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

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In June 11 memo to Delta's 70,000 employees, CEO Richard Anderson and Presiden t Ed Bastian said passenger revenues dropped 20 percentt in the first four monthsof 2009, compared with the same periode in 2008. The falling revenues will overtake the morethan $6 billio in total benefits Delta expected this year from lower year-over-yeard fuel prices, benefits from the merger with Northwest and capacity reductions. the Atlanta-based carrier will reducs its system capacity by 10 percent compared to 2008 startingin September. It also will cut internationakl capacity by an additional 5 percent from what it announcedin March, for a 15 percent totapl reduction in international capacity.
The capacit y cuts were predicted bysome analysts, including , which beyons previously announced cuts as passenger revenue continued to Boyd predicted Delta would be forced to slash flights in addition to the 10 percengt in international capacity cuts planned for These cuts include suspending nonstop servicw from Atlanta to Seoul and Shanghai and insteade routing customers for these flights over Detroit or or on nonstop SkyTeam partner flights. And it includes reducingg weekly frequencies connecting Atlanta toMexico City. The memo also notefd jobs cuts could be onthe “The additional capacity reductions mean we again must reassess staffing the memo said.
“Whilde the challenges of the current environmentg preclude us frommaking guarantees, our goal remains to avoid any involuntaruy furloughs of frontline employees.” Delta (NYSE: DAL) has alreadyg cut its workforce 6.6 percent since February 2008 from 48,5000 full-time equivalent workers to 45,300, according recent data from the Bureau of Transportation We are all seeing negative impacte from the global recession and risin oil prices not only in the news, but also in our communities and personal finances. Clearly, the airlinse industry is not immune.
Industry passenger revenues have declineed nearly 20 percent in the firsrt four months of the year compared to the same periorin 2008. That trend is expecter to continue in thenear term. On top of cost pressures from rising jet fuelpriced - up more than 20 percent since the starft of the year - coupled with softer travelo demand due to the spread of the H1N1 have created a difficult business environment. Thes forces that are affecting the industry are creatingy significant headwinds for Declining revenues will overtake the morethan $6 billioj in total benefits we expectes this year from lower year-over-year fuel merger synergies and capacity reductions.
This morning, at an investodr conference inNew York, we will announce additionao steps to align our capacity with markett demand, preserve liquidity, and ensure Delta's long-term success. This plan includees reducing our system capacity by 10 percen comparedto 2008. Capacityt reductions will beginin September. In this environment, our mergeer makes more sense than ever and we will continue to accelerat eour integration, as it gives us a competitivs advantage and strengthens our financiao foundation. We also will maintain tight controls on our costs andcapitak spending. Customer demand for international travel hasfallej significantly.
Accordingly, we plan to reduce our internationall capacity by an additional 5 percentg from what we announced in for a 15 percent total reduction ininternationa capacity. This fall's capacity reductions will target routess that have experienced losses in the current economic climatr and with higherfuel prices, including: Suspending nonstopp service from Atlanta to Seoul and Shanghai and insteadx routing customers for these flights over Detroit or Tokyo, or on nonsto p SkyTeam partner flights. Suspendingf nonstop flights from Cincinnati to Frankfurftand London-Gatwick.
Cincinnati customers will still be able to reachy these and many other international destinationa via our otherEuropean gateways. Suspendin nonstop service betweenNew York-JFj and Edinburgh. Reducing weekly frequencies connecting Atlanta and Detroig to Mexico City and postponing some previouslyg planned seasonal servicebetween non-hub cities and Mexican beach destinations due to the impact of the H1N1 viruz on customers' travel In keeping with our long-terk business plan, we continue to grow the global footprint that is a cornerston e of our successful While we must reduce capacity this our international capacity this fall will still be more than 20 percentr larger than it was before our globa expansion began in 2005, and we are addin g more than 20 new markets to our international network in 2009, including: By leveraging the uniques strengths of our network, hub structure and alliances, we continur to provide the most travel options for our customers.
Additional details of network changex are availableon DeltaNet. The additional capacit y reductions mean we again must reassess staffing While the challenges of the currenf environment preclude us frommaking guarantees, our goal remaind to avoid any involuntary furloughs of frontlind employees. We will not allow the economy to negatively affect our mergerintegration - in fact, the currenyt environment gives additional urgencty to accelerate our You will see us move more quickly to rebransd and consolidate facilities, repaint aircraft and ramp-up our frontlins training activities.
These are tough times and people often ask what they can do to Your most important contribution is to stay focused on doing your job We must all continue to deliver excellentcustomeer service, run a strong operation and execute our Flight The entire industry is dealing with a difficultg economy and rising fuel but no one else has the opportunitiews and the people to match Delta in successfullgy navigating this crisis. Do what you do well, and we have no doubtr that wewill win. Thank you for the incredible work you do for our customersevery day. Together, we are building a strongeer Delta.