To improve liquidity, the airline has entered into a $ 2.6 billion guaranteed line of credit. Still it is suffering huge losses due to the outbreak.
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Amid an unprecedented decline in air travel demand due to the coronavirus pandemic, Delta Air Lines Inc has announced that it expects your second quarter earnings fall by $ 10 billion, which represents an 80% reduction compared to the previous year, Reuters review.
To improve liquidity during the crisis, the airline has opened a $ 2.6 billion secured line of credit with JPMorgan Chase Bank, which is to be paid in one installment by the maturity date of March 16, 2021. The company is also withdrawing $ 3 billion from its existing lines of credit.
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“The growing need to protect Delta’s future has led to difficult decisions in our business that are affecting all of our shareholders,” said company chief executive Ed Bastian. Maintaining high liquidity during this crisis is critical to the essential service Delta provides in the US transportation infrastructure, as well as to the jobs of more than 90,000 Delta people across the country.
But in an internal company memo, Bastian lamented that “despite all the self-help measures we are taking, we are currently burning approximately $ 50 million in cash each day.”
He also thanked “the more than 13,000 people who decided to take unpaid voluntary licenses“which means that these employees were left without a job, but cannot apply for unemployment benefits since they” voluntarily “took that leave.
The global aviation industry has been strongly affected by the covid-19 outbreak because governments around the world have taken flight restriction measures and entry of foreigners and have introduced quarantines to stop the spread of the virus.
According to some estimates, revenue losses for that sector would exceed $ 820 billion. Delta has already said it will park more than 600 planes, reduce corporate pay by up to 50%, and reduce its flight schedule by more than 70% until demand begins to pick up.
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