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Delta Air Lines to slash flight capacity
2009-06-11
WASHINGTON (AFP) - Delta Air Lines said Thursday it would slash flight capacity by 10 percent in 2009 and review staff needs in the face of the global recession and rising fuel prices. The US airline, the world's largest in terms of traffic, said in a memo to its more than 70,000 employees worldwide that it was forced to reduce capacity to cope with a sharp decline in air travel amid the recession that was exacerbated by surging jet fuel prices. Delta said it would cut overall flight capacity by 10 percent compared with 2008, and slash an additional five percent of international capacity on top of a previously announced cutback of 10 percent. The move was "to align our capacity with market demand, preserve liquidity, and ensure Delta's long-term success," Delta chief executive Richard Anderson and president Edward Bastian said in the memo. The Atlanta, Georgia-based airline, which merged with Northwest Airlines last year, said the capacity reductions would begin in September. The two top Delta executives also warned that the additional capacity reductions "mean we again must reassess staffing needs." They did not give details. "While the challenges of the current environment preclude us from making guarantees, our goal remains to avoid any involuntary furloughs of frontline employees," they said. The memo said that industry passenger revenues had declined nearly 20 percent in the first four months of the year compared to the same period in 2008 and the trend was expected to continue in the near term. In addition, 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 swine flu virus, have created a difficult business environment, it said. "These forces that are affecting the industry are creating significant headwinds for Delta." The two top executives also cautioned that declining revenues would overtake the more than six billion dollars in total benefits Delta expected this year from lower year-over-year fuel prices, merger synergies and capacity reductions. But they emphasized that Delta would continue to grow the "global footprint." "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," the memo said.
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