Take a deep breath. Don’t panic.
We don’t think our beloved Delta Air Lines is going out of business.
What’s Causing the Concern
Let’s face it. This is a very dark, scary, uncertain time. Some small worries are magnified exponentially. So the longer until, say, airlines resume normal schedules, the more time we have to worry.
On top of that, Boeing CEO Dave Calhoun told the Today show it’s “likely” a major US carrier will go out of business because of the COVID-19 pandemic. As USA Today points out, Mr. Calhoun “didn’t name names or define “major” airline in the 22-second snippet NBC shared ahead of the full interview.”
Look, all the airlines are experiencing difficult times right now — and Delta certainly is no exception.
But Rene’s post this past Monday about people buying tickets for the final MD-88 and MD-90 flights stirred up some reader reaction.
Longtime reader RoloT commented, “If EVERYONE follows your no-fly until AT LEAST 2021 advice, there will be a new spelling for Delta Air Lines: H.I.S.T.O.R.Y….and that will be the least of our economic problems.”
RoloT is surely not the only person with this concern.
But both René and I think Delta is here for the long haul (aviation pun fully intended).
5 Reasons Why Delta Won’t Disappear Anytime Soon
Off the top of my head, here are several reasons why I think Delta will be around for a long time.
Analysts Think Delta Can “Weather the Downturn”
Some reliable financial folks seem to think Delta will be safe.
Seeking Alpha’s Tim Gunn praised Delta’s recovery plan. And just yesterday, Barron’s Al Root noted that Delta and Southwest “have the best balance sheets in the industry and appear to be in the best position to weather the downturn.”
[Disclaimer: neither René nor I own or trade any airline stocks.]
Uncle Sam to the Rescue!
I doubt many of us would be surprised if the government infused more cash into the airlines — including Delta. Heck, the feds have already talked about pre-purchasing a lot of travel just to help out the travel industry.
More Destination Suspensions
The government just gave airlines the go-ahead to suspend flights to 5% of their destinations. That comes on top of Delta’s announcement last week it’s suspending some flights in a few major markets with secondary airports. And let’s not forget they want to temporarily pull out of some smaller markets, too.
I assume we’d see more of these practices enacted before any of the four major US airlines — American, Delta, Southwest, or United — go under.
Further Route Consolidations
Yesterday’s government announcement about airlines being allowed to cut flights at 5% of their airports stipulated that at least one carrier will still serve affected destinations. Say, for instance, Delta and American bail on a city, then United would still operate flights from that airport.
That, essentially, is route consolidation. I bet we’d see that on a larger scale. For example, Delta might be the only airline operating flights between LAX and SFO, United could handle DEN to DFW, etc.
Delta owns SkyMiles. They can print all miles they want. If they need to they can sell them to Amex, or anyone else they want, at any price.
Delta has confidence you and I will return to flying very soon and has, as we all know, extended status to everyone who had it this year though all of 2021 (you should see your updated status on Delta.com now btw).
Love the mothership or hate it, Delta Air Lines will not go out of business, at least during the foreseeable future. They certainly won’t be in great financial shape after the COVID-19 pandemic (like many of us). But they’ll stick around and keep flying.
Featured image: ©iStock.com/rypson
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