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Delta to trim capacity further

  • Thread starter Thread starter GuppyWN
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GuppyWN

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Zacks Equity Research, On Friday May 20, 2011, 2:15 pm EDT


Delta Air Lines Inc. (NYSE: DAL - News), the second largest U.S. airline, is cutting more capacity to cope with persistently rising fuel prices and changing air travel demand conditions.
Delta plans to trim its capacity by 4% post Labor Day in markets where fare hikes are unable to deal with higher fuel prices. The company expects to cut 3% of domestic capacity, including a 25% reduction in departure at its Memphis hub and 140 aircraft reduction.
In Atlanta, the company plans to cut capacity by 12%, in Latin America by 4% and in the Pacific by 3%. Further, with its trans-Atlantic joint venture partners –– Air France KLM and Alitalia –– capacity between Europe, the U.S. and Canada will be reduced by 7–9%.
The company also plans to reduce maintenance and other non-fuel costs, as well as accelerate retirement of less fuel-efficient planes.
Delta Air Lines continues to invest in the existing domestic mainline fleet by installing winglets to increase fuel efficiency and by expanding the First Class cabin to more fleets. In the international transoceanic aircraft, the company is installing full flat-bed seats in BusinessElite and adding in-seat audio and video in all cabins. Delta is further investing to add First Class to 70 and 76 seat regional jets in its regional aircraft.
The steeply rising fuel prices are expected to increase Delta’s 2011 fuel expenses by $3 billion or 35% over the last year, thereby hurting its profitability. Although the aggressive fare hike actions and capacity cuts will help Delta to counter higher fuel costs, it might hurt revenue and profitability throughout 2011.
The Zacks Consensus Estimate for fiscal 2011 is $1.26. The estimate was static over the last 7 days but rose by 10 cents over the last 30 days. This represents a substantial decline of 26.61% annually.
However, for 2012, earnings will grow from the year-ago level aided by higher ancillary revenues such asexpanded seat-related offerings and the launch of the international premium economy product “Economy Comfort” in June as well as cost synergies from the integration of the Northwest merger. The ancillary revenues will yield revenue of $1 billion by 2013 and the merger will generate $2 billion in annual revenue and cost synergies by 2012.
The Zacks Consensus Estimate for 2012 is $2.11, up 8 cents over the last 7 days and 10 cents over the last 30 days. The estimate represents a whopping increase of 68.45% year over year.
We are currently maintaining our long-term Neutral recommendation on the stock. However, a highly unionized labor, debt loaded balance sheet, competitive threats from large peers such as United Continental HoldingsInc. (NYSE: UAL - News), AMR Corporation (NYSE: AMR - News) and Southwest Airlines Co. (NYSE: LUV - News), and continued investment in technology make us cautious on the stock. Thus, for the short term (1–3 months), Delta Air Lines retains a Sell rating with the Zacks # 4 Rank.
 
We all live in glass houses bro!
The merging of 2 airlines always leads to jobcuts!
I'm sure this is a slam at your Delta "buddies,":laugh: but let's not find pleasure in others' misfortunes!


 
Last edited:
We all live in glass houses bro!
The merging of 2 airlines always leads to jobcuts!
I'm sure this is a slam at your Delta "buddies,":laugh: but let's not find pleasure in others' misfortunes!

I absolutely agree! That's why I posted the article without comment. If I had said anything then someone would have taken offense to it.

Gup
 
All previously announced. The capacity reduction doesn't necessarily mean planes getting parked, rather less seats. This Summer there are more A330s on Europe flights than ever before, some coming from the Asia side as it recovers from the Earthquake/Tsunami. So, after Labor Day the A330s will move off of Europe and then head South towards South America. 767s will take over the Europe stuff, but that will lead to a CAPACITY REDUCTION in the number of seats available. Some of the routes will be cut as normal, like Atlanta to Athens and Venice, which always happens. The planes that will be "parked" for the Fall are actually going to get re-mods, for lie flat seats and new IFE systems, to better compete with Asian carriers. The Haneda flying will also be downgauged to 777s from 744s, which will allow those 744s to get the mods. So, no furloughs scheduled, and actually getting those planes up to date with new interiors and IFE, which is a good thing.

On the Southwest side, they are adding a lot of flights from Newark. Yeah! Good for them. More people will learn to loathe that place.


Bye Bye---General Lee
 
In Atlanta, the company plans to cut capacity by 12%,
wow, wonder why:D To bad there aren't any LBB or GEG destinations to make up for that loss. In any event, help an old lady cross the street tommorrow, even if she has a colostomy bag.
 
