(Reuters) – Delta Air Lines Inc <DAL.N> expects its second-quarter revenue to fall by $10 billion, representing an 80% reduction compared with a year earlier, the company said on Friday, as the coronavirus hurts travel demand.
To beef up its cash position during the crisis, Delta has entered into a $2.6 billion secured credit facility and was drawing down $3 billion under its existing credit facilities.
“We are currently burning roughly $50 million in cash each day,” Chief Executive Officer Ed Bastian said in a memo to employees. (https://bit.ly/3a67eLS)
The global travel industry has been upended as tourists stay indoors to stop spread of the highly contagious virus, with some estimates pegging revenue losses for the business travel sector at about $820 billion.
Delta has already said it will park more than 600 jets, cut corporate pay by as much as 50% and scale back its flying by more than 70% until demand begins to recover.
“Given the underlying damage the virus has created to the overall economy, that demand recovery will take an extended period once the virus is contained,” Bastian said in a memo to employees.
Credit quality of airlines could worsen if the health crisis runs beyond June 2020, forcing them to cut capacity between 40% to 75% or more in the second quarter, Moody’s warned in a note earlier on Friday.
(Reporting by Ankit Ajmera in Bengaluru; Editing by Arun Koyyur)