ATLANTA -- Delta Air Lines said its cancellation of 4,000 flights over five days after last week's thunderstorms in Atlanta will cause a $125 million hit to its profit and prompt a thorough internal review.
CEO Ed Bastian made his first public remarks since the episode during the company's quarterly financial update Wednesday.
"To our customers, we apologize for the disruption to their schedules," Bastian said. He said the issue provides "fertile ground for improvements for the future."
Bastian acknowledged the company needs to invest in improvements to crew scheduling and information systems, though he added that understaffing was not the problem.
He largely blamed the logjam on an unusual, daylong string of storms that raked Atlanta's Hartsfield-Jackson International Airport on April 5, giving the airline no chance to recover.
"There were seven different thunderstorm cells that happened at a rapid-fire basis starting from early morning to evening," Bastian said. "We had the virtual shutdown of Atlanta for the better part of an entire day," combined with busy spring break travel that left little room to rebook customers.
He said it was an "impact that in my 20 years at the airline we've never seen."
"We take full responsibility for making this better in the future," Bastian said, including technology investments with improvements to crew tracking and communication. Many crews and aircraft were out of place after the storms, extending the disruption for days while pilots and flight attendants were reassigned.
"We had crews calling in from all across the system," Bastian said. "We were literally running the airline hour-by-hour ... as we tried to get the system pieced back together."
Information technology systems "were working throughout," according to Bastian.
"It wasn't a question that it didn't work. It worked, and it worked as designed. It got overwhelmed," Bastian said.
Bastian said the flight schedule "had to be put together on the fly at an unprecedented level of volume."
Delta spokesman Ned Walker said the company's chief operating officer, Gil West, will do "a complete deep dive across the organization to find out lessons learned from all the different divisions."
Bastian also commented on the United Airlines incident in which a passenger on a regional affiliate's flight between Chicago and Louisville, Ky., was dragged off to make room for a flight crew member.
Bastian said he does not favor more regulation of overbooking and bumping by airlines, as was suggested by New Jersey Gov. Chris Christie, who called for at least a temporary ban on the practice.
"I don't think we need additional legislation to try to control how the airlines run their businesses in this space," Bastian said during Wednesday's conference call on the company's quarterly results.
"It's not a question, in my opinion, as to whether you overbook. It's how you manage overbooked situations. ... The key is managing it before you get to the boarding process, and that's what [Delta] has done a very effective and efficient job at."
Bastian called overbooking "a valid business process. There's operational considerations behind that." He added that "there are things that happen that create overbooking situations beyond just oversales," citing weather delays and weight-and-balance issues.
Airlines overbook some flights to offset expected no-shows, typically by business fliers who use refundable fares or switch flights. Most overbookings are resolved by offering future trip credits to passengers who volunteer for later flights, but a small percentage of bumps are involuntary.
Bastian said Delta passengers are involuntarily bumped at lower rates than at other major airlines.
Delta had 1,238 involuntarily bumped passengers in 2016, a rate of 0.1 per 10,000 passengers. That was the second-lowest rate among U.S. airlines.
"It's very much about giving our front-line [workers] the tools and empowering them at the first line of contact," Bastian said.
Christie, a Republican, said in a written statement that United's conduct was "abusive and outrageous," and he wrote a letter to U.S. Transportation Secretary Elaine Chao asking her to suspend federal regulation allowing airline overbooking and the related removal of passengers.
Rising fuel costs hurt Delta's first-quarter profit, which dropped 36 percent from the same period a year before. But the company's adjusted earnings beat expectations.
The company reported net income of $603 million, or 82 cents per share, for the three months ending March 31. That's down from $946 million, or $1.21 per share, in the same quarter a year ago.
Adjusted earnings were 77 cents per share, surpassing Wall Street expectations of 73 cents per share, according to Zacks Investment Research.
Revenue fell 1 percent to $9.15 billion in the period, missing forecasts. Analysts surveyed by Zacks expected $9.16 billion.
Shares of Delta Air Lines Inc. fell 24 cents to close Wednesday at $45.05.
Information for this article was contributed by staff members of The Associated Press.
Business on 04/13/2017