Shares of Delta Air Lines (DAL - Free Report) have lost 63.2% compared with the industry’s 59.8% decline in the past month. Delta, like most other airline stocks, has been hit hard by the sharp drop in air-travel demand due to the coronavirus outbreak, resulting in the stock’s depreciation.
Coronavirus-Led Woes Dampen Delta’s Prospects
Due to the coronavirus-induced sharp plunge in demand, Delta expects revenues for March to be almost $2 billion less on a year-over-year basis. The carrier’s projection for April is worse. In a bid to match the extremely low-demand scenario, this Zacks Rank # 3 (Hold) Atlanta-GA based carrier decided to cut systemwide capacity to the tune of 70% until there is a recovery in air-travel demand. Notably, over the next two to three months, Delta’s international flights will be reduced to more than 80%.
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With revenues being dented due to extremely low passenger traffic, Delta is looking to cut costs to drive the bottom line. Evidently, the carrier deferred all plans pertaining to capital spending. Moreover, the carrier put a pause on hiring and is offering voluntary leave options to employees. Apart from accelerating retirement plans of the older planes in its fleet, Delta aims to downsize its active fleet by parking at least 50% of the fleet
Due to the above-mentioned downsides following the coronavirus outbreak, Fitch Ratings lowered its outlook for Delta to negative.
Delta apart, carriers like American Airlines (AAL - Free Report) , JetBlue Airways (JBLU - Free Report) and Ryanair Holdings (RYAAY - Free Report) cut capacity in the face of dwindling demand due to this health hazard.
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