Name: Delta’s Ed Bastian on the company’s rebound after “incredibly difficult” year
Uploaded: 2021-01-21
Duration: 8 min 14 s
Description: Bastian outlines the timeline for Delta’s return to profitability.

Bastian outlines the timeline for Delta’s return to profitability.

Delta’s Ed Bastian on the company’s rebound after “incredibly difficult” year

Leadership

Bastian outlines the timeline for return to profitability.

Delta CEO on company’s rebound after 2020

It's so good to have you back to talk about the year ahead. For Delta Airlines, let's begin with the New Year's Day memo that you sent to employees where you wrote that you are optimistic this will be a year of recovery. And you also said that 2021 is a turning point for travel. Tell us why you're optimistic and when do you see the term coming? Well, first of all, thanks for thanks for having me. Always good to talk to you, Susie. 2020 was an incredibly difficult year, as you can appreciate for our society, our nation as well as our industry. And for Delta, it was the worst, uh, year of worst travel conditions in history. And as you know, we came from the highest of highs in 2019 to the lowest of lows in 2020. So we are very focused on on the rebound and being positioned for the recovery. I really do believe by summer you're going to see a fairly significant rebound and recovery with people wanting to go places and see friends and opportunities to escape. Uh, from the lockdown, uh, condition that most of us have experienced this year. I think it will be still principally domestic. And US people travel to shorter distances first and over Time International will start to pick up, probably next year. So you are predicting profits by this summer. How do you get there? I mean, you just said it was a tough 2020 $12 billion in losses, the worst year ever for the airline. How do you pull off profits come back? Well, one thing we need to do and we'll continue to do is manage our costs. Really well, Uh, through the entire pandemic, we've been able to reduce our total costs by about 50% which is a huge amount for a big capital intensive companies such as ours. And we're going to continue to be very vigilant. We've got almost 20% of our people in the year have taken early retirement. We've reduced our fleet size by about 20% as well. So we've already downsized to accommodate that. It's going to be a lengthy recovery process. Uh, second thing we're gonna do is we're gonna stimulate travel. We're going to continue to keep our brand strong. Our net promoter score customer satisfaction scores through the pandemic have never been higher. All the safety protocols that we have displayed, we're going to continue display and keeping people say, uh, we're gonna block the middle seats right through into the spring and then we'll decide when we get there if we're going to continue to keep those middle seats blocked. Uh, you know, beyond that, we have made that decision yet. We're going to ensure that people are wearing masks and and the aircraft are sanitized and electro spray, fog and all the things we're doing to restore confidence in people getting around. And then I think, you know, public sentiment is going to be to a point where air travel is is a safe form of transportation. Uh, we just need the world to start to reopen businesses to reopen the theme parks to start to accept more more visitors. I think that will be then by the summertime, where where profits will start to return. You mentioned a moment ago about the importance of customer confidence. What evidence are you having that consumers are feeling confident about traveling again and sitting on an airplane next to other people, even though the middle may not be there. Are they buying tickets? What numbers do you have? People are traveling. We. During the Christmas holidays, we saw travel at about 40% of the prior year level. So there's a There's certainly a pent up demand that we're seeing in customers. It's still not a large number of business. Business travel continues to be very, very weak. It's less than 20% of what it should be at this time of year. But we're talking to our big corporate customers or travel managers. All the people in the travel ecosystem are all saying the same thing once the vaccines are out. Once people start to feel confident in moving around later this year, hopefully by summer there's going to be a big, big surge in demand. So from those corporate customers, they do still see going back to travel. Will it be like pre pandemic levels, or do they feel that they can be successful doing their business in this new era of zoom meetings? Well, you know, I think we're all tired of zoom meetings speaking as a someone in the travel business, and, uh, we just need to get back out in person again. We did a very extensive survey of our big corporate customers and as we were preparing last week for our earnings, which we discussed on our call, and it was very interesting the results of that, uh, 40% of our big corporate travel managers are telling us that they expect to be fully back next year in 2022 to 2019 levels. That's 40% and another 11% said it will take until 2023 for them to be back. So that's about half of the travel universe. The other half is pretty uncertain. You know their states there, and they need more time to understand the pace of the recovery. But the important thing in there is there is only 7% of our big corporate travel managers that said, that will never return to 2019 levels. So you hear a lot of the technologist. A lot of the people that want to market virtual is as good as in person, and it's better. It's not, uh, you know, the people are prognosticating a 50%. I think Bill Gates said business travel is going to be down 50%. I don't. I don't believe that at all. But no matter what all of us believe, it's really the corporate corporations are going to make those decisions. No, I hope you're right about all of that. Um, you know, as many people say that the ultimate test of leadership comes in a time of crisis, what more do you think you need to do as the CEO of Delta to leave the airline to this crisis? For me, it's continuing to lead by example, uh, to continue every single day, showing up to realize that the goal line is still out there. You know, we've got we've got a ways to go keeping that that ray of optimism, that confidence, that knowledge, that when people are ready to travel, our product is going to be incredibly important to unifying and bringing the world back together. Susie, we have, you know, the power of human connection is what we we sell. That's what we provide. And I think we do it better than any airline in the world does. And so when you think about how distant we all feel from each other right now because of the virus, our product has actually missed more than it's ever been. And so I think that's why I do have the optimism later in the year that it's going to be in high demand and we're going to lead the world back to a safer place together. And the Delta people are going to do a great job in doing that and setting that path in that tone. And that resilience is one of the most important things I can be doing. Let's talk a little bit about the changes going on in Washington, and now that Joe Biden is the new president, we now have a clear idea of the key people in his administration and the people who will be advising him. How do you think his decisions and his leadership will impact the business environment for 2021? What do you think the most important thing is to continue to attack the virus to win the war on the virus and put it into contained phase? I think you're going to see a much more actively engaged federal policy and and support for the states who have been trying to fight this on their own. Largely, I think you're going to see people rally, uh, to to his side, uh, in doing that, bringing businesses around because all of our businesses are really dependent upon victory over the virus. Once we get there, I think you're going to see an enormous surge of not just travel demand. I think there's going to be, uh, demand in many sectors. People are going to finally be able to get to a point where they declared freedom from the virus. Um, I think that's the most important thing that we're all looking for.