Delta sees further softening in the industry; cuts more routes

Delta just cannot seem to move forward in their efforts to find profits (or even smaller losses) since their merger with Northwest was completed.  In an open letter sent to all employees yesterday that was also shared with the general public this morning CEO Richard Anderson and President Edward H. Bastian laid bare their concerns with the carrier’s chances.

Among the bits that the two identified as troubling are a 20% reduction in passenger revenue from last year and a 20% rise in fuel prices since the beginning of the year.  The first one is hard to work against with the sever cuts in travel as the economy has suffered but the fuel pricing issue is one where I think the airlines would have been wise to see that the prices were going to start edging back up once they finally settled late last year.

Most significant, however, is the announcement of a further 10% cut in capacity coming at the end of the peak summer travel season.  This is 10% off of last year’s numbers, which were already cut as the high fuel prices and low loads forced airlines to park lots of planes and cut unprofitable routes.  Speaking of cutting routes, Delta is doing that, too.

The biggest loser in the route cuts is probably Cincinnati which will be losing its service to both Frankfurt and London.  For a city that is supposedly a hub of a major airline they seem to be losing routes and frequencies pretty quickly there.

But even with the cuts that they announced Delta is still planning on launching a bunch of new service, too, mostly on routes where there is already stiff competition (e.g. Los Angeles – Sydney) or where there doesn’t seem to be much of a market (e.g. Pittsburgh – Paris).  Oh, and they mention that they are probably going to need to trim staffing head counts but they intend to do so without involuntary furloughs if they can.

I’d like to think that someone there knows what they are doing with all of this but the more I see of the way they are running things the more I question that reality.  Things are ugly and they’re likely to get worse before they get better.  At least fares have stayed ridiculously low so I can still travel basically as much as I want.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.