Delta Air Lines will cut capacity to the United Kingdom this
year in light of economic uncertainty surrounding Brexit, and it will scale
back domestic capacity growth amid declining yields from corporate business.
Delta's second-quarter operating revenue declined 2 percent
year over year, a drop of $260 million. Foreign currency pressure contributed $65
million to that drop, but Delta also sees little growth in corporate demand and
"stubbornly low business fares," according to Delta president Glen
Hauenstein. "Absolute volumes for business traffic remain solid, but they
did not keep pace with Delta's growth," he said.
As such, Delta will moderate domestic capacity growth after
the summer travel months and will cut three percentage points in domestic
capacity by the fourth quarter, Hauenstein said. Additionally, for its winter
schedule, Delta will cut capacity to the United Kingdom by six percentage
points, and joint-venture partner Virgin Atlantic also will cut capacity, CEO
Ed Bastian said. Their combined winter capacity to the United Kingdom will decrease
between 2 percent and 4 percent compared with last year, he said.
During the second quarter, Delta increased capacity 3.2
percent year over year, and traffic increased 3 percent, causing its load factor
to dip 0.1 percentage points to 75.5 percent. Yield declined 4.7 percent.
Delta also is expanding the presence of its Basic
Economy fare, a no-frills fare that allows no refunds, changes or advance
seat assignments. Delta has introduced the fare to cover about half its
domestic revenue base and plans to have full domestic coverage by sometime next
year, Bastian said. Delta has introduced Basic Economy to more than 50
international markets, as well, and expects to expand to all Delta markets by
2018.
The carrier reported a net income of $1.5
billion for the second quarter, up 4 percent from a year prior.