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Delta Air Lines, Inc. (DAL) CEO Ed Bastian Hosts Annual Shareholders Meeting (Transcript)

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About: Delta Air Lines, Inc. (DAL)
by: SA Transcripts
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Delta Air Lines, Inc. (NYSE:DAL) Annual Shareholders Meeting Call June 18, 2020 7:30 AM ET

Company Participants

Frank Blake - Non-Executive Chairman

Ed Bastian - Chief Executive Officer

Peter Carter - Chief Legal Officer and Corporate Secretary

Jill Greer - Vice President, Investor Relations

John Chevedden - Non-Executive

Adam Kanzer - Non-Executive

Kate Monahan - Non-Executive

Renaye Manley - Non-Executive

Operator

Good morning and welcome to the Annual Meeting of Shareholders for Delta Air Lines. I will now turn the meeting over to Mr. Frank Blake, Non-Executive Chairman of the Board of Delta.

Frank Blake

Thank you. Good morning and welcome. We are holding our annual meeting virtually this year due to the COVID-19 pandemic. Joining me today are Ed Bastian, Delta’s CEO; Peter Carter, our Chief Legal Officer and Corporate Secretary, and Jill Greer, our Vice President, Investor Relations.

I would also like to recognize the remaining members of our Board of Directors whom I will introduce in a few minutes and the members of the Delta Board Council: Scott Bell, Technical Operations; Taylor Collins, Reservations, Customer Care and Digital; Michael Fernandez, Flight Attendant; Dan Leskusky, Supervisory and Administrative; and Austin AJ Johnson, Airport Customer Service and Cargo Operations. Also on the line today are Mark Besca and Bo Bradley, representatives of Ernst & Young, our independent auditors. It is 7:30 a.m., and the polls are open for voting. If you were a shareholder as of the record date and are logged into the meeting as a shareholder and would like to vote, you may do so using the voting buttons on the virtual meeting screen.

Before we present the items to be voted on today, Peter will briefly address legal matters related to the virtual meeting, and Ed will make a few comments about the state of our business. Peter?

Peter Carter

Thank you, Frank and good morning everyone. Delta previously delivered a notice of the meeting and information on how to receive proxy materials to each shareholder of record on April 30, 2020, the record date. I would like to refer you to the meeting agenda and the rules of conduct on the virtual meeting screen. Among other things, the rules of conduct provides shareholder proponents with 2 minutes each to present the proposals they submitted as set forth in our proxy statement. After 2 minutes, we will ask that they conclude their remarks. And if needed, we will mute the line in order to permit our remaining proponents to present. [Operator Instructions]

During the meeting, we intend to respond to questions from identified shareholders pertaining to proposals being considered at the meeting. Consistent with our approach at in-person meetings in prior years, we plan to address remaining questions from identified shareholders as time permits during a Q&A session following the meeting. We may group similar questions together and paraphrase them when responding. Statements we make about Delta during the shareholders meeting and the Q&A session, that are not historical facts may be forward-looking statements under the federal securities laws. Forward-looking statements involve risks and uncertainties that could cause the actual results to differ materially from the forward-looking statements. Factors that may cause these differences are set forth in Delta’s SEC filings. We also may refer today to measures of Delta’s financial performance that are not presented in conformity with generally accepted accounting principles. You can find the reconciliation of those measures to GAAP measures on ir.delta.com.

I’ll now turn over this meeting over to Ed Bastian, our CEO.

Ed Bastian

Thanks Peter. Good morning and thank you all for joining us today. In 2019, Delta demonstrated the power of our people and brand with our best year in history, operationally, financially and for our customers. And while we know that every year comes with its challenges, we knew 2020 would be no exception. But we could never have predicted how quickly the coronavirus pandemic would upend our plans as demand for near-term air travel dropped to almost 0 in a matter of weeks. We are realistic that the timing and shape of revenue recovery are uncertain and are prepared that it could take up to 2 to 3 years to return to a new level of normal, which could still be lower than 2019 revenue base.

