Delta CEO asks employees to take more unpaid leave in 2021 as industry continues to struggle

KEY POINTS

• The cost-cutting measure is the latest from airlines as they prepare for a difficult 2021.
• About 18,000 Delta employees have accepted buyouts this year, about 20% of its pre-pandemic workforce.

Delta Airline employees check in luggage at the Ronald Reagan National Airport on July 22, 2020 in Arlington, Virginia. During the COVID-19 pandemic, all employees and passengers are required to wear facemasks while onboard a Delta plane.

Michael A. McCoy | Getty Images

Delta Air Lines CEO on Wednesday asked employees to sign up for more unpaid leave with a slump in travel to continue into 2021.

"Our voluntary unpaid leave program will continue to be essential to positioning Delta for the recovery, and we will need participants for the foreseeable future," Ed Bastian said in a note to staff. "I ask everyone to consider whether a voluntary leave makes sense for you and your family."

Executives at Delta and other airlines in recent weeks have warned about a slowdown in bookings as Covid-19 infections rose, making it more challenging to trim its cash burn.

The Transportation Security Administration said it screened 501,513 people at U.S. airports on Tuesday, the fewest since July 4 and about a quarter of the 1.9 million people the TSA screened a year ago.

During an interview with CNBC's "Squawk on the Street," Bastian said despite Christmas and New Year's Eve being a few weeks away, demand would likely climb to just about a third of last year's levels. He said he expects a rebound in air travel in the spring after Covid vaccinations ramp up.

More than 40,000 Delta employees have opted for unpaid leaves of absence at the company's urging. Roughly 18,000 accepted buyouts and early retirement packages, cutting Delta's pre-pandemic head count by about 20%.

Other airlines are eyeing more cost-cutting in 2021 with a recovery still months away. JetBlue Airways told employees on Tuesday that it plans to pause employee raises, paid parental leave and extend executive pay cuts into next year, CNBC reported.

"We are planning for revenue to be billions of dollars lower than usual, and are challenging teams across JetBlue to reduce costs and improve efficiency even further," Mike Elliott, JetBlue's chief people officer, said in a note to employees.