5:42 p.m. Tuesday, September 13, 2011
By Kelly Yamanouchi, The Atlanta Journal-Constitution
Delta Air Lines will cut its flight capacity by another 2 to 3 percent next year, its response to continuing high fuel costs that have the leading airlines either cutting operations or remaining flat.
The Atlanta-based airline already said it would reduce its fourth-quarter flight capacity up to 5 percent, with the biggest cuts coming on trans-Atlantic flights to Europe, plus a shrinkage of its Memphis hub and cuts to Japanese flights.
"We now anticipate that fuel is going to stay at the levels we see today, if not continue to grow," Delta president Ed Bastian said Tuesday at the Deutsche Bank aviation and transportation conference for investors.
Of the other top airlines, United Continental Holdings Inc. planned to keep its flying levels flat next year and AMR Corp.'s American Airlines will cut more flights than it originally planned for the fourth quarter.
Delta will not only decrease its overall flight capacity for next year, but also planned to make deeper seasonal cuts during the slower winter season, Bastian said. The airline will drop its flight capacity by 20 percent in the winter compared with the summer.
"We need to make money year-round," Bastian said. "We'll make more money in the summer, but we're no longer interested in giving it back in the winter."
Delta has experienced a 3-percent increase incosts outside of fuel and aims to reduce those costs, Bastian said. Layoffs of 200 employees, buyouts and early retirements for more than 2,000 workers, retiring older aircraft and consolidating facilities have been instituted.
Delta received a $70 million revenue increase from the 13-day shutdown of the Federal Aviation Administration in late July and early August. Delta previously reported that it expected $4 million to $5 million extra per day. For the quarter ending in September, Delta's operating margins were expected to be 9 to 11 percent -- better than expected, according to Bastian.
Southwest Airlines, which acquired AirTran Airways to gain a foothold in Atlanta, recorded a $56 million increase from the FAA shutdown, according to chief financial officer Laura Wright Tuesday.
In a separate issue, Bastian said Delta is considering adding its "economy comfort" section with extra legroom and other benefits, in exchange for a fee, to domestic flights after getting a good response on international flights.
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