Shares of Delta Air Lines Inc. (DAL) dropped 4.2% in premarket trading Thursday, putting them on track to open at a 7-year low, after the air carrier disclosed that it will remove all of its Boeing 777 aircraft by the end of the year to help stem cash burn amid the COVID-19 pandemic. Delta said it also expects the MD-90 aircraft, which are made by Boeing Co. (BA) subsidiary McDonnell Douglas, to exit its fleet in June. Boeing's stock fell 2.3% ahead of the open. Delta expects to record impairment charges of $1.4 billion to $1.7 billion as a result of the aircraft retirements. Delta said the 777 fleet included 18 aircraft. Chief Executive Ed Bastian said the decision was made as international travel is expected to return slowly. "[P]arking this fleet will provide significant cost savings over the next several years," Chief Executive Ed Bastian wrote in a memo to employees. "Delta is burning about $50 million every day, and steps like this help us stem the bleeding, in an effort to safeguard Delta jobs and our future." Bastian said the more fuel-efficient and cost-effective A330s and A350-900s made by Airbus SE (AIR.FR) will be used when international demand returns. Bastian said since the pandemic hit, has it parked more than 650 jets total. Delta's stock has plunged 67.1% over the past three months through Wednesday, while Boeing shares have tumbled 64.3% and the Dow Jones Industrial Average has declined 20.9%.
-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
May 14, 2020 08:59 ET (12:59 GMT)
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