Delta Air Lines, Inc. (NYSE: DAL) announced plans to scale back flights by 40% and suspend service to most of Europe amid the coronavirus crisis.
Delta CEO Ed Bastian announced that Delta was experiencing negative net bookings (i.e., more cancellations than new reservations) for travel over the next four weeks. With demand evaporating, Delta is moving aggressively to limit the losses from this health crisis and ensure that the company doesn't suffer permanent damage.
At the beginning of March, there were significant COVID-19 outbreaks in Europe and Asia, but fewer than 70 confirmed cases in the United States. Over the past two weeks, the situation has changed rapidly.
Hundreds of new U.S. cases have been reported every day recently, bringing the nationwide total to more than 2,000 by Friday, despite very limited testing so far. The scale of the outbreak in Europe has increased significantly since the beginning of March, too.
Airlines like Delta have also had to cope with rapidly changing rules on who is allowed to travel where. Travel to and from China has been severely restricted since the beginning of February.
Last Wednesday, President Trump announced new restrictions barring most travel from continental Europe to the U.S. except for American citizens and permanent residents. Several other countries, like Argentina and India, are severely restricting or banning travel from the U.S.
With new developments every day, it has been virtually impossible for airlines to make accurate demand projections. However, it's clear that demand for air travel within the U.S. and to Latin America has plunged dramatically, while demand for flights to and from Asia and Europe has almost disappeared entirely. As a result, airline stocks have plunged.
Even after a double-digit gain on Friday, Delta Air Lines shares have fallen 35% this year.
Delta opened Monday markets down $4.59, or 14.6%, to $32.77.