The actions that we have taken and will continue to take define how Delta emerges on the other side of this. Our response and path forward remain focused on three priorities: First, our number one focus is taking care of our people and our customers. Nothing is more important than the health and the safety of our employees and our customers. Our response is grounded in the values-based culture that puts people at the heart of every decision. We have invested in resources to add new layers of protection throughout the travel journey, keeping spaces clean, giving customers more space and offering safer service on planes, at airports and across our facilities. And we’re also engaging with partners across the travel ecosystem on these issues. And these actions won’t end when the virus abates. We plan to continue to invest in new techniques to make flying safer than ever.

And as of last week, Delta established the airline’s first Global Cleanliness Division, a new department within the customer experience organization that’s dedicated to innovating and evolving our already high cleanliness standards. As people want to travel again, we have taken actions so that they can feel confident about choosing Delta. These actions include electrostatic spraying of every aircraft before each flight, a requirement for customers and employees to wear masks, reduced touch points between customers and employees during travel and importantly, the capping of load factors to 60% on all Delta planes, including the blocking of the booking of middle seats through September 30. This guarantees that every customer has a seat open to them next to them onboard the plane. We also understand the need for flexibility in making travel plans, and our reservations and customer care professionals have done an amazing job assisting with processing refunds. Delta continues to provide full refunds to eligible passengers requesting them and for whom we have canceled the flight or made a significant schedule change. Delta has refunded $2 billion to customers since the start of this year.

Our second priority is preserving our liquidity. As revenues rapidly deteriorated, we took decisive action to reduce our cost base and protect our liquidity. We hit pause on every project that was not necessary and cut expenses by consolidating airport operations, temporary closing many Delta Sky Clubs, parking aircraft and delaying nonessential aircraft maintenance. We have reduced our total operating expenses by 55% in the current June quarter. We are continuing to make progress on daily cash burn and now expect cash burn for the month of June to be approximately $30 million per day.

For context, in the early days of the pandemic in March, our daily cash burn was close to $100 million per day. This improvement is driven by strong cost performance and improved net sales trends. In the last few weeks, we’ve seen modest but meaningful sales improvements. We have seen our net cash sales be positive for each of the last couple of weeks, and we’re confident in our principal financial goal of reducing average daily cash burn to 0 by the end of this year, which is the most valuable way that we can preserve liquidity.

We have received $3.8 billion in payroll support to date under the CARES Act with an additional $1.6 billion to be received by the end of July. Including our unsecured debt offering completed last week but not including CARES Act relief, we have raised over $14 billion in financing since the beginning of March. Our actions so far, combined with CARES Act relief, should bolster our liquidity to over $15 billion by the end of this current June quarter, putting us on a solid path to have more than $10 billion in liquidity at year-end.

And finally, we are focused on protecting our future. Delta’s core business strengths are enduring: our people, brand, domestic network and operational reliability. These advantages will continue to differentiate Delta and position us to succeed while rescaling the business and our cost structure to be a more agile airline going forward. We’re taking advantage of reduced demand to pull forward our future, retiring planes sooner to bring in fuel efficient planes faster and accelerating construction at LAX, LaGuardia and Salt Lake City. We have the best team in the industry, and I thank all 90,000 employees for the incredible job that they are doing.

Right now, more than 40,000 of our employees have chosen to take voluntary unpaid leaves, ranging from 30 days to 1 year, a significant personal sacrifice for which I will forever be grateful. It is my hope that we will be able to avoid furloughs through the many self-help initiatives that we are leveraging while caring for our people, including through the early retirement and voluntary opt-out programs that we announced last month. It won’t be easy and requires collaboration across each of our divisions to spread the available work that we have over as large a group as possible to save jobs. We may be smaller temporarily, but the new Delta is going to be stronger and more resilient than ever.

And in closing, while the coronavirus has disrupted our world, it pales in comparison to the long-standing issues of racism, racial inequality and racial injustice that have recently come to a head through heartbreaking events across our communities. As we traverse these challenging times, we remain committed to the fight for equality, social justice and against racism. The Delta people will be part of the solution, not just through words, but much more importantly, by our actions, which starts by learning and understanding. Our culture and people demonstrate our commitment to doing what is right for our customers, our shareholders and each other. Thank you for your support now and always.

Frank Blake

Thank you, Ed. The independent inspector of election has tabulated all proxies submitted for the meeting. The inspector will now report on the number of shares present at the meeting.

