Delta Air Lines Internal Memo: We are burning $50M in cash a day – Idaho Reporter

DAL, Industries, Investments, National

Delta Air Lines Internal Memo: We are burning $50M in cash a day

ATLANTA, March 20, 2020 – Delta Air Lines today announced it has entered into a $2.6 billion secured credit facility with JPMorgan Chase Bank, payable in a single installment on the maturity date on March 16, 2021. The goal is to enhance the company’s liquidity as it manages through an unprecedented decline in air travel demand due to the COVID-19 outbreak. The company is also drawing $3 billion under its existing revolving credit facilities.

“The growing need to protect Delta’s future has led to difficult decisions across our business that are impacting all of our stakeholders,” said Delta CEO Ed Bastian. “Maintaining ample liquidity during this crisis is critical to the essential service that Delta provides in America’s transportation infrastructure as well as the jobs of more than 90,000 Delta people across the country.”

But in the internal memorandum sent to “Delta Colleagues Worldwide” today, Ed Bastian said that “despite all the self-help measures we are taking, we are currently burning roughly $50 million in cash each day.”

He furthermore thanked “the more than 13,000 people who have stepped up to take voluntary unpaid leaves”meaning that 13K workers lost their job but they cannot apply for unemployment benefits since they “voluntarily” took that leave. and according to Delta employees in comment section they absolutely are giving unemployment payments to the Delta employees that are taking voluntary leave.

Bastian also said that “June quarter revenues will be down by $10 billion compared to a year ago – an 80 percent reduction.”

Following is the first page of memorandum.

Internal Memorandum

Date: Friday, March 20, 2020

To:Delta Colleagues Worldwide
From:Ed Bastian, CEO
Subject:Securing Delta’s Position In This Crisis
  

It has been an extraordinary few weeks, to say the least, for our business, our nation and our world. Just over a month ago we were celebrating a record Profit-Sharing Day; today we face the greatest economic challenge in our history as the world grapples with the growing COVID-19 (coronavirus) pandemic.

I want to thank the more than 13,000 people who have stepped up to take voluntary unpaid leaves – this is the most important thing anyone can do right now to support Delta. While I’m grateful to the thousands that have volunteered, we could use more, so please seriously consider whether this is the right short-term decision for you and your family.

Earlier this week I outlined the serious threat to our business and the difficult actions we’re taking over the next few months to protect our company. Our revenue outlook continues to deteriorate in the short term with the decline in travel demand. We’re now projecting our June quarter revenues will be down by $10 billion compared to a year ago – an 80 percent reduction. It’s also clear, 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.

In light of the unprecedented challenges facing us, we have entered into a $2.6 billion secured credit facility and are drawing down $3 billion under our existing revolving credit facilities. This will help fortify our cash position in the coming weeks and months. To put this in context, despite all the self-help measures we are taking, we are currently burning roughly $50 million in cash each day.

We also continue working with the President and Congress on disaster relief assistance, which is vital to protect our industry’s critical role in our nation’s economy. Amid those discussions, in recent days some critics have argued that the airlines have not been good stewards of our money during our profitable years. At Delta, nothing could be further from the truth. Our philosophy has always been a simple one: We put 50 percent of our operating cash flow back into our business by investing in our people and our customers, use 30 percent to pay down debt, and return 20 percent to our owners.

In fact, over the past five years Delta has invested over $20 billion in new aircraft, airport enhancements, technology and customer service improvements; and invested $19 billion in our people via profit-sharing and pension contributions and payments. In addition, we increased base pay by 30 percent during that period and regained the confidence of the financial markets by earning back our investment-grade credit rating. When the extent of the COVID-19 crisis became clear, we immediately suspended our share repurchases, and our Board of Directors has voted to suspend future dividend payments.

While these actions will help, the innovation of our people has always been our most powerful tool, and we need it more than ever to protect the future of our company. I have received a remarkable number of ideas and offers to help from Delta people across all divisions as well as our merit employees. We’re reviewing them all and will be making decisions soon on next steps to preserve cash, fortify our future and plan for our eventual recovery. We are exploring all options on help we will need from both merit and frontline people.


Shares of Atlanta-based Delta nosedived by 60% since February 21, 2020.

28 Comments

  1. Heather

    “He furthermore thanked “the more than 13,000 people who have stepped up to take voluntary unpaid leaves”meaning that 13K workers lost their job but they cannot apply for unemployment benefits since they “voluntarily” took that leave.”

    If you’d bothered to do any research, like contacting the GA or MN Departments of Labor, you’d know that the employees who volunteered to take leave will in fact qualify for unemployment in these extraordinary circumstances (ask me how I know). Also, these leaves are short-term not to exceed 90 days, not some nebulous layoff by another name. The situation is grim for us, but you’re reaching just to sensationalize your story, and it shows.

    • Idaho Reporter Team

      Thanks for your comment
      We used this article as a guidance https://www.huffpost.com/entry/unpaid-leave-coronavirus_l_5e6bd44ac5b6747ef11c9e7c
      And for a “short term”, I am not so sure it will be that short…especially in travel sector

      Mark

      • Erica

        I looked at the reference you gave and no where does it mention Delta or that you can not apply for unemployment. Pretty sketchy reporting when your only source is another journalist work and you don’t double check facts. BTW, those that volunteered to take a leave can and have applied for unemployment. I know of one person personally who has been approved.

