Delta To Further Reduce International Capacity

Delta Air Lines beginning in September will reduce international capacity by 15 percent—5 percentage points higher than its previous outlook issued in March, the carrier announced today.

Delta plans to cut transatlantic capacity by 20 percent beginning in September, Delta president Ed Bastian said today during the Bank of America-Merrill Lynch 2009 Global Transportation Conference in New York, pointing to that market's "particular weakness." He said capacity cuts would come in the form of service suspensions, seasonal reductions and trading larger aircraft for smaller planes on some routes.

Including the 15 percent overall international reduction, Delta said systemwide capacity would be 10 percent lower than in 2008, reflecting a 6 percent reduction in domestic capacity.

Delta today said it would suspend nonstop service from Atlanta to Seoul; nonstop flights from Cincinnati to Frankfurt and to London-Gatwick; and service from New York JFK to Edinburgh. Bastian said the carrier would further specify the details of the capacity realignment.

The carrier today also said it would reduce weekly frequencies from Atlanta and Detroit to Mexico City, while "postponing some previously planned seasonal service between non-hub cities and Mexican beach destinations due to the impact of the H1N1 virus on customers' travel plans," according to a company statement.

Despite the cuts, Bastian also noted growth opportunities as Delta and Northwest Airlines align networks. The carrier this year plans to expand to more than 20 new international markets, including Los Angeles-Sydney, Salt Lake City-Tokyo, Detroit-Shanghai, New York-Prague, Pittsburgh-Paris and Atlanta-Johannesburg.

Bastian said he expects passenger revenues to fall in the 20 percent range this quarter, year over year, consistent with industry trends in the first four months of the year, but he noted, "Demand trends looking forward are stable." Still, he said, "that doesn't imply recovery just yet," particularly in the business travel market where a bounce back "has not taken place."