Unidentified Company Representative

Mr. Chairman, we have a total of 491,794,514 votes present virtually or represented by proxy. This is equal to 77.1% of the votes entitled to be cast by the owners of all shares of common stock outstanding as of the record date.

Frank Blake

Thank you. A quorum is present. The meeting is convened. Before introducing the 7 items to be presented for a vote today, I would like to take a moment to thank Dan Carp for his dedicated service to the Delta Board over the last 13 years. Dan has recently retired from the Board, and we wish him well in his retirement. His leadership, thoughtfulness and commitment to Delta will be sorely missed.

I will now introduce the nominees for election as directors, which is proposal 1. Their bios and qualifications are in the proxy statement. All nominees currently serve on our Board. In addition to Ed and me, the nominees are: Ash Carter, David DeWalt, Bill Easter, Christopher Hazleton, Michael Huerta, Jeanne Jackson, George Mattson, Sergio Rial, David Taylor and Kathy Waller. There are no other nominations, and nominations are closed.

Proposal 2 is the advisory vote on the 2019 compensation of Delta’s named executive officers. Proposal 3 is to ratify the appointment of Ernst & Young as Delta’s independent auditors for 2020. The Board urges you to vote for each of these 3 management proposals for the reasons set forth in the proxy statement. We will now turn to the shareholder proposals and remind each of our proponents to limit their remarks to 2 minutes. Proposal 4 was submitted by John Chevedden. If Mr. Chevedden would like to present the proposal, he is now recognized. Operator, please open Mr. Chevedden’s line.

John Chevedden

Hello, this is John Chevedden. Can you hear me okay?

Frank Blake

Yes, we can.

John Chevedden

Proposal 4, adopt a mainstream shareholder right written consent. Shareholders request that our Board of Directors take the steps necessary to permit written consent by shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting. Hundreds of major companies enable shareholder action by written consent. This proposal topic won majority shareholder support at 13 large companies in a single year. This included 67% support at both Allstate and Sprint. This proposal topic also won 63% supported at Cigna in 2019. This proposal topic would have received higher votes than 63% to 67% at these companies if more shareholders had access to independent proxy voting advice.

The right for shareholders to act by written consent is gaining acceptance as more important right than the right to call a special meeting. This also seems to be the conclusion of the Intel shareholder vote at the 2019 Intel Annual Meeting. The directors at Intel apparently thought they could divert shareholder attention away from written consent by making it less difficult for shareholders to call a special meeting. However, Intel shareholders responded with greater support for written consent in 2019 compared to 2018. Adoption of this proposal will enable shareholders to engage with management with more of a position of strength since shareholders will have a Plan B if Delta management just wants to go through the motions of shareholder engagement. Management does not seem to be serious about shareholder engagement since the annual meeting starts at 4:30 a.m. and allows only 2 minutes each for the presentation of shareholder proposals.

The 2019 edition of this proposal won 37% support. The 37% support was significant because the Delta directors apparently thought they could decrease support for this topic in 2019 by lowering the stock ownership threshold to call a special meeting from 40% to 20%. After a 45% vote for written consent, which is less than a majority, The Bank of New York Mellon Corporation said it adopted written consent in 2019...

Peter Carter

Mr. Chevedden, I hate to interrupt you, but you have exceeded the time limit by about 30 seconds.

John Chevedden

Okay. I am just concluding here.

Peter Carter

Thank you. Please conclude your...

John Chevedden

After a 45% vote for written consent, The Bank of New York Mellon Corporation said it adopted written consent in 2019. Please vote yes, shareholder right to act by written consent, proposal 4.

Frank Blake

Thank you, Mr. Chevedden. The Board recommends that you vote against this proposal because its adoption is unnecessary given Delta’s strong governance practices. In addition, the proposal is not in the best interest of our shareholders as a whole. The Board’s reasons for opposing this proposal are explained further in the proxy statement. Proposal 5 was submitted by BNP Paribas Asset Management. If a representative of BNP would like to present the proposal, they are now recognized. Operator, please open the line.

Adam Kanzer

Good morning. Can you hear me?

Frank Blake

Yes.

