Delta Air Lines (DAL-US) CEO Ed Bastian said Wednesday that the airline is asking employees to take more unpaid leave to reduce costs as the epidemic accelerates and threatens to continue to impact airline demand through 2021.
In a letter to employees Wednesday, Bastian said, “The voluntary unpaid leave program is important to Delta’s recovery, and we will need more volunteers for the foreseeable future, so I urge you to consider whether voluntary unpaid leave makes sense for you and your family.
In recent weeks, Delta and other airline executives have been warning of a slowdown in flight bookings due to the worsening outbreak of the new coronary pneumonia (Chinese Communist virus). This means that the airline industry will have a more challenging time reducing its cash consumption.
In addition, the Transportation Security Administration (TSA) statistics for airports across the U.S. on Tuesday (August 8) showed signs of weakness in aviation demand. Tuesday’s traffic at U.S. airports was only 502,000, the lowest since July 4, and only a quarter of the 1.9 million passengers in the same period last year.
In an interview with CNBC, Bastian said that despite the Christmas and New Year’s Eve holiday travel season in a few weeks, airline demand is likely to be about one-third of what it was during the same period last year; however, airline demand is expected to start rebounding next spring when the new coronary pneumonia vaccine begins to be distributed.
At Delta’s urging, more than 40,000 employees have opted to take unpaid leave, and about 18,000 others have left or retired, reducing Delta’s total workforce by about 20 percent from its pre-epidemic level.
Other airlines are looking to make further cuts in 2021 as the airline industry takes more than a few months to recover, CNBC reported Tuesday, noting that JetBlue Airways has told employees it plans to extend its moratorium on raises, paid parental leave and pay cuts for top executives into 2021.
In a letter to employees, JetBlue CEO Mike Elliott said, “Our forecasted revenue shortfall of billions of dollars has become a major challenge for JetBlue, so we need to further reduce costs and improve organizational efficiency.
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