Large U.S. airlines revise 2020 forecasts, slash costs and flights

On Tuesday, leading U.S. airlines including Delta and American announced the suspension of their 2020 financial forecasts and took strong measures to further boost their capabilities to fight the economic impact of China’s coronavirus United announced a capital raising event and reported a first-quarter loss.

The coronavirus pandemic has deeply impacted the tourism sector and in turn the passenger airlines industry.

“This clearly is not an economic event. This is a fear event, probably more akin to what we saw at 9/11 than necessarily what we saw in 2009,” said Delta Chief Executive Officer Ed Bastian in an industry conference.

Delta is cutting domestic capacity by 10% to 15% and international capacity by 20% to 25%; it has also frozen hiring across the company and has begun offering voluntary leave options to staff; it is also looking at early retirement of older generation aircraft.

Delta has reported a fall of net bookings by 25% to 30% and expects the situation to worsen even further.

American said, it would trim domestic capacity by 7.5% in April and international flights by 10% for the upcoming summer season; it has yet to announce any costs cuts.

As of March 9, American’s capital stood at $7.3 billion and it said it was “well-positioned” to manage the coronavirus crisis; a fall in fuel prices is expected to result in cost savings of $3 billion in 2020.

In a statement, United said, its CEO Oscar Munoz and President Scott Kirby are forgoing their base salaries through at least June 30, 2020.

Analysts have said, U.S. airlines have strong balance sheets in terms of significantly lower debt levels and sizeable cash reserves before the spread of this crisis. Airline executives have however warned that it is difficult to predict how deep and how long China’s coronavirus pandemic will persist.

In an effort aimed at encouraging bookings, many large U.S. airlines are allowing passengers to re-book tickets through April 30 without having to pay fees to change flights.

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