Delta Air Lines Inc. said March 10 that weakening demand due to the slumping global economy is forcing the airline to cut international capacity an additional 10 percent beginning in September.
These cuts, announced by Delta’s leadership in a memo to employees, come on top of 6-8 percent system-wide reductions (3-5 percent in overseas markets) already planned for this year.
“In just the few months since we last announced capacity reductions, revenues have weakened, particularly in international markets. Once again, we must move quickly to adjust our capacity and stay in front of demand changes,” said the memo from Delta CEO Richard Anderson and Ed Bastian, president and CEO of Northwest Airlines Corp.
Mr. Bastian, Delta’s former president and chief financial officer, is leading Northwest as the two airlines transition into one as a result of their merger.
Trans-Atlantic and trans-Pacific routes, long seen as highly profitable for Delta, have been hit the hardest as the economic crisis has worsened, the memo said.
In winter 2009, Trans-Atlantic capacity will be down 11-13 percent and trans-Pacific down 12-14 percent compared to the same period in 2008.
“To achieve these capacity changes, we will exit low performing markets, down-gauge certain routes, adjust frequencies, and move some markets to seasonal service,” the memo said.
Latin American capacity is expected to rise slightly in the fourth quarter of 2009. Delta on March 9 said that in December it would begin flying to Brasilia, Brazil, bringing to six its total number of flights to cities in the South American country. Read more here.
While 2,100 employees took severance packages during the last staff reorganization, Delta hinted that additional job cuts could be needed, beginning with more voluntary buyouts.
“While these voluntary reductions met our overall target, there are certain positions and geographic locations where we fell short of achieving the goals of the voluntary programs,” the memo said.
Delta employs 70,000 people worldwide.
Read Delta’s memo to employees by clicking here.
