Delta CEO: Government shutdown will cost the airline $25 million this month

Key Points
  • Delta's CEO says the airline lost $25 million in revenue due to the partial government shutdown.
  • The shutdown is the longest ever and has left some 800,000 federal workers furloughed or working without pay.
Delta CEO: There's slight reduction in January revenue due to shutdown
Delta CEO: There's slight reduction in January revenue due to shutdown

The partial U.S. government shutdown will cost Delta Air Lines about $25 million in revenue this month as fewer government contractors and employees are traveling, the airline's, CEO Ed Bastian, said Tuesday.

The shutdown is the longest ever and has left some 800,000 government employees furloughed or working without pay.

Delta, which reported fourth-quarter earnings earlier Tuesday, said it expects the shutdown, along with currency headwinds and a later Easter this year, to dent its revenue in the first three months of the year. Unit revenue, which measures its revenue for every seat it flies a mile, will be flat to up 2 percent in the three months ending March 31, compared with the year-earlier period. Delta posted $10.74 billion in revenue for the last three months of the year, up 5 percent from a year earlier.

Here's how the government shutdown is affecting the airline industry
Here's how the government shutdown is affecting the airline industry

The comments from Delta's CEO are the clearest yet of the financial toll that the partial shutdown is having on U.S. companies. The shutdown is the result of an impasse between President Donald Trump and lawmakers over funding for a wall along the U.S. border with Mexico.

The aviation industry has been among the most vocal in urging the government to reopen.

The shutdown is preventing airlines from introducing new jets and routes because they need federal officials to sign off on those plans. For example, Delta said expects to delay its Jan. 31 launch of its brand-new Airbus A220 jets, aircraft it hopes will bring more high-paying corporate travelers on board with its bigger seats and windows, since safety inspectors are furloughed. The rollout of its widebody Airbus A330neo planes, replacements for older, less fuel-efficient aircraft, could also be pushed back because of a dearth of FAA inspectors, executives told analysts on a call Tuesday.

TSA checkpoint at the Atlanta airport
Phil LeBeau | CNBC

It's also delayed hiring plans for new employees who require certain federal clearances, such as mechanics, Delta said.

Several major U.S. airports have been strained by the shutdown as the absentee rate of Transportation Security Administration screeners climbs. Some of the nation's busiest airports have closed down security checkpoints, leading to long lines for travelers, due to the staffing shortfall. Wait times at security checkpoints in Hartsfield-Jackson Atlanta International Airport on Monday topped one hour with several lanes closed. The airport is the world's busiest and Delta's hub.

TSA officers are among the some 420,000 federal employees deemed essential who are required to work without regular paychecks during the impasse. Delta's CEO Ed Bastian said the airline staff have been helping direct passengers and providing assistance with "non-security" tasks to help short-handed TSA agents get passengers to their gates.

Security lines at Atlanta's airport on Tuesday were about 15 minutes, a spokesperson said, a wait time within TSA's standard of a half-hour or less. TSA said the bottlenecks were limited to a few airports on Monday and that more than 94 percent of the 1.89 million screened passengers passed through TSA checkpoints in 15 minutes or less.

Airline earnings continue after the bell on Tuesday when United Continental Holdings, parent of United Airlines, reports fourth-quarter results.

Delta CEO Ed Bastian, at a press conference to announce that Delta Air Lines and Los Angeles World Airports (LAWA) have formally kicked off the Delta Sky Way at LAX project ââ¬â Delta's $1.86 billion plan to modernize, upgrade and connect Terminals 2, 3, and the Tom Bradley International Terminal (Terminal B).
Al Seib | Los Angeles Times | Getty Images