In a recent frank and wide-ranging interview with CNN’s Poppy Harlow, Delta Air Lines CEO Ed Bastian said bookings have stalled, they are facing potential layoffs, more than half of their employees have taken voluntary leaves and that more than 2200 employees have taken an early buyout and are leaving the company.
Bastian also used one word over and over: Resiliency. He said this is the crisis that will define Delta and added, “Resiliency will be redefined across corporate America, across our society.”
The CEO has overseen Delta since 2016. His tenure in the last four years reminds me of a quote, the opening line from Charles Dickens’ “A Tale of Two Cities”: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair.” The clarity and relevancy of Dickens’ words in today’s world is testament to their power.
Put yourself in Bastian’s shoes. He has literally been at the helm of this airline during its most profitable days. On February 14th (Valentine’s Day) of this year, 2020, Delta paid out $1.1 billion in profit sharing to its employees. “No other company and certainly no other airline has ever shared $1 billion in profits with its employees,” Bastian said at the time. The company paid close to that to its employees for five years — the entirety of Bastian’s time as CEO. The mind-blowing part is that was a mere six months ago.
Now Bastian has to lead in the worst of times. In the second quarter of 2020, Delta Air Lines lost $5.7 billion. The rapidity of the negative impact of the pandemic is enough to make any head spin.
Through the end of September, Delta will block all middle seats and cap load factors at 60%. Other airlines have opted not to block seats or restrict loads, cancelling flights and packing the airplanes they have kept on those routes.
Delta received $5.4 billion as part of the The Coronavirus Aid, Relief, and Economic Security Act (CARES). Delta signed a letter of intent for additional funding. But, Bastian says, they have not made a decision to take the money.
The Oracle of Omaha, Warren Buffett, has reportedly said that “there are too many planes flying,” and airlines are facing this as their new reality. Oliver Wyman’s David Stewart, partner and lead CAVOK advisor, says there is an “unprecedented inventory of aircraft available for teardown” and is predicting “a tsunami of used aircraft parts.”
The level of flying, pre-pandemic, was huge. Post-pandemic it will settle at a new level and airlines and industry experts are trying desperately to determine what level that will be. It may take two to three years before we understand the full impact of what this health crisis has done to our industry as a whole.
I am a realist but I am learning from the best — the optimists who think positively and focus on the good. “In the midst of every crisis, lies great opportunity,” Albert Einstein famously said. It’s hard, but in this crisis, our industry must look for opportunity. That is what we all must do during this time and at Aerospace Tech Review we have adopted that ideology, believing in the eventual strong return of our economy and the aviation industry.
People across the globe have embraced travel as not only a privilege but as a right. As bleak as things look right now, we will fly again — in bigger numbers than before. It may take some time to get there but it will happen. Air travel makes the world smaller and as anyone who has had a family member move away, study or live abroad knows, we will go to visit. Businesses also know keenly that nothing — not Zoom or Skype or WhatsApp — replaces a face-to-face meeting for prospecting, client relations or sealing a deal.
There is positive news regularly as countries around the world get the virus under control. There is hope on the vaccine front with several researchers showing potential promise with positive results in trials from Oxford to China.
For now, operators must focus on doing all they can to cut waste, be more efficient and utilize the already phenomenal amounts of data they possess to their advantage. As I quoted before, in crisis, there is opportunity. Those that look for it, and grab it, will succeed. This is where leveraging technology that helps make operations more efficient is key, and our goal in this publication as well as our event, Aerospace Tech Week, is to help operators find those opportunities. You can find more information about Aerospace Tech Week throughout the magazine after each feature story.
Back to resiliency. Bastian is on target. Right now, companies need to be resilient. Encourage your employees to dig deep, look hard and continually find ways to improve your operations. It’s not just about saving money by finding a cheaper vendor. It’s about making leaps in thinking and the way business is conducted, using the incredible technologies available to us.
Now, while the pace of operations is a bit slower, is the time to implement all the things that seemed impossible when trying to keep up with the previously staccato pace of business. Think of the slower drum beat of operations now as a blessing and take advantage of it.
As Mark Twain said, “Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.” And from that perspective, and so many others, we need travel more than ever.