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Delta Air Lines To Reduce Capacity, Cut Costs Due To Coronavirus Outbreak

Delta Air Lines Inc. (DAL) said Tuesday it is taking additional steps, including capacity and cost reduction, to address the financial impact of the COVID-19 or coronavirus outbreak.

The airline said it will reduce its international as well as domestic capacity, institute a company-wide hiring freeze, offer voluntary leave options, and suspend share repurchases, among other initiatives.

"As the virus has spread, we have seen a decline in demand across all entities, and we are taking decisive action to also protect Delta's financial position. As a result, we have made the difficult, but necessary decision to immediately reduce capacity and are implementing cost reductions and cash flow initiatives across the organization," said Delta CEO Ed Bastian.

To align capacity with expected demand, Delta said it is reducing system capacity by 15 points compared to its plan, with international capacity reduced by 20 percent to 25 percent, and domestic capacity reduced by 10 percent to 15 percent.

The company added it will continue to make adjustments to its planned capacity as demand trends change.

As part of reducing costs, Delta said it is instituting a company-wide hiring freeze and offering voluntary leave options. It will also park aircraft and evaluate early retirement of older aircraft. The airline noted that the recent fuel price decline will provide approximately $2 billion of full-year expense benefit.

In addition, Delta said it will defer $500 million in capital expenditures, delay $500 million of voluntary pension funding, and also suspend share repurchases.

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