      • Pauletta Nixon

        They absolutely are giving unemployment to the Delta employees that are taking voluntary leave Delta it is giving them the paperwork so they get paid make sure you’re giving your information correctly

        • Robert K. Reed

          Thank you for your helpful comment. I have revised the article accordingly.

    • Lorinetta

      Thank you Heather for setting them straight.

    • Al

      No one lost their jobs ……some people don’t live paycheck to paycheck and can afford to take a week or 2 away from work unpaid

    • Teresa

      Exactly! Why bother with research when it’s easier to spread lies without verifying from the source. (I’m on my Very Voluntary 90 days LOA now, but I’m sure this info is far more factual than my documentation, meh.)

      This opinion on whether or not it will be short term carries as much weight as the incorrect “facts” published. Zero.

      Side note: there’s an article about asparagus curing cancer. Maybe repost that too. I’m sure it’s 100% accurate.

      See ya in 90 days.

  2. Margaret kipling

    So pilot pete can now try to enjoy his was stress life we love u pilot pete and hope one day can fly with ur pilot pete on a holiday with your airline again soon

  3. Ramp agent

    I SEE DELTA AIRLINES TAKING ABOUT WHEN THEY HAD THE BIG PROFITS SHARING AND NOW BEGIN FOR HELP FROM THE GOVERNMENT.
    I WORKED FOR ALMOST 20 YEARS FOR DELTA AS A RAMP AGENT AND IF I EVER GOT 50 OR 60 DOLLARS ONCES AS BONUS I THINK I WAS BY MISTAKE BECAUSE AFTER THAT WE NEVER GOT A SINGLE DOLLAR AND JUST BECAUSE WE ARE BELOW WING THEY THINK WE DON’T DESERVE ANY MONEY AND DOING ALL OF THE HEAVY AND DIRTY WORK FOR THE AIRLINES AND GETTING PAID 9.45 MOST OF THOSE YERAS AND TO INSULT US MORE BESIDES NOT GETTING PAID ,DELTA EMPLOYEES GOT MORE MONEY LAST FEBRUARY AND THEN AGAIN WE DIDN’T EVEN GET A DOLLAR.
    I HOPE THE GOVERNMENT HELPS THE OTHER AIRLINES AND NOT DELTA.

    • Matt

      …below wing employees get profit sharing checks.

      • HAROLD CHRISTOP

        Only the supervisers get profit sharing check the ramp agents do not.

      • HAROLD

        Only below wing supervisors get profit sharing checks ramp agents do not

    • Varinder Dhillon

      I know that workers get maybe 1000 check but most of the part going to big corporations

    • Above Wing JFK

      You are not a Delta Airlines Inc employee. Because nothing that you wrote here is true for Delta Airlines Inc employees. Additionally below wing gets a higher hourly rate of pay than above Wing. And all Delta Airlines Inc employees get profit sharing whether you work airport, cargo, inflight, flight opps, teaching/training or corporate.

    • No thanks

      Stop lying, I’m a ramper too and valentine’s day was a great day for profit sharing. Hey “ramp agent” why don’t you tell everyone the year range you worked here?

      • John Pete

        Maybe, this guy worked for DGS or other Delta contracter and getting confused.

    • Brian

      I also work for Delta and we have had record profit sharing for 6 years straight. We get paid close to $35.00 an hour? Unless you were seasonal/temp or a vendor you are way off base to say you worked 20 years and only got $9.45 an hour.

  4. Denise Williams

    Should not have giving out 2nd profit checks

  5. Jaimie

    Delta is refusing to give refunds to their patrons even if that flight is to a country with closed borders. This business practice should sustain their expenses as their costs have also decreased. Does the Department of Transportation have a stance on this practice?

    • Majorairlineemployee

      Delta isn’t the only one. All airlines are doing this.

  6. Nunya

    They promised those accepting the leave they would be able to get unemployment. If he knew differently, then they will destroy any trust they have work all these employees.

  7. Maggie Lawrence

    Love y’all Delta

  8. Tina

    Delta airlines is a great company matter fact best company anyone can work for. I’m employee and Delta has been giving great profit sharing check since 2005 when I got hired .also bouns in our check when we reach our goals Bonus’s points which u can purchase anything with all kinds of discounts on Hotel car rental parks ect.i love u Delta we going make though this disaster thanks for all u do in taking care of us we are one Big Positive Family!

  9. Delta employee

    Robert K. Reed,

    The USA Today article you are using as a talks about the claim that cannabis can cure cancer was reported by Reuters, and also states THERE IS NO EVIDENCE OF THIS. The truth is in the details, if you are willing to take time to conduct proper research. Based on this example, I’m not surprised you put a different twist on this Delta article. Reporting incomplete information or gossip as fact discredits you’re writing, comprehension skills, critical thinking skills and position as a credible journalist. But maybe being factual and credible is not your goal at all.

    From the USA Today article YOU referenced above where you claim USA Today says marijuana cures coronavirus. Clearly they state there is no evidence of this. What a poor example to use for a reference to your argument:

    “A Reuters story this past week addressed the issue of whether cannabis can impact coronavirus, specifically social media claims that it can kill the virus (there is no evidence of that). Reuters also referenced the American Lung Association position that smoking marijuana can damage the lungs and possibly affect immune systems and their ability to fight diseases.”

    You, Sir, are giving the appearance of trolling. Carry on! I won’t read anything written here by Robert K. Reed again, that’s for sure.

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