Government shutdown is costing the airline $25 million this month
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 quarter. Revenue for each seat it flies a mile, a key industry metric, 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.
“We’re seeing a reduction in revenues in the month of January,” Bastian told Imagala.com’s Phil LeBeau. The airline is also facing certification delays for new aircraft with FAA inspectors not working, Bastian said.
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 plans to launch its brand-new Airbus A220 jets on Jan. 31, aircraft it hopes will bring more high-paying corporate travelers on board with its bigger seats and windows.
Several major U.S. airports have also felt the strain from 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 executives will hold a call with analysts at 10 a.m. ET. United Continental Holdings, parent of United Airlines, will report fourth-quarter and full-year results after the market closes Tuesday.