Adam Kanzer

Yes. Hello. Good morning, Mr. Chairman, members of the Board, fellow shareholders. My name is Adam Kanzer. I am Head of Stewardship for the Americas at BNP Paribas Asset Management, here to move proposal #5, seeking a climate lobbying report. Corporate lobbying activities that are inconsistent with meeting the goals of the Paris Agreement, presents significant financial risks to investors. These efforts also present systemic risks to our economies. Delays in implementation of the Paris Agreement increased the physical risks of climate change, threatened economic stability and introduce uncertainty and volatility into our portfolios. We believe that Paris-aligned climate lobbying helps to mitigate these risks and contributes positively to the long-term value of our investment portfolios.

Our proposal seeks to ensure that Delta is appropriately managing these risks. Our proposal asks our Board to evaluate and report to shareholders of Delta’s lobbying activities aligned with the Paris Agreement’s goal to limit average global warming to well below 2 degrees Celsius and how the company is addressing any misalignments with that goal. This analysis should cover direct lobbying and indirect lobbying conducted by Delta’s trade associations. More than 14 major European corporations have agreed to this request, including Anglo American, BP, Shell, Total and Rio Tinto. 200 institutional investors managing $6.5 trillion wrote to Delta in September, seeking information on how Delta is managing this critical governance issue. This proposal received a majority vote at Chevron’s Annual Meeting. We are concerned that the policy framework supported by Delta, a commitment to carbon-neutral growth, is insufficient to meet the Paris goals. We have a limited window to stabilize our climate. Investors need to know that Delta is supporting the policy frameworks we all need to avert disaster.

I thank you for your attention and look forward to continuing our dialogue on this issue with your management team. Thank you.

Frank Blake

Thank you. The Board recommends that you vote against BNP’s proposal. The Board believes that Delta’s lobbying efforts are clearly aligned with responsible climate action, including the reduction of carbon emissions from aviation and that the company’s lobbying efforts and environmental policies are transparent. The Board’s reasons for opposing this proposal are explained further in the proxy statement.

Proposal 6 was submitted by Friends Fiduciary Corporation. If a representative of Friends Fiduciary would like to present the proposal, they are now recognized. Operator, please open the line.

Kate Monahan

Good morning. Can you hear me?

Frank Blake

Yes.

Kate Monahan

Great. Good morning, fellow shareholders and members of the Board. My name is Kate Monahan. I’m a shareholder and Engagement Manager at Friends Fiduciary Corporation. I hereby move proposal 6, the shareholder proposal asking our company to provide a report on its direct and indirect contributions made to influence the outcome of elections at the federal, state and local levels. As long-term shareholders of Delta, we support transparency and accountability in corporate electoral spending. And we first want to thank the company for engaging in dialogue with us throughout this process and appreciate that Delta’s current political contributions policy includes Board and management oversight, which is a great first step.

However, we believe the second step, disclosure of political contributions, is necessary and in the best interest of the company and its shareholders. Publicly available records show Delta has contributed at least $1.5 million in corporate funds since the 2010 election cycle. However, relying on publicly available data does not provide a complete picture of the company’s electoral funding. For example, the company’s payments to trade associations that may be used for election-related activities are undisclosed and unknown. This proposal asks the company to disclose all of its electoral spending, including payments to trade associations and other tax-exempt organization, which may be used for electoral purposes. This would bring our company in line with a growing number of leading companies, including Coca-Cola, UPS and Norfolk Southern, which present this information on their websites. Disclosing contributions, as many other companies do, would help mitigate the potential legal or reputational risks posed to Delta by these relationships, even more important in this time of crisis. Our request for disclosure is a call for transparency and accountability in the spending of shareholder resources, and we urge shareholders to vote for this proposal. Thank you.

Frank Blake

Thank you. The Board recommends that you vote against the Friends Fiduciary proposal. Delta already provides disclosure about its participation in the political process and believes that providing all of the information requested by the proposal would be detrimental to Delta and our shareholders. The Board’s reasons for opposing this proposal are explained further in the proxy statement.

Proposal 7 was submitted by the Service Employees International Union Pension Plans Master Trust. If a representative of the Master Trust would like to present the proposal, they are now recognized. Operator, please open the line.

