On December 3, Del Bastian CEO Ed Bastian sent a huge memo to his staff around the world. In it, the airline expanded on its testing program for employees while also offering a vision of getting the airline out of a crisis like a vaccine close delivery. One of the biggest details was that the airline reduced its cash burn from 50% in the third quarter to 50% in the fourth quarter.
Delta’s fourth quarter cash burn
Delta Air Lines expects daily cash burn in the fourth quarter to be around થી 12 to મિ 14 million per day. That’s down 50% from the 24 24 million a day seen in the third quarter. The carrier noted that the slowdown in demand and forward bookings amid the ongoing crisis has pushed the carrier to about $ 2 million per day in cash. Whenever the high is high, Delta’s cash burn expects the average daily cash burn in the fourth quarter to be half of what Americans expect.
The airline has continued to target break-prizes by the spring, and CEO Ed Bastian has highlighted the recent growth by the vaccine as a reason to encourage it.
The airline is trying to get more people back on its plane. This includes a new quarantine free trial for flights to the Netherlands and Rome. It is also focusing on cargo operations as it is ready to be sent around the vaccine once it hits the market. Contact tracing option has also been launched for international travelers.
Delta’s CEO is booming on a vaccine
In the memo, Mr. Bastian clearly states the following:
“While it will take months for the vaccine to be widely distributed, it is a clear sign of light at the end of the tunnel. Extensive vaccination among our customers and our employees will be essential for Delta’s continued recovery and the start of our resume. “
However, Delta has stopped calling for vaccination to be mandatory for all consumers, as Qantas has already suggested, as part of Mr Bastian’s pressure to encourage people to get vaccinated once they hit the market.
In the meantime, the airline continues to work with the Mayo Clinic to ensure a safe travel experience. The airline is now expanding its testing capabilities to allow people to do weekly testing for the virus. Its partners at the Mayo Clinic told the airline that there could be a 90% reduction in viral spreads if Delta progressed to weekly testing, as this would help reduce asymptomatic transmission. Delta will expand the test faster than this; It will provide test kits at workplaces with a small employee population and offer home testing kits to all employees in the US.
Vaccines are not the solution to the aircraft crisis. They are part of the travel compromise. Most airlines and countries have not yet indicated how or to what extent they need to be vaccinated before the trip, or after the vaccination will begin the journey. There are still a few months left, however, before it becomes necessary to discuss it.
What about blocked middle seats?
Delta Air Lines is blocking the choice of middle seats on board aircraft. On a jet with medium seats, the airline will block the choice of premium select, comfort + and middle seats of the main cabin. Nevertheless, parties of three and more may select seats simultaneously.
On jets without medium seats, Delta will block the selection of one wing of seats on smaller planes. In the first class, Delta is blocking nearby seats. However, the airline is not blocking any seats in the two-wing Delta One cabin. This only applies to widebodies. This affects the Airbus A330, A350 and Boeing 767 fleets.
The airline has to spend on blocked middle seats, though not directly. Blocked seats mean fewer seats are available for sale, which means less revenue if prices are kept constant. To compensate, Delta will have to increase its price, which it has done on some routes compared to the competition, but not on all of them.
Southwest Airlines, which has ended its policy of blocking middle seats, said it expects to spend 100 100 million from the policy, mostly loss-making revenue.
Delta has relaxed its policies over the past few months. The carrier is offering more seats for booking, especially in attractive business class cabins. Delta committed to blocking seats in early 2021, although it is unclear whether it will pursue its policy. The carrier still has hundreds of parked aircraft that it can bring to meet the growing demand by upgrading certain routes or adding new flights, but that’s also a breaking point, as those new flights can’t be optimized for connections taken by people.
For now, Delta looks credible that it can reach a break-even point with blocked middle seats. However, it is not very possible for the airline to turn a profit until it pays all, or at least 70-75% of its aircraft.
Do you enjoy looking at Delta’s fourth quarter cash burn rate below the third quarter? When do you think the airline will stop blocking the middle seat? Let us know in the comments!
