Delta Air Lines plans "disciplined" systemwide capacity
growth of 2 percent next year, according to the carrier, which also reported an
adjusted net income of $1 billion for the third quarter.
CEO Richard Anderson, speaking Thursday on a conference call
with investors and media, said the 2 percent growth rate is Delta's target as
it finalizes capacity plans for 2015. He noted that "excess capacity
growth" on transatlantic routes this summer has put pressure on the
industry.
"Despite the capacity situation, our transatlantic
profitability increased year over year, and we again produced good double-digit
margins with a very significant load factor premium to the industry,"
Anderson said. "Together with our joint-venture partners, we have adjusted
our course and will limit JV capacity growth to around 1 percent to 3 percent
this winter, a level that is appropriate within the current demand environment."
That limited growth will enable Delta to more quickly retire
its fleet of Boeing 747-400s as it redeploys smaller-gauge wide-body aircraft
to the Pacific. All 16 will have left Delta's fleet by 2017, according to
Anderson.
Overall, 2015 international capacity growth will be largely
flat year over year and domestic growth up about 2 percent. A research note
from Cowen & Co. called the plan "strategic capacity moves" that
would "drive profitability."
"Delta clearly understands why the market is concerned
with its capacity additions, but their track record has been to grow in markets
where it makes sense and to leave weak markets (for them, think Cincinnati and
Memphis)," the note continued. "Delta will see lower capacity growth
in Asia as well as in European markets outside of London."
During the quarter, Delta's total operating revenue
increased 7 percent year over year to $11.2 billion. Consolidated revenue
passenger miles were up 4 percent, and yield increased 2 percent.
Systemwide capacity in available seat miles increased 3
percent year over year, and Delta's load factor increased 0.4 percentage points
to 86.4 percent.
During the call, Delta executives also fielded several
questions about Ebola. Echoing comments earlier this month by American Airlines
and British Airways chief executives, Delta executives said the carrier has
seen no change in booking trends due to fear of the disease.
"This isn't the first communicable disease that we
faced as an airline or an industry, and we are well-versed at managing these
types of events," Delta executive vice president and COO Gil West said. "We've
got a corporate safety and security staff that's in continuous dialogue with
the Centers for Disease Control and the World Health Organization, and we
adhere to all their recommendations."