Renaye Manley

Good morning. My name is Renaye Manley, and I’m here to present proposal #7. The proposal requests that the Board of Directors takes action to strengthen Delta’s prevention of workplace sexual harassment by formalizing the Board’s oversight responsibility, aligning its senior executive compensation incentives, reviewing and, if necessary, overseeing revision of company policies and reporting to shareholders on actions taken. We believe the Board oversight of sexual harassment protects long-term shareholder value. As we all know, the Me Too era has highlighted the importance of Board oversight of sexual harassment issues as numerous companies have seen reputational damage and shareholder value loss in the weight of public allegation.

The proportion of Americans who believe that sexual harassment in the workplace is a serious problem has increased from 47% in 2011 to 64% in 2017. New York, Maryland, Vermont and Washington has passed new laws that, amongst other things, bar mandatory arbitration of sexual harassment claims. 125 laws were introduced in 2018 in 32 legislatures on the subject of sexual harassment in the legislature itself. In 2019, 29 states have introduced over 100 pieces of similar legislation. Sexual harassment has the potential for significant legal, human capital and reputational costs for companies. Workplace sexual harassment has – may harm corporate reputation, which can alienate consumers. Many investors use sexual harassment as a potential on sign of broader human capital management and corporate culture issues that warrant Board attention. A coalition of trustees from long-term institutional investors with combined assets of more than $635 billion have come together to create and promote trustee united principles concerning sexual harassment in portfolio companies in order to mitigate and reduce future risk that can damage long-term value creation.

Delta Board can play a key role in preventing and limiting sexual harassment by setting the appropriate tone at the top. Neither Delta’s corporate governance guidelines nor any Board committee charter signed responsibility specifically for managing and mitigating risks related to sexual harassment. Although the Audit Committee is responsible for the oversight of the company’s code of conduct, it is unclear as to how frequently the committee reviews Delta’s harassment-related...

Peter Carter

Ms. Manley, I hate to interrupt, but unfortunately, you have exceeded your time limit by about 40 seconds already.

Renaye Manley

Okay. Thank you very much.

Peter Carter

Could you please conclude your remarks? Thank you. I apologize.

Renaye Manley

Yes. No problem. Thank you.

Frank Blake

Thank you. The Board recommends that you vote against this proposal. The Board supports its underlying goals but does not believe that the prescriptive approach outlined in the proposal is the best way to address prevention of sexual harassment or that it would result in an efficient or effective allocation of our resources. Further information about the Board’s reasons for opposing this proposal are explained in the proxy statement. If any shareholders would still like to cast a vote on the virtual meeting screen, please do so now.

Frank Blake

Peter and Jill, have we received any questions pertaining to the proposals on which shareholders are being asked to vote today?

Jill Greer

We have not.

Frank Blake

Thank you. It is now 7:56 a.m. The polls are closed. Peter, please report the preliminary results of the voting.

Peter Carter

Mr. Chairman, because ballots were accepted until a few minutes ago, the final tabulation of votes will be reported after the meeting. The preliminary vote results are as follows: in the election of directors, all director nominees received a substantial majority of the votes cast and, therefore, have been elected. The advisory vote on the compensation of Delta’s named executive officers was approved. The appointment of Ernst & Young LLP as independent auditors for the year ending December 31, 2020 has been ratified. None of the shareholder proposals was approved. Complete results of the voting will be published on our website as well as on a report on Form 8-K with the SEC within 4 business days of this meeting.

Frank Blake

Thank you, Peter. This concludes the business of the shareholders meeting, and the meeting is now adjourned. We have approximately 15 to 20 minutes remaining for today’s Q&A session and intend to address as many of the questions submitted by identified shareholders as possible. If we are unable to address all the questions, we plan to post a summary of responses to any remaining questions that would be of general interest to our shareholders on the IR section of Delta’s website following the meeting. Please go ahead with the first question.

Question-and-Answer Session

A - Jill Greer

Thanks, Frank. We have received about a dozen questions into the queue, many of which cover similar topics. So, we are going to try and consolidate them together, both by topic and questions. So, several on our COVID response if we could speak to the cleaning measures that Delta is taking and the technologies being used?

Ed Bastian

Sure, Jill. We are reinventing our definition of clean throughout the travel journey at Delta. Just last week, we announced the establishment of a new Global Cleanliness Division headed by Mike Medeiros, a long time Delta veteran, to gather all of our resources and focus on protecting customers’ health as well as our own employees’ health. The results of all of our activities from the distancing protocols we maintain onboard, the plane, capping load factors, the work we are doing in the airports to board customers actually from the back to the front to avoid people coming into touch with each other, the contactless service that we are providing onboard the plane by our flight attendants were all working and paying significant dividends, and the results are in the facts of what we are seeing. Customers are surveying. We are surveying customers throughout the journey, and customers continue to not only advocate for Delta in their Net Promoter Scores but have increased the overall Net Promoter Scores by over 10 points from where we were just a few months ago. And secondly, we are keeping our employees safe. For all of our employees that work in frontline, customer-facing divisions, we see the rates of infection amongst that group of employees, which total 50,000 of our employees, are 5.5x less than any national average we have seen relative to overall infectious spread and positivity for the disease. So team is doing a great job. I am proud of the work we are doing because by bringing consumer confidence back, health and safety is going to be the core of what we are doing to get travel going again.

Jill Greer

Next question. In light of the pandemic, when was the last in-person Board meeting? And how often has the Board been meeting since then?

Ed Bastian

So, the last in-person Board meeting was February 6. And I would say that when the pandemic first hit, we – the Board was meeting as often as 3 times a week. And of late, it’s been every other week.

Jill Greer

Question on fleet, with regard to the pandemic, which aircraft types have been temporarily parked and permanently parked because of the response?

Ed Bastian

Well, immediately following the pandemic and the reduction of travel demand, we have temporarily parked over 700 aircraft across our system, every aircraft type that Delta operates. We have made the decision to exit certain fleet types that we are not going to bring back. The most recent decision we made was around the 777. We will have our last flight of the 777 this fall. We have already grounded and will not be returning the MD-88 or MD-90. Both of those fleet types had their last flight earlier of this month. And we will continue to look at other fleet types as well as planes within sub-fleets within our larger fleet family for retirement decisions. There will probably be a few more made before the end of this year.

Jill Greer

Another question talking to how many employees have contracted COVID-19?

Ed Bastian

We have had approximately 500 employees that have tested positive for COVID-19. The vast majority have recovered, thankfully. Unfortunately, we have lost 10 employees to the disease. And every one of them breaks my heart. We have stayed very close contact with all of our employees, those that have contracted the disease. We have recently announced that we are going to be testing all of our employees. In fact, we started this week in Minneapolis for both the blood serology, as to whether they have already been exposed to the disease and have antibodies, as well as the active test to see if they, indeed, are carrying the virus. And that test is being led by Mayo Clinic. And we are also working very closely with Quest Diagnostics in that we will have all 90,000 of our employees available to be tested. And from getting a good baseline, we will be able to provide better protection for our people and then, eventually, certainly, our customers as we go forward.

Jill Greer

What are our growth projections, Delta’s growth projections over the next 6 months?

Ed Bastian

Well, our immediate plan is to start to rebuild and restore service in the third quarter coming up here. We are adding 1,000 flights a day the month of July. And then in August, we expect to add another approximately same amount in incremental, 1,000 flights for the month of August. That would put our domestic capacity down somewhere between 55% and 60% of what our normal schedule is. And then once we get to that level, then we will take a pause, and we will see how demand looks post Labor Day before we decide to add further domestic flights back. International, we are still very early in the recovery phase. Most countries have restrictions regarding international travel. I think international travel is probably going to lag domestic by up to 12 months.

Jill Greer

Are there any special incentives for employees to retire early?

Ed Bastian

Yes, there is. We announced several weeks ago an early retirement opportunity for our employees. The program is a 70-point plan for employees that their age as well as their years of service combined to total 70, they are eligible for the early enhanced retirement opportunity. We have a significant number of employees that do qualify. And the offering is a – both a very significant retiree medical allowance. Delta currently does not have retiree medical as part of its current benefit structure as well as severance and enhanced flight privileges for those that accept the early enhanced offering. For people that do not meet the 70-point program, we also have a voluntary severance option that, while not carrying the same level of benefit, still is a nice thank you for the employees that have provided years of service to Delta who decided to take that program.

Jill Greer

Great. What is Delta’s current liquidity position?

Ed Bastian

We expect to end the June quarter, June 30, with in excess of $15 billion of cash.

Jill Greer

And then within the business, what is the month-to-date load factor for June?

Ed Bastian

Month-to-date load factor for June is running in the mid-40s, but that’s growing as the month goes on. We are looking at today’s schedule, and I think today’s load factor is booked at 50%. Of course, we have a 60% cap on flights, and that limits our load factors, so the numbers are a bit lower as compared if we had an uncapped load factor. And the benefit of the capped load factor is making certain that our customers as well as our employees are safe onboard and have space. And as the business starts to return, as demand starts to grow, and if people have more confidence in their travel experience, we will decide later in this year when we start to ease up on that cap restriction.

Jill Greer

And then one last COVID-related question, what percent of employees can do most of their work from home?

Ed Bastian

Well, given that we are a frontline customer service business, the majority of our employees need to be at work to conduct business. Our flight attendants, our pilots, our airport agents make up the bulk of our employee base. Of course, we have our mechanics, our technical operators, our operations team that are keeping the planes well maintained; our reservation agents who are answering the phones and are doing a fabulous job of helping customers in a very difficult time frame. So I would say that on the merit and the administrative staff, which is the less than 10,000 of our team members, the bulk of those people are working from home. But other than that, as needed, employees are out in the workplace.

Jill Greer

A couple of more questions. Did any directors not attend today’s online meeting?

Ed Bastian

No. All of the directors are attending today’s meeting.

Jill Greer

Next one is, what is the participation rate in Delta’s carbon offset program? And can things be done to promote it better to customers?

Ed Bastian

We are developing the carbon offset program, as we mentioned in February when we announced the goal to offset our environmental footprint. We are committed to that goal. We have not backed away from that goal. At the present time, given the very low level of flight activity, the amount of carbon being produced is substantially lower than at any time in our recent history. But we are committed to those goals, and we will continue to let customers know how they can participate going forward.

Jill Greer

Great. Let’s see. What can Delta do to serve customers by reducing the reservation call center wait times?

Ed Bastian

We are in the process of adding back up to 2,000 of our reservation agents who have taken leaves of absence and bringing them back on to the phones. We expanded our at-home capabilities for our reservation agents. We already have a meaningful number of our res agents who do work from home typically, and we have expanded the capability. So more and more of our people can stay safe at home, in place and still handle the phone volumes. But we are experiencing, as all airlines are, an unprecedented surge in calls as people are canceling flights, changing plans, looking to see the status of their refunds and understanding what the new standards of cleanliness and care that we are taking onboard the plane. So, we are bringing as many agents back. We originally wanted to keep our res agents safe, so that’s why we had a number to go out on leaves of absence as we redesign their work space and the res centers to keep them physically safe. We have that work done, and we are starting to bring people back over the next 2 weeks.

Jill Greer

Great. So, we have got two more questions. Talking to Delta’s help in transporting medical supplies in the battle against COVID, would there be any change to Delta transporting lab animals in support of research?

Ed Bastian

We will take that question off-line. I don’t have any information on that.

Jill Greer

Okay. And then the last one, what is the company’s plan to address racial injustice and the protests in recent weeks?

Ed Bastian

Well, as I mentioned in my prepared remarks, the level of angst in our communities and our society is – weighs heavy on our hearts. For our black- and brown-skinned brothers and sisters, it’s our responsibility to ensure that we are not just providing equality but stamping out racial injustice and systemic racism wherever and however we can see it and find it. A lot of it, I think, at this point in time is one of education, is understanding, is learning. We are undertaking events throughout our company, talking to our people, understanding the concerns, the challenges that they see. We all are in a very difficult period of time right now with both the pandemic as well as the challenges of racial equality in our nation. But make no mistake that Delta is going to be accountable, and I am going to be personally accountable, to ensuring that we are doing everything humanly possible to advance the quality and justice in our company. And you should hold me accountable for that standard.

Jill Greer

That is the entirety of our Q&A. We can wrap the meeting.

Peter Carter

Thank you. Thank you, Ed. Thanks, Jill. There are no further questions. We appreciate everyone’s interest in Delta, your participation in our shareholders meeting and your questions this morning. Thank you.

Operator

The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.