Delta CEO Ed Bastian Warns Of 'Significant’ Costs Due To Mandated Flight Cuts: Report

During an interview with CNBC, Bastian said the airline still expects normalcy to resume, provided the ongoing government shutdown ends this week.

• Bastian stated that Delta had 2,500 flight cancellations last week, which he termed as a “crazy amount.”
• He added that the airline expects to grow at its “normal” rate of 1% above the U.S. gross domestic product over the next year.
• The House of Representatives is set to vote on a spending bill later on Wednesday, which is key to reopening the federal government.

Delta Air Lines Inc. (DAL) CEO Ed Bastian reportedly warned on Wednesday that the U.S. government-mandated flight cuts would result in “significant” costs.

During an interview with CNBC, Bastian said the airline still expects normalcy to resume, provided the ongoing government shutdown ends this week.

“We had 2,500 cancellations for the last week, which is a crazy amount. It’s going to cost Delta a significant amount, it’ll cost the other airlines,” Bastian said in the interview.

Delta shares were up more than 2% in Wednesday morning’s trade. Retail sentiment on Stocktwits around the company trended in the ‘bearish’ territory at the time of writing.

Government Shutdown Update 

The U.S. government shutdown is currently in its 43rd day. While Bastian expressed hope in the interview that it would come to an end this week, an upcoming vote on a spending bill in the House of Representatives later on Wednesday remains key to the reopening of the federal government.

On Monday, the Senate passed the spending bill, paving the way for a vote in the House. Once the measure clears the House, the bill will be sent to President Donald Trump for his signature.

Bastian Expects Healthy Growth Ahead

Bastian added that the airline expects to grow at its “normal” rate of 1% above the U.S. gross domestic product (GDP) over the next year. However, he noted that the U.S. airline industry is facing some challenges, particularly at the lower-end price points.

He expects flat to 1% growth in the domestic market in the fourth quarter (Q4) of the current fiscal year and the first quarter (Q1) of the next one, but maintains optimism about Delta’s prospects.

“This holiday season is going to be a strong season. Businesses are going to get back on the road here as soon as they feel comfortable that there’s clarity in the sky,” he added in the interview.

DAL stock is down 2% year-to-date and 8% over the past 12 months.

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