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Delta to retire Boeing 777 jets, warns of layoffs to stop cash burn

DELTA Air Lines is retiring its fleet of Boeing 777s, warning its pilots of layoffs as it faces collapse in the travel market, the result of the Covid-19 pandemic, reports Bloomberg

18 May 2020 - 19:00

DELTA Air Lines is retiring its fleet of Boeing 777s, warning its pilots of layoffs as it faces collapse in the travel market, the result of the Covid-19 pandemic, reports Bloomberg.

By removing 18 of its biggest planes, Delta would still have 7,000 more pilots than it needs by the fourth quarter, despite a 50 per cent reduction.



The airline will take an accounting charge of as much as US$1.7 billion for the retirement of the 777s and other previously parked smaller planes, according to a regulatory filing.



The carrier said it will rely on its 'more fuel-efficient and cost-effective' Airbus SE A350-900 and A330 planes to serve long routes.



Delta joins American Airlines in retiring entire aircraft models from its fleet, an indication of the breadth of changes carriers are making to reduce operating costs amid revenue declines of as much as 95 per cent and flying reductions of 85 per cent or more.



'While we know that we will eventually see growth and the return of our customers, our challenge is predicting the pace and timing of this return - which will be slower than any of us hoped,' said Delta vice president John Laughter in a memo to pilots. He called the 7,000 unneeded pilots 'an alarming number.'



Delta's retirement of the 777s also 'will hurt' American and United Airlines Holdings, said George Ferguson, a Bloomberg Intelligence analyst. By labelling the larger planes have no use in today's market, it potentially reduces their value as the airlines seek additional financing using the aircraft as collateral, he said.



'Retiring a fleet as iconic as the 777 is not an easy decision,' said Delta CEO Ed Bastian. 'The 777 played an important role with Delta since 1999, allowing us to open new long-haul markets and grow our international network as we transformed into a global airline.'



Mr Bastian said the retirement of its biggest Boeing jets would further Delta's 'principal financial goal' of slashing its daily cash burn to zero by year's end from the current level of $50 million.


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