By Dave Sebastian 

Delta Air Lines Inc. said it would remove its 18 Boeing 777 aircraft from its fleet by the end of the year as it tries to cut costs amid the decimation of travel by the Covid-19 pandemic.

The company said it expects to book impairment charges related to aircraft retirement of $1.4 billion to $1.7 billion before tax for the second quarter as a result. The company is also accelerating its retirement plan for the MD-88 and MD-90s, which will exit the fleet in June 2020, and has parked more than 650 jets, Chief Executive Ed Bastian said in a letter to employees Thursday.

Delta's decision to retire old aircraft comes as it burns $50 million every day as its fleet remains idle, Mr. Bastian said, adding that the company aims to reduce cash burn to zero by the end of the year. Taking estimated future cash flows in consideration, the Boeing 777 and MD-90 aircraft's carrying value is no longer recoverable, Delta said.

"Steps like this help us stem the bleeding, in an effort to safeguard Delta jobs and our future," Mr. Bastian said.

The company will rely on its more fuel-efficient Airbus A330 and A350-900 aircraft for long-haul flying when international demand returns, Mr. Bastian said.

Delta will consider further early aircraft retirements, it said.

Mr. Bastian said the airline has refunded more than $1.2 billion to customers since the pandemic started, including $160 million so far this month.

More than 41,000 Delta employees have taken voluntary leaves of absence, Mr. Bastian said.

 

(END) Dow Jones Newswires

May 14, 2020 09:44 ET (13:44 GMT)

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