Home Business Airlines Large and Small Face Strong Fiscal Headwinds
Airlines Large and Small Face Strong Fiscal Headwinds

Airlines Large and Small Face Strong Fiscal Headwinds

0

By David E. Hubler
Contributor, Online Career Tips

Delta Air Lines announced on May 14 that it plans to retire its fleet of Boeing 777 jets, a fleet that helped Delta to become a global airline, The New York Times reported.

Start a management degree at American Public University.

Delta will retire all 18 of its wide-body 777s by the end of the year in preparation “to ride out what is expected to be a long and choppy recovery, especially for international travel,” the Times explained. “Once demand for international travel recovers, the airline plans to use newer, more fuel-efficient aircraft on long flights.”

Delta Airlines Hopes to Reduce Its $50 million Daily Loss to Zero by the End of the Year

The Times said Delta is losing about $50 million a day, a figure that it hopes to bring to zero by the end of the year. It has idled more than 650 jets in all and has already moved up plans to retire two other fleets, the MD-88 and MD-90.

In addition, Delta has paid out $1.2 billion in ticket refunds since the crisis began. More than 41,000 employees have agreed to take some form of unpaid leave of absence, the Times added.

“Delta started 2020 celebrating what it said was the most successful year in company history,” noted Niraj Chokshi, Times business of transportation reporter. “Not long after, it shared a record $1.6 billion in profits with its 90,000 employees.” Then came the coronavirus pandemic and the deadly COVID-19 disease.

Delta, however, is not alone in the airline industry’s plunge. Earlier this month, the Chicago Tribune reported that United Airlines reported a $1.7 billion first-quarter loss. United said “it could eliminate more than 3,400 management and administrative positions when a prohibition on involuntary layoffs linked to $5 billion in federal financial assistance for the airline ends this fall.”

The airline, which has been asking other employee groups to take voluntary unpaid leave, also faced opposition from airport employees after Delta attempted to slash 15,000 workers’ hours to part-time.

United reversed course after the union representing those workers filed a lawsuit in a New York federal court alleging the reduction violates the terms of United’s agreement with the federal government tied to the financial assistance.

American Airlines Announces First-Quarter Net Loss of $2.2 Billion

In March, American Airlines borrowed a $1 billion line of credit from Citibank. In its first quarter filing on April 30, American Airlines Group Inc. reported a net loss of $2.2 billion.

“Never before has our airline, or our industry, faced such a significant challenge,” American Airlines Chairman and CEO Doug Parker said in the filing announcement. “We have a lot of difficult work ahead of us. And while there is still uncertainty in what’s to come, we are confident that through the dedication of the American Airlines team and our swift actions, we will get through this for our team, our customers and our shareholders.”

In addition to the travails of the airline industry’s “Big Three,” some of the nation’s smallest airlines are facing some of the biggest headaches in coping with the effects of the coronavirus pandemic, USA TODAY reported on May 14.

Extremely High Risk to Small Community Air Service Right Now

“There is an extremely high risk to small community air service right now,” Faye Malarkey Black, CEO of the Regional Airline Association, told the newspaper.

According to USA Today, three regional airlines have already stopped flying because passengers are shunning air travel. “Industry officials worry that other small carriers could fail, leaving smaller cities and towns even more isolated.”

Last month, Trans States Airlines, a United Express carrier, suspended operations. “It was followed by Compass Airlines, which flew as American Eagle and Delta Connection. Both are owned by Trans States Holdings,” USA Today said.

The third airline to cease operations was RavnAir Group, based in Anchorage, Alaska. The company filed for Chapter 11 bankruptcy reorganization last month after 90 percent of its passenger revenue dried up, USA Today added. Among its three separate brands, RavnAir Alaska, PenAir, and RavnAir Connect, the company provided passenger, mail, and freight service to more than 100 Alaskan communities, including remote villages.

US Transportation Department to Allow Airlines to Further Reduce Numbers of Flights

To make matters worse, the Department of Transportation issued a revised order on May 12 that will allow the airline industry to reduce flights further.

“The government has been requiring carriers to operate a minimum level of service to cities as a condition of receiving aid,” USA Today said. The news source added: “One aspect of the new order is to let carriers reduce service in a way that will mean airports that had two airlines serving them could now have only one.”

The severe turbulence in the airline industry engendered by the pandemic must have older frequent flyers thinking back fondly to the days of the original “Big Three” — Pan American World Airways, Trans World Airlines (TWA) and the only one of the trio left standing, a troubled American Airlines.

Comments

comments

Ready When You Are

At American Public University, students are priority one. We are committed to providing quality education, superior student resources, and affordable tuition. In fact, while post-secondary tuition has risen sharply nationwide, the university continues to offer affordable tuition without sacrificing academic quality.

Request Information

Please complete this form and we’ll contact you with more information about APU. All fields except phone are required.

Validation message here
Validation message here
Validation message here
Validation message here
Validation message here
Validation message here
Validation message here
Validation message here
Validation message here
Ready to apply? Start your application today.

We value your privacy.

By submitting this form, you agree to receive emails, texts, and phone calls and messages from American Public University System, Inc. which includes American Military University (AMU) and American Public University (APU), its affiliates, and representatives. I understand that this consent is not a condition of enrollment or purchase.

You may withdraw your consent at any time. Please refer to our privacy policy, terms, or contact us for more details.