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Delta Air Lines CEO Thinks Airline Can Make a Profit Without a COVID-19 Vaccine, Expects to Break Even Next Spring

Delta Air Lines CEO Thinks Airline Can Make a Profit Without a COVID-19 Vaccine, Expects to Break Even Next Spring

The chief executive of Delta Air Lines says there are clear signs of momentum building in a recovery of the aviation industry and expects Delta to break even by Spring 2021. In an interview with Bloomberg television, Ed Bastian admitted that his “crystal ball is a little murkier than normal” but claimed the Atlanta-based carrier could turn a profit through the COVID-19 pandemic even if a vaccine for the deadly virus is never found.

“We’re in the process of a recovery, no questions about it,” Bastian said on Thursday. “It’s slow, it’s going to take some time but there are clear signs that the momentum we have is meaningful and it’s continuing to build.”

Ed Bastian, chief executive of Delta Air Lines

Delta “bottomed out” in mid-April according to Bastian with customer loads of just 5 per cent of what it would expect at that time of year. “Today, that number is closer to 15 per cent, so the optimist in me says we’ve tripled over the last couple of months, which isn’t bad,” Bastian continued.

“I expect that number to get up to 20 per cent in the coming weeks,” Bastian claimed, saying 1,000 flights a day each month will be added over the next couple of months to accommodate for the growth in demand. By the end of August, the Delta boss predicts passenger loads will top 30 per cent of normal numbers and cash burn has been reduced to just $30 million per day from $100 million at the height of the pandemic.

At the moment, Delta is enticing leisure travellers with rock-bottom fares but business travellers returning to the air are going to be crucial to Delta’s recovery. “We need businesses to start opening and right now, they’re closed,” Bastian commented. Many large corporates are encouraging employees to work from home until at least September or October.

Company travel bans remain in force and might not be lifted until next year at the earliest. “After Labor Day is going to be an important milestone and pivot point,” Bastian said of the hope that business travellers might start booking flights again after September 7.

In an effort to convince travellers that air travel remains safe despite a global pandemic, Delta has stepped up efforts to keep aircraft clean and has joined a coalition of airlines who will enforce mandatory face mask rules. The airline has also blocked middle seats on all of its flights to ensure some of physical distancing on its flights.

Bastian claimed those kinds of measures would continue until passengers were confident that air travel was safe and they could carry on with their lives even if the novel Coronavirus hadn’t been eliminated. So far, those efforts have helped bump Delta’s Net Promoter Score up 10 points.

“The steps that we’re taking are certainly temporary. Once there is a vaccine, once there are therapeutics to deal with the virus, once there’s herd immunity, whatever combination of factors are involved with respect to society feeling safe to be out in public once again, obviously, we’ll start to increase the load factor caps and eventually take the caps off,” Bastian explained.

Delta continues to ask workers to take voluntary leave and early exit options but Bastian said involuntary furloughs might be needed come October 1st. The chief executive thanked staffers for stepping up to help the airline and said Delta would do everything possible to avoid job losses.

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