) Dow Jones Newswires
May 14, 2020 09:44 ET (13:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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