Delta, United to ground aircraft, slash domestic capacity to counter slowdown
Wednesday March 19, 2008
Delta Air Lines and United Airlines yesterday announced a domestic downsizing to help negotiate rising fuel costs and a slowing US economy, with each carrier planning to ground 15-20 mainline aircraft this year and DL also aiming to slash its workforce by approximately 2,000.
UA plans to reduce domestic capacity by an unspecified amount later this year as it grounds 15-20 737-500s, while DL said it will cut domestic capacity by 10% year-over-year in the second half of 2008.
UA already has committed to lowering domestic capacity by 3.5%-4.5% for the full year and yesterday said it will offer new guidance next month. DL, which also plans to ground 20-25 regional jets this year, said its full-year domestic capacity will be cut 7% with most of the reduction coming from point-to-point flying as it seeks to focus domestic operations on feeding its international services, which will see capacity growth of 15% in 2008.
"Jet fuel prices are up 85% since the beginning of 2007," DL President and CFO Edward Bastian said yesterday at the JP Morgan Aviation and Transportation Conference in New York, available via webcast. "What's going on with fuel is certainly unprecedented, if not a crisis for the industry." He explained that 1,300 front-line DL workers will be cut by "voluntary" means and 700 administrative employees will be cut by "involuntary" means if necessary.
He added that international demand remains strong but said decisive action is required domestically. "We're in uncharted territory in terms of fuel prices and the slowness of the domestic market," he said. "We believe the [10% second-half] domestic capacity reduction is the right tonic, but if we have to go deeper, we will."
Northwest Airlines Executive VP and CFO Dave Davis, also speaking at the conference, said the carrier is undertaking "a thorough review of capacity with a particular view on the domestic market" but has not made any decisions. He predicted that cuts could come "beginning with the fall schedule" and noted that NWA could decide to increase the number of DC-9s it plans to retire over the 40 already scheduled to be grounded. Its DC-9 fleet is slated to stand at 68 at year end, but "there's an opportunity to get even smaller from a DC-9 perspective later in 2008 if we need to," he revealed.
by Aaron Karp
ATWOnline
Wednesday March 19, 2008
Delta Air Lines and United Airlines yesterday announced a domestic downsizing to help negotiate rising fuel costs and a slowing US economy, with each carrier planning to ground 15-20 mainline aircraft this year and DL also aiming to slash its workforce by approximately 2,000.
UA plans to reduce domestic capacity by an unspecified amount later this year as it grounds 15-20 737-500s, while DL said it will cut domestic capacity by 10% year-over-year in the second half of 2008.
UA already has committed to lowering domestic capacity by 3.5%-4.5% for the full year and yesterday said it will offer new guidance next month. DL, which also plans to ground 20-25 regional jets this year, said its full-year domestic capacity will be cut 7% with most of the reduction coming from point-to-point flying as it seeks to focus domestic operations on feeding its international services, which will see capacity growth of 15% in 2008.
"Jet fuel prices are up 85% since the beginning of 2007," DL President and CFO Edward Bastian said yesterday at the JP Morgan Aviation and Transportation Conference in New York, available via webcast. "What's going on with fuel is certainly unprecedented, if not a crisis for the industry." He explained that 1,300 front-line DL workers will be cut by "voluntary" means and 700 administrative employees will be cut by "involuntary" means if necessary.
He added that international demand remains strong but said decisive action is required domestically. "We're in uncharted territory in terms of fuel prices and the slowness of the domestic market," he said. "We believe the [10% second-half] domestic capacity reduction is the right tonic, but if we have to go deeper, we will."
Northwest Airlines Executive VP and CFO Dave Davis, also speaking at the conference, said the carrier is undertaking "a thorough review of capacity with a particular view on the domestic market" but has not made any decisions. He predicted that cuts could come "beginning with the fall schedule" and noted that NWA could decide to increase the number of DC-9s it plans to retire over the 40 already scheduled to be grounded. Its DC-9 fleet is slated to stand at 68 at year end, but "there's an opportunity to get even smaller from a DC-9 perspective later in 2008 if we need to," he revealed.
by Aaron Karp
ATWOnline