All previously announced. The capacity reduction doesn't necessarily mean planes getting parked, rather less seats. This Summer there are more A330s on Europe flights than ever before, some coming from the Asia side as it recovers from the Earthquake/Tsunami. So, after Labor Day the A330s will move off of Europe and then head South towards South America. 767s will take over the Europe stuff, but that will lead to a CAPACITY REDUCTION in the number of seats available. Some of the routes will be cut as normal, like Atlanta to Athens and Venice, which always happens. The planes that will be "parked" for the Fall are actually going to get re-mods, for lie flat seats and new IFE systems, to better compete with Asian carriers. The Haneda flying will also be downgauged to 777s from 744s, which will allow those 744s to get the mods. So, no furloughs scheduled, and actually getting those planes up to date with new interiors and IFE, which is a good thing.

On the Southwest side, they are adding a lot of flights from Newark. Yeah! Good for them. More people will learn to loathe that place.


Bye Bye---General Lee


Correct. Frankly they need cargo lift in South America and Asia badly. I routinely carry 40K lbs of cargo and leave some on the ramp.
 
We all live in glass houses bro!
The merging of 2 airlines always leads to jobcuts!
I'm sure this is a slam at your Delta "buddies,":laugh: but let's not find pleasure in others' misfortunes!

Really we shall see about the job cuts. However how should I look at GL slams about SWA! He is getting what he deserves.
 
Oh, I wonder why DAL is "trimming capacity" It appears this is an effort to get their stock price up for one reason or another........ Booking are very strong and Asia is recovering nicely.
 
All previously announced. The capacity reduction doesn't necessarily mean planes getting parked, rather less seats. This Summer there are more A330s on Europe flights than ever before, some coming from the Asia side as it recovers from the Earthquake/Tsunami. So, after Labor Day the A330s will move off of Europe and then head South towards South America. 767s will take over the Europe stuff, but that will lead to a CAPACITY REDUCTION in the number of seats available. Some of the routes will be cut as normal, like Atlanta to Athens and Venice, which always happens. The planes that will be "parked" for the Fall are actually going to get re-mods, for lie flat seats and new IFE systems, to better compete with Asian carriers. The Haneda flying will also be downgauged to 777s from 744s, which will allow those 744s to get the mods. So, no furloughs scheduled, and actually getting those planes up to date with new interiors and IFE, which is a good thing.

On the Southwest side, they are adding a lot of flights from Newark. Yeah! Good for them. More people will learn to loathe that place.


Bye Bye---General Lee

SWA to add a lot of flights to EWR? know how many? I didn't think it was a heck of a lot.

GuppyWn, you didn't post any comments with the article, I take offense to that sir!
 
Oh, I wonder why DAL is "trimming capacity" It appears this is an effort to get their stock price up for one reason or another........ Booking are very strong and Asia is recovering nicely.

I've been flying way more than I like and everything's been packed to the gills.
Mr B's pretty good at what he does and he does seem to have an agenda lately.
 
Really we shall see about the job cuts. However how should I look at GL slams about SWA! He is getting what he deserves.

So when the first furloughs hit SWA I should find joy in that?
Anyone finding joy in other people's misfortunes is an ass, and you sir, fit that description!
 
SWA to add a lot of flights to EWR? know how many? I didn't think it was a heck of a lot.

GuppyWn, you didn't post any comments with the article, I take offense to that sir!


And they started with, what, 13 flight a day out of DEN? Up to nearly 150 now I read recently.


Unfortunately EWR isn't as bad as it used to be, so getting in and out of there is better than it was in the past. Plus, the NYC Tracon is in need of a few flat screens and some pizza, so SWA showed up at just the right time.. :D
 
Nothing to see here. All is well. All employees at Eastern, uh I mean, uh Song have a bright future to look forward to at our shrinking, uh, I mean growing airline!
 
Guys,

Not to worry SWA will have a 777 program within the year to compete in the very lucrative and fastest growing aviation international market. The fact is- The domestic market will be capped within the next decade. If your not positioned with the airframes for the upcoming shift in worldwide travel, your gonna be behind the power curve.

With great products like Jetblue and Virgin america, the domestic market is full. No leisure passenger is loyal to any one carrier. They go for price then duration. That's it.

If everyone is within $10 in price on any flight segment how can anyone say they will dominate ?
 
Guys,



If everyone is within $10 in price on any flight segment how can anyone say they will dominate ?
Easily....companies may be within each other on price point. But, one only needs to look at the balance sheets to see who will win in the future.

In other words: sure American is matching fares, but they are losing money doing it. Losing money is not sustainable in the long term.
 
I routinely carry 40K lbs of cargo and leave some on the ramp.


A remarkable achievement. I'm unable to carry more than 100lb at a time for short distances.

This is a testament to the effectiveness of Human growth hormone and steroids. Under a trainers supervision of course.
 

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