Anderson to align capacity with demand

jonjuan

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Delta: Global Recession, Rising Oil Prices Forcing Additional Changes to Business

http://finance.yahoo.com/news/Delta-Global-Recession-Rising-prnews-15499621.html?.v=1

ATLANTA, June 11 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL - News) today issued the following memo to its more than 70,000 employees worldwide from CEO Richard Anderson and President Edward H. Bastian.

To: Delta Colleagues Worldwide

From: Richard Anderson and Ed Bastian

Subject: Global Recession and Rising Oil Prices Forcing Additional
Changes To Our Business
We are all seeing negative impacts from the global recession and rising oil prices not only in the news, but also in our communities and personal finances. Clearly, the airline industry is not immune. Industry passenger revenues have declined nearly 20 percent in the first four months of the year compared to the same period in 2008. That trend is expected to continue in the near term. On top of this, cost pressures from rising jet fuel prices - up more than 20 percent since the start of the year - coupled with softer travel demand due to the spread of the H1N1 virus, have created a difficult business environment.

These forces that are affecting the industry are creating significant headwinds for Delta. Declining revenues will overtake the more than $6 billion in total benefits we expected this year from lower year-over-year fuel prices, merger synergies and capacity reductions.

This morning, at an investor conference in New York, we will announce additional steps to align our capacity with market demand, preserve liquidity, and ensure Delta's long-term success. This plan includes reducing our system capacity by 10 percent compared to 2008. Capacity reductions will begin in September. In this environment, our merger makes more sense than ever and we will continue to accelerate our integration, as it gives us a competitive advantage and strengthens our financial foundation. We also will maintain tight controls on our costs and capital spending.

Customer demand for international travel has fallen significantly. Accordingly, we plan to reduce our international capacity by an additional 5 percent from what we announced in March, for a 15 percent total reduction in international capacity. This fall's capacity reductions will target routes that have experienced losses in the current economic climate and with higher fuel prices, including:

Suspending nonstop service from Atlanta to Seoul and Shanghai and instead routing customers for these flights over Detroit or Tokyo, or on nonstop SkyTeam partner flights.
Suspending nonstop flights from Cincinnati to Frankfurt and London-Gatwick. Cincinnati customers will still be able to reach these and many other international destinations via our other European gateways.
Suspending nonstop service between New York-JFK and Edinburgh.
Reducing weekly frequencies connecting Atlanta and Detroit to Mexico City and postponing some previously planned seasonal service between non-hub cities and Mexican beach destinations due to the impact of the H1N1 virus on customers' travel plans.
In keeping with our long-term business plan, we continue to grow the global footprint that is a cornerstone of our successful strategy. While we must reduce capacity this year, our international capacity this fall will still be more than 20 percent larger than it was before our global expansion began in 2005, and we are adding more than 20 new markets to our international network in 2009, including:

Los Angeles-Sydney
Salt Lake City-Tokyo
Detroit-Shanghai
New York-Prague
Pittsburgh-Paris
Atlanta-Johannesburg
By leveraging the unique strengths of our network, hub structure and alliances, we continue to provide the most travel options for our customers. Additional details of network changes are available on DeltaNet.

The additional capacity reductions mean we again must reassess staffing needs. While the challenges of the current environment preclude us from making guarantees, our goal remains to avoid any involuntary furloughs of frontline employees.

We will not allow the economy to negatively affect our merger integration - in fact, the current environment gives additional urgency to accelerate our efforts. You will see us move more quickly to rebrand and consolidate facilities, repaint aircraft and ramp-up our frontline training activities.

These are tough times and people often ask what they can do to contribute. Your most important contribution is to stay focused on doing your job well. We must all continue to deliver excellent customer service, run a strong operation and execute our Flight Plan. The entire industry is dealing with a difficult economy and rising fuel prices, but no one else has the opportunities and the people to match Delta in successfully navigating this crisis. Do what you do well, and we have no doubt that we will win.

Thank you for the incredible work you do for our customers every day. Together, we are building a stronger Delta.
 

Voice Of Reason

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I'm confused...I thought they HEDGED fuel knowing this summer would obviously repeat last?
 

samballs

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What he really is saying is DALPA is about to cave on our latest scope offer and in return we'll give them a .10 raise in per diem. RJs will grow at DL
 

Beetle007

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Hedging fuel doesn't change the price an airline pays at the pump.

Therefore, fuel hedging never benefits the economics of a flight or route. If a flight or route becomes unprofitable due to fuel prices, hedging will not help. The only choice is to reduce capacity on unprofitable routes when fuel prices rise.

The best way to understand this is to understand that airlines can't directly hedge jet fuel in the United States. Airlines buy and sell heating oil or crude oil contracts. Airlines never actually take delivery of the oil since it doesn't work well in a jet engine.

http://www.kellogg.northwestern.edu/research/fimrc/papers/jet_fuel.pdf
 

jonjuan

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Hedging fuel doesn't change the price an airline pays at the pump.

Therefore, fuel hedging never benefits the economics of a flight or route. If a flight or route becomes unprofitable due to fuel prices, hedging will not help. The only choice is to reduce capacity on unprofitable routes when fuel prices rise.

The best way to understand this is to understand that airlines can't directly hedge jet fuel in the United States. Airlines buy and sell heating oil or crude oil contracts. Airlines never actually take delivery of the oil since it doesn't work well in a jet engine.

http://www.kellogg.northwestern.edu/research/fimrc/papers/jet_fuel.pdf
Correct-although the term should really be "speculating."
 

maxblast72

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I'm confused...I thought they HEDGED fuel knowing this summer would obviously repeat last?
The bulk of the problem this time around isn't fuel, it the revenue environment. 20% YOY RASM dropoff just shows how bad the premium traveler dropoff is. Airlines are discounting fares tremendously just to keep the airplanes full. Even Southwest/Airtran are publicly saying they are seeing their competitors offering fare sales even when Southwest/Airtran aren't.

http://www.dallasnews.com/sharedcon...ies/061209dnbusairlineinvestors.6d3c2eaf.html
 

BrickTop

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More f*&ing cuts..... All they do is CUT. I really want to jack someone in the mouth.... I've just had it.
 

Ex737Driver

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List of Service Suspensions/Terminations

International capacity reductions beginning in September include:


[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Atlanta-Seoul: indefinite suspension after Aug. 30 [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Shanghai: indefinite suspension after Sept. 1 [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Stockholm: seasonal suspension Sept. to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Prague: seasonal suspension October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Moscow: seasonal suspension October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Guayaquil, Ecuador: seasonal suspension mid-September to mid-December [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Nairobi, Kenya: suspended pending TSA approval [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Mumbai, India: moves to New York-JFK in October [/FONT]

[FONT=Times New Roman,Times New Roman]• Cincinnati-Frankfurt: indefinite suspension after Aug. 29 [/FONT]

[FONT=Times New Roman,Times New Roman]• Cincinnati-London-Gatwick: indefinite suspension after Aug. 29 [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Edinburgh, Scotland: indefinite suspension after Sept. 19 [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Bucharest, Romania: indefinite suspension after Sept. 6 [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Shannon, Ireland: seasonal suspension October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Monrovia, Liberia: suspended pending TSA approval [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Kiev, Ukraine: seasonal suspension mid-September to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Malaga, Spain: seasonal suspension mid-October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Pisa, Italy: seasonal suspension mid-October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Valencia, Spain: seasonal suspension mid-October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Dakar-Cape Town, South Africa: indefinite suspension Aug. 29 [/FONT]
[/FONT][FONT=Times New Roman,Times New Roman]
[/FONT]
 

General Lee

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International capacity reductions beginning in September include:





[FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]Atlanta-Seoul: indefinite suspension after Aug. 30 [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Shanghai: indefinite suspension after Sept. 1 [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Stockholm: seasonal suspension Sept. to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Prague: seasonal suspension October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Moscow: seasonal suspension October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Guayaquil, Ecuador: seasonal suspension mid-September to mid-December [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Nairobi, Kenya: suspended pending TSA approval [/FONT]

[FONT=Times New Roman,Times New Roman]• Atlanta-Mumbai, India: moves to New York-JFK in October [/FONT]

[FONT=Times New Roman,Times New Roman]• Cincinnati-Frankfurt: indefinite suspension after Aug. 29 [/FONT]

[FONT=Times New Roman,Times New Roman]• Cincinnati-London-Gatwick: indefinite suspension after Aug. 29 [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Edinburgh, Scotland: indefinite suspension after Sept. 19 [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Bucharest, Romania: indefinite suspension after Sept. 6 [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Shannon, Ireland: seasonal suspension October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Monrovia, Liberia: suspended pending TSA approval [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Kiev, Ukraine: seasonal suspension mid-September to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Malaga, Spain: seasonal suspension mid-October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Pisa, Italy: seasonal suspension mid-October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• New York JFK-Valencia, Spain: seasonal suspension mid-October to March [/FONT]

[FONT=Times New Roman,Times New Roman]• Dakar-Cape Town, South Africa: indefinite suspension Aug. 29 [/FONT]
[/FONT]
Wow. The NYC ER category will be cleaned out for awhile, and there are some indefinite suspensions of a few flights in ATL and CVG. Could there be furloughs? Again, it was said they needed about 2 years for it to be financially smart, and a lot of the flights are coming back in the Spring. We shall see. Not good. It will be a slow Fall and Winter for sure.


Bye Bye--General Lee
 
Last edited:

whatitdoing?

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Like I've been saying, furloughs are coming. They're just trying to reglaze the terd over and over again before they feed it to you. It was they're plan all along.
 

ACL65PILOT

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Like I've been saying, furloughs are coming. They're just trying to reglaze the terd over and over again before they feed it to you. It was they're plan all along.

I can tell you it wasn't. This economy is killing us. I agree that we will see some sort of job loss out of this. Not much probably about what you guys at CAL have. (ALL IMHO)
 

Cobraair75drvr

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Acl,

This is what I wrote on 2-14-09:

"
Sorry to be a downer. BUT, minimum 10%(1200) more likely 15%-20% starting within the next 9-12 months. "

I hope for the sake of all of us, especially the guys who have already been furloughed once, and some twice, that the numbers are closer to yours than mine.






I can tell you it wasn't. This economy is killing us. I agree that we will see some sort of job loss out of this. Not much probably about what you guys at CAL have. (ALL IMHO)
 

nwaredtail

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Acl,

This is what I wrote on 2-14-09:

"
Sorry to be a downer. BUT, minimum 10%(1200) more likely 15%-20% starting within the next 9-12 months. "

I hope for the sake of all of us, especially the guys who have already been furloughed once, and some twice, that the numbers are closer to yours than mine.
The real irony is that the majority of the cuts are from the DAL -S side, yet, to be sure, the DAL-n will suffer too. Funny how during the SLI it was "DAL is growing, NWA is shrinking" while actually the opposite has been true. I want a do over!

Hoping for no furloughs
 

dugan jones

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Acl,

This is what I wrote on 2-14-09:

"
Sorry to be a downer. BUT, minimum 10%(1200) more likely 15%-20% starting within the next 9-12 months. "

I hope for the sake of all of us, especially the guys who have already been furloughed once, and some twice, that the numbers are closer to yours than mine.

What about those of us that have taken a ride on the furlough train 3 times now?
 

whatitdoing?

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I can tell you it wasn't. This economy is killing us. I agree that we will see some sort of job loss out of this. Not much probably about what you guys at CAL have. (ALL IMHO)

ACL65pilot, why the smartass comment? I thought we were past this. Yes, the economy is killing all of us, I agree. But when are we going to get past this attitude of my airline is better than yours? I'm determined to re-wired your central core processor that I know Delta does when they hired you. You've got to tell me, is the "Collective" in Peachtree City? Maybe I should be saying, "000011100110011100110011111000010100". That's saying FURLOUGHS ARE COMING AND I TOLD YOU SO. As far as your smartass comment about CAL, this POS airline has always run their ship on a razor thin staffing model. So I doubt it. Problem at Delta is that you've got over 12,000 pilots!!!! You even said that you're 400 pilots fat, so 10 percent reduction.......you do the math!! Maybe you guys can expand in Africa more. "It's a gold mind" rings a bell.
 

Cobraair75drvr

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Redtail,

Just because the announced cuts appear to all be on the south side, stay tuned for the parking of the 400s and shifting of 777s to the north along with a reduction in 330 flying and a shift to 76s on those routes. One more thing. Look for this to happen PRIOR TO soc.



The real irony is that the majority of the cuts are from the DAL -S side, yet, to be sure, the DAL-n will suffer too. Funny how during the SLI it was "DAL is growing, NWA is shrinking" while actually the opposite has been true. I want a do over!

Hoping for no furloughs
 
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