Delta Air Lines this month furthered its ongoing international expansion by announcing plans to introduce next year new nonstop services from its Atlanta and New York-JFK hubs. Northwest Airlines, meanwhile, announced plans to launch service between Hartford, Conn., and Amsterdam and between Detroit and Brussels and Düsseldorf next year. The carriers said they see their respective expansions as positive indicators as they seek to come out of bankruptcy protection in the first half of next year.
Delta's new routes, which are expected to launch between April and August next year, include service between its Atlanta hub and Prague, Vienna, Dubai, Seoul and Sao Paulo, as well as new services between New York's John F. Kennedy International Airport and Pisa, Italy; Shannon, Ireland; and Bucharest, Romania. Delta CEO Gerald Grinstein during a client event in New York said the new routes comprise the most dramatic international expansion in the carrier's history, adding to the more than 50 new international routes introduced in the past year alone.
Meanwhile, Northwest in May plans to launch nonstop service between its Detroit hub and Brussels and in June will commence nonstop service between Detroit and Düsseldorf. Northwest said the new routes would complement established service from its Detroit hub to Amsterdam, Frankfurt, London and Paris.
"When we look at next year, as to our transatlantic capacity versus this year, we're looking at something that's approximately 3 percent larger. That's what we would expect the transatlantic expanding by," Northwest president and CEO Doug Steenland said this month during a conference call announcing the expansion.
Steenland added that Brussels has become a key governmental city as the headquarters of the European Union and Düsseldorf is a major commercial center within Germany. Both cities, he said, were selected because of customer demand and are within the range of the Boeing 757 aircraft, which will serve the markets.
In conjunction with its SkyTeam alliance partner KLM Royal Dutch Airlines, Northwest also said it will add more flights between Detroit and Amsterdam as well as Boston and Amsterdam. KLM/Northwest also is adding up to five extra weekly frequencies between Amsterdam and Los Angeles and Toronto.
Delta between June and September this year bulked up international and domestic service at its New York-JFK hub by adding 46 new departures to 17 destinations
(BTN, March 20). Grinstein this month said that through the course of its expansion its international portfolio will grow from 20 percent of the carrier's service to about 35 percent by the end of the year. "Delta used to think of itself as a large regional airlines. Now, we think of ourselves as a large international airline," Grinstein said.
Delta also recently purchased route authority from United for direct New York-London service, essential to its development plans, Grinstein said, and intends to expand service to Gatwick to twice daily in April.
Grinstein noted that Delta and Northwest have diverged in their international strategies in this latest round of route expansions, with Delta opting for more direct service to what it considers underserved markets, while Northwest is bulking up service to international hubs and partners at gateway destinations.
"It does seem that there is increasing competition in the Atlantic but when you take a look at the market opportunities that are there, what we are looking at is new markets to be served so that it is not necessarily a competition for marketshare," Grinstein said. "And there are a number of places where there are still some opportunities for us without much conflict with our competitors. With Northwest, you see that for the most part those flights are going from places they already serve, like Detroit, to the KLM hub in Amsterdam. While it does appear that transatlantic competition could get overheated, we do have adequate feed."
Delta COO Jim Whitehurst added that its expansion further rounds out its international offerings. "As we look forward, we have a very large presence in Europe. And as we go forward we certainly will want to balance our international, which means more Latin America, more Africa, Asia and the Middle East. You'll see that better international balance in our schedule next summer."
Meanwhile, Northwest's Steenland said the international expansion efforts, as well as previously announced plans to purchase aircraft
(BTN, Oct. 9), are positive indicators for the bankrupt carrier. "It means that our international service is growing and expanding," he said in a conference call this month. "It means more opportunities for our coworkers, pilots and flight attendants to be able to serve our customers. It's testimony to the fact that we've been able to invest in the business during the restructuring. It permits us to take advantage of growth opportunities."
Steenland added that the carrier is replacing its DC-10 aircraft with Airbus 330s for all service between Minneapolis and Europe. "The first week in November will be the last week in which the DC-10 operates from Minneapolis to Europe," Steenland said, adding that the A330 is "a better product, in terms of onboard experience and reliability."
Delta, too, sees its expansion as positive indicators in its quest to emerge from Chapter 11. Grinstein said that the there is enough liquidity in the capital markets to get exit financing now and that probably will still be the case when the airline is ready to emerge early next year.
"All of the investment into international service, including expansion of the JFK hub, is going to make a difference in obtaining the exit financing," Grinstein told BTN. "The question is, 'Do you have a business plan, do you have people who can execute that business plan and do you have the track record?' That is what they are going to measure you on. All of those pieces are going to have to come together, and I think it's going to pay off very well for us. I just got a note that said that our claims would be settled 50 cents on the dollar as opposed to 20 cents on the dollar, as they were originally estimated to be, so somewhere we are adding some value."
Calyon Securities analyst Ray Neidl said that Delta and Northwest "have also returned to profitability along with the industry and both expect to be out of the reorganization process in the first or second quarter of 2007." Neidl, however, said both carriers' stock "will be worthless upon reorganization."
Meanwhile, Delta announced its intention to be the first U.S. carrier to offer lie-flat seats for international business class travel. The carrier will have new lie-flat sleeper suites beginning in 2008, with the delivery of two new long-range Boeing 777s, which at first will serve its longest-haul routes. Delta then will install the suites on all of its 777s and 767s by 2010. "Our longest flights will have it first," Whitehurst said, "and all the triple sevens will be done by 2009."