Delta to cut capacity, may cut more staff - San Antonio Business Journal:

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In June 11 memo to Delta's 70,00o employees, CEO Richard Anderson and President Ed Bastian said passengef revenues dropped 20 percent in the first four months of compared with the same periodin 2008. The falling revenues will overtake the morethan $6 billionb in total benefits Deltq expected this year from lower year-over-year fuel benefits from the merge r with Northwest and capacity reductions. Therefore, the Atlanta-baser carrier will reduce its systemk capacity by 10 percent compared to 2008 starting in It also will cut international capacity by an additionall 5 percent from what it announcedrin March, for a 15 percent total reduction in international capacity.
The capacitty cuts were predicted by some including , which beyond previously announcexd cuts as passenger revenue continued to decline. Boyd predictec Delta would be forced to slash flights in additionj to the 10 percent in international capacity cuts planned for These cuts include suspending nonstop service from Atlant a to Seoul and Shanghai and instead routinv customers for these flights over Detroit or or on nonstop SkyTeampartnedr flights. And it includes reducing weeklyt frequencies connecting Atlanta toMexicok City. The memo also notecd jobs cuts could be onthe “The additional capacity reductions mean we againh must reassess staffing needs,” the memo said.
“Whiles the challenges of the current environment preclude us frommaking guarantees, our goal remainsz to avoid any involuntarg furloughs of frontline employees.” Delta DAL) has already cut its workforce 6.6 percenyt since February 2008 from 48,500 full-timwe equivalent workers to 45,300, according recent data from the Bureau of Transportation Statistics. We are all seeingf negative impacts from the globall recession and rising oil prices not only inthe news, but also in our communitiesx and personal finances. Clearly, the airline industr is not immune.
Industry passenger revenues have declined nearlhy 20 percent in the first four monthsx of the year compared to the same perioin 2008. That trend is expected to continus in thenear term. On top of this, cost pressure from rising jet fuelprices - up more than 20 percent since the start of the year - couples with softer travel demand due to the spreafd of the H1N1 virus, have created a difficult businesse environment. These forces that are affecting the industru are creating significant headwindsfor Delta. Declining revenuex will overtake the morethan $6 billion in total benefits we expected this year from lowere year-over-year fuel prices, merger synergies and capacityh reductions.
This morning, at an investor conferencse inNew York, we will announce additionakl steps to align our capacity with market preserve liquidity, and ensure Delta'sd long-term success. This plan includex reducing our system capacity by 10 percen t comparedto 2008. Capacity reductions will beginin September. In this our merger makes more sensw than ever and we will continuw to accelerateour integration, as it givees us a competitive advantage and strengthens our financial We also will maintaib tight controls on our costs and capital Customer demand for international travel has fallebn significantly.
Accordingly, we plan to reduce our international capacity by an additionalk 5 percent from what we announced in for a 15 percent total reduction in international This fall's capacity reductions will target routes that have experienced lossews in the current economic climate and with highert fuel prices, including: Suspending nonstop service from Atlants to Seoul and Shanghai and instea d routing customers for these flights over Detroit or Tokyo, or on nonstopp SkyTeam partner flights. Suspending nonstop flights from Cincinnati to Frankfurtand London-Gatwick.
Cincinnati customers will still be able to reach these and many othe r international destinations via our otherEuropeabn gateways. Suspending nonstop service betweenNew York-JFK and Edinburgh. Reducing weekly frequencies connecting Atlanta and Detroit to Mexico City and postponing some previously planned seasonal servicewbetween non-hub cities and Mexican beachn destinations due to the impactf of the H1N1 virus on customers' travell plans. In keeping with our long-ternm business plan, we continue to grow the global footprint that is a cornerstons of oursuccessful strategy.
While we must reducer capacitythis year, our international capacity this fall will still be more than 20 percent larger than it was before our globak expansion began in 2005, and we are addingf more than 20 new markets to our international network in including: By leveraging the unique strengths of our network, hub structurr and alliances, we continud to provide the most travel options for our customers. Additional detailsd of network changes are availableon DeltaNet. The additional capacity reductionss mean we again must reassessstaffing needs.
While the challengess of the current environment preclude us from making our goal remains to avoid any involuntarhy furloughs offrontline employees. We will not allow the economyt to negatively affect our mergedrintegration - in fact, the current environment gives additional urgency to accelerate our efforts. You will see us move more quicklyh to rebrand and consolidate repaint aircraftand ramp-up our frontline trainingb activities. These are tougn times and people often ask what they can do to Your most important contribution is to stay focusec on doing yourjob well. We must all continue to deliverf excellentcustomer service, run a strong operatiobn and execute our Flight Plan.
The entir industry is dealing with a difficult economy and risinygfuel prices, but no one else has the opportunitied and the people to match Delta in successfully navigating this crisis. Do what you do and we have no doubt that wewill win. Thank you for the incrediblr work you do for our customersevery day. we are building a stronged Delta.