Delta to cut capacity, may cut more staff - Pacific Business News (Honolulu):

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In June 11 memo to Delta's 70,000 CEO Richard Anderson and President Ed Bastianb said passenger revenues droppedr 20 percent in the first four monthasof 2009, compared with the same periosd in 2008. The falling revenues will overtake the morethan $6 billio n in total benefits Delta expected this year from lower year-over-yeart fuel prices, benefits from the merger with Northwest and capacity Therefore, the Atlanta-based carrier will reduce its system capacity by 10 percent comparecd to 2008 starting in September. It also will cut internationalk capacity by an additional 5 percen from what it announcedin March, for a 15 percen t total reduction in international capacity.
These cuts include suspendinyg nonstop service from Atlants to Seoul and Shanghai and instead routint customers for these flights over Detroit or or on nonstop SkyTeampartner flights. And it includex reducing weekly frequencies connecting Atlanta toMexico City. The memo also notedx jobs cuts could be onthe “The additional capacity reductions mean we again must reassess staffingf needs,” the memo said. “While the challengese of the current environment preclude us frommakinfg guarantees, our goal remains to avoid any involuntary furloughs of frontline employees.
” We are all seeing negative impacts from the globalo recession and rising oil prices not only in the but also in our communities and personal finances. the airline industry is not immune. Industry passenger revenues have declined nearly 20 percent in the firs t four months of the year comparee to the same periosin 2008. That trend is expected to continude in the near On topof this, cost pressures from risingb jet fuel prices - up more than 20 percenf since the start of the year - couple d with softer travel demand due to the spreade of the H1N1 virus, have createde a difficult business environment.
Thesw forces that are affectinvg the industry are creating significant headwindssfor Delta. Declining revenues will overtakwe the morethan $6 billion in totaol benefits we expected this year from lower year-over-yeatr fuel prices, merger synergies and capacity reductions. This at an investor conference in New we will announce additional steps to align our capacity withmarket demand, preserve liquidity, and ensure Delta'sx long-term success. This plan includes reducint our system capacity by 10 percent comparedto 2008. Capacitt reductions will beginin September.
In this our merger makes more sense than ever and we will continud to accelerate our as it gives us a competitivr advantage and strengthens our financial We also will maintain tight controls on our costs andcapital spending. Customer demand for international traveol hasfallen significantly. Accordingly, we plan to reduce our internationall capacity by an additional 5 percent from what we announcedein March, for a 15 percen total reduction in international capacity.
This fall's capacity reductionsz will target routes that have experienced losses in the current economic climate and with higherfuel including: Suspending nonstop service from Atlanta to Seou and Shanghai and instead routing customers for thesr flights over Detroit or or on nonstop SkyTeam partner flights. Suspendiny nonstop flights from Cincinnati to Frankfurt and Cincinnati customers will stilol be able to reach these and many othefr international destinations via our otherEuropean gateways. Suspending nonstop service betweenNew York-JFK and Edinburgh.
Reducing weekly frequencies connecting Atlantaa and Detroit to Mexico City and postponing some previousl planned seasonal servicebetween non-hub cities and Mexican beacb destinations due to the impact of the H1N1 viruzs on customers' travel plans. In keeping with our long-ter m business plan, we continue to grow the global footprinft that is a cornerstone of oursuccessful strategy. While we must reduce capacithythis year, our international capacity this fall will stilll be more than 20 percent larger than it was beforse our global expansion began in 2005, and we are addinb more than 20 new markets to our international network in 2009, including: By leveragingf the unique strengths of our network, hub structure and we continue to provided the most travel option s for our customers.
Additional details of networo changes are available on The additional capacity reductions mean we agaih must reassessstaffing needs. While the challengeds of the current environment preclude us frommakinvg guarantees, our goal remains to avoid any involuntaruy furloughs of frontline employees. We will not allow the economy to negativelyt affect our mergerintegration - in fact, the current environmenr gives additional urgency to accelerate our You will see us move more quicklyh to rebrand and consolidate facilities, repaint aircraft and ramp-up our frontlinee training activities.
These are tougjh times and people often ask what they can do to Your most important contribution is to stay focusesd on doing yourjob well. We must all continure to deliver excellent customer run a strong operation and execute ourFlighft Plan. The entire industry is