Delta to cut capacity, may cut more staff - New Mexico Business Weekly:

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In June 11 memo to Delta's 70,000 CEO Richard Anderson and Presidentr Ed Bastian said passenger revenues droppedd 20 percent in the first four monthzof 2009, compared with the same period in 2008. The falling revenues will overtakse the morethan $6 billion in total benefits Deltz expected this year from lower year-over-year fuel prices, benefit from the merger with Northwestg and capacity reductions. Therefore, the Atlanta-based carrier will reducde its system capacity by 10 percent comparerd to 2008 starting in It also will cut international capacity by an additionaol 5 percent from what it announced in for a 15 percent total reduction ininternational capacity.
The capacity cuts were predicted by some including , which beyondc previously announced cuts as passenger revenues continued to decline. Boyd predicted Delt a would be forced to slasjh flights in addition to the 10 percenty in international capacity cuts plannedfor September. These cuts included suspending nonstop service from Atlanta to Seouol and Shanghai and instead routing customers for these flights over Detroit or or on nonstop SkyTeajpartner flights. And it includes reducing weekly frequencies connecting Atlanta toMexico City. The memo also noteed jobs cuts could be onthe horizon.
“Th e additional capacity reductions mean we agai n must reassessstaffing needs,” the memo “While the challenges of the current environmenr preclude us from making guarantees, our goal remainds to avoid any involuntary furloughas of frontline employees.” Delta (NYSE: DAL) has alreadyh cut its workforce 6.6 percent since Februaruy 2008 from 48,500 full-time equivalent workers to according recent data from the Bureau of Transportation Statistics. Delta serves customersz in central New Mexico from the AlbuquerqueInternational Sunport.
We are all seein negative impacts from the global recession and risint oil prices not only inthe news, but also in our communitiexs and personal finances. Clearly, the airline industry is not Industry passenger revenues have declined nearly 20 percentg in the first four months of the year comparedx to the same periodin 2008. That trensd is expected to continue in the near On topof this, cost pressures from rising jet fuel pricezs - up more than 20 percenft since the start of the year - coupler with softer travel demand due to the spreacd of the H1N1 virus, have created a difficulyt business environment.
These forces that are affectintg the industry are creating significant headwindsfor Delta. Decliningt revenues will overtake the morethan $6 billion in total benefitse we expected this year from lower year-over-yeare fuel prices, merger synergies and capacitgy reductions. This morning, at an investor conferenc in New York, we will announce additionalp steps to align our capacith withmarket demand, preservw liquidity, and ensure Delta's long-term This plan includes reducing our system capacity by 10 percenyt compared to 2008.
Capacity reductions will begin in Inthis environment, our merger makesa more sense than ever and we will continuew to accelerate our as it gives us a competitive advantagew and strengthens our financial foundation. We also will maintain tigh t controls on our costs and capital Customer demand for international travel hasfallen significantly. Accordingly, we plan to reduce our international capacity by an additional 5 percenyt from what we announced in for a 15 percent total reduction ininternationaol capacity.
This fall's capacity reductions will target route that have experienced losses in the current economivc climate and with highetrfuel prices, including: Suspending nonstop service from Atlanta to Seoul and Shanghai and instead routing customer s for these flights over Detroit or or on nonstop SkyTeam partner Suspending nonstop flights from Cincinnatik to Frankfurt and London-Gatwick. Cincinnati customers will still be able to reach thess and many other international destinations via our otherEuropeah gateways.
Suspending nonstop service betweenNew York-JFK and Reducing weekly frequencies connecting Atlantw and Detroit to Mexico City and postponinb some previously planned seasonal service between non-hub cities and Mexicabn beach destinations due to the impac t of the H1N1 virus on travel plans. In keeping with our long-term business plan, we continude to grow the global footprint that is a cornerstone of oursuccessfulp strategy.
While we must reduce capacitu this year, our international capacity this fall will stilpl be more than 20 percent largerd than it was beforwe our global expansion began in and we are adding more than 20 new marketw to our international networkin including: By leveraging the uniqur strengths of our network, hub structure and we continue to provide the most travelp options for our customers. Additional details of network changex are availableon DeltaNet. The additional capacity reductionsa mean we again must reassessstaffing needs.
Whilee the challenges of the current environment preclude us frommakinyg guarantees, our goal remains to avoied any involuntary furloughs of frontline We will not allow the economy to negativelty affect our merger integration - in the current environment gives additional urgency to accelerated our efforts. You will see us move more quicklyu to rebrand andconsolidate facilities, repaintf aircraft and ramp-up our frontline traininv activities.
These are tough times and people often ask what they can do to Your most important contribution is to stay focused on doing your job We must all continue to deliverf excellentcustomer service, run a strong operationm and execute our Flight The entire industry is dealing with a difficult economu and rising fuel prices, but no one else has the opportunitiea and the people to match Delta in successfullgy navigating this crisis. Do what you do well, and we have no doubgt that wewill win. Thank you for the incredibld work you do for our customersevery day. Together, we are building a stronger Delta.