U.S. airlines have made new, far-reaching capacity cuts due
to the Covid-19 pandemic.
Delta now plans to cut capacity 70% systemwide until demand
starts to recover. United will implement a 60% systemwide capacity cut. JetBlue
will make a capacity reduction for April and May of 40%. And Allegiant expects to
do a 35% reduction.
Delta’s latest update, made in a regulatory filing
Wednesday, accelerates a pullback that the carrier had set at 40% late last
week. Delta now expects March revenue to dip nearly $2 billion from a year
earlier, with worse results to come in April.
The carrier said its largest cuts will come in international
flying, with a pullback of more than 80% over the next two or three months. New
cuts include the suspension of flying to Aruba, Guatemala, Honduras, Peru and
Panama due to travel restrictions imposed by those governments.
More than 600 Delta aircraft will be grounded, and the
carrier will accelerate retirements of old aircraft, including McDonnell Douglas
MD-88s and MD-90s as well as Boeing 767s.
United, meanwhile, upped its planned capacity cut from 50%
in April to 60% and provided more details than other carriers on where the cuts
will be made.
The carrier will cut international capacity by 85% and
capacity within the U.S. and Canada by 42%.
On the domestic front, United will implement its cuts while stopping
service to just one destination: ski town Mammoth Lakes, Ca., where the ski
area is already shuttered.
The carrier is suspending 66 hub-and-spoke routes. The most
cuts will come in San Francisco, where United is suspending 19 routes. At its
Denver hub, United announced just one route suspension, to Eureka, Calif.
United has generally sought to preserve routes that connect
secondary cities to nearby hubs. For example, the airline will suspend flying
between Chicago and Eugene, Ore., but continue flying to Eugene from Denver,
Los Angeles and San Francisco.
On the international front, United now plans to operate just
45 daily flights beyond the U.S. and Canada in April.
JetBlue CEO Robin Hayes and president Joanne Geraghty
offered grave financial details while announcing their 40% cut in flying in a
memo to employees Wednesday. The cuts are up from the 5% capacity reduction
JetBlue revealed last week.
Hayes and Geraghty said that in the last several days,
JetBlue had taken in an average of less than $4 million per day from bookings
and ancillary fees, down from an average of $22 million per day last March. The
cancellation rate has been more than 10 times the norm.
“If you do the math, $4 million per day does not come
anywhere close to covering our daily expenses. It is hard to predict how long
these conditions will last and how much more challenging the environment may
become,” the memo says.
To fortify its cash on hand, JetBlue has borrowed $1 billion
from a credit line it recently secured.
Allegiant had already cut capacity by approximately 15%
during April and May, but additional reductions will raise the figure to
between 30% and 35%.
Allegiant also said that it will immediately suspend
construction of what will be its first hotel, the Sunseeker Resort Charlotte
Harbor in Port Charlotte on Florida’s southwest coast. Other measures —
including a moratorium on nonessential capital expenditures, a hiring freeze
and the cessation of discretionary expenditures and stock buybacks — will
defer as much as $300 million in cash outlay this year.
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