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Coronavirus: Delta prepares for possible 90% Q2 rev drop; JetBlue loses $10M per day

Airlines are feeling the pressure of the coronavirus as many carriers reduce flights to NYC, one of the hotspots for the outbreak. Yahoo Finance’s Emily McCormick joins Seana Smith to discuss.

Video Transcript

SEANA SMITH: Welcome back to Yahoo Finance. We have stocks rallying this afternoon, with all 11 of the S&P sectors posting gains. Now one area of the market that is posting some gains today is also airlines, getting a little bit of a relief here. They are among the worst performers amid the coronavirus pandemic. Now this comes as carriers are forced to pare back their schedules and cut thousands of flights.

We also have the news at the end of last week that the US Transportation Department was ordering airlines to fully refund airfare to passengers whose flights had been canceled during the outbreak. So for more on this, I want to bring in Yahoo Finance's Emily McCormick.

And Emily, I know you're looking into this story for us. The financial strain to the industry is almost indescribable at this point. But I mean, when you take a look, when you start drilling down into this, they are getting some relief from the government, but it doesn't look like they're going to be back up and running anytime soon.

EMILY MCCORMICK: Well, that's right, Seana. So, so far, these airlines have been applying for relief under the federal government aid package that had been authorized under that $2 trillion stimulus package passed back in late March. So the exact amount and the terms of that package still remains to be seen, but what we do know so far is that airlines have really been taking two major moves to try to mitigate some of the damage and also just investor sentiment around the coronavirus impact on demand.

So first, they've been resetting their expectations lower, particularly around quarterly results. They've also been cutting costs where possible, and that's largely been through a capacity cut. So just to give one specific example, we had Delta saying in a memo to employees last week that the airline has canceled around 115,000 flights for April. That's more than 80% of its overall schedule.

And to give an extent of the drop that it expects, the company saw just 38,000 passengers that last weekend of March versus 600,000 passengers for the comparable dates last year. So really a huge drop in demand that has been very easily quantifiable in recent weeks.

It also disclosed that the company did apply to the Treasury Department for $50 billion in federal support to help particularly on the payroll side. Delta is burning through more than $60 million in cash every day, but still doesn't think it's seen a bottom yet.

And the company is expecting its revenue to be down 90% for the second quarter of this year, so truly a tremendous financial impact that it's anticipating. And that has really translated into these stock prices that have fallen, in Delta's case, 61% for the year to date, and really, by double digit percentages for all of the major US air carriers.

SEANA SMITH: Yeah, certainly a lot of trouble there in that sector. Emily McCormick, thanks so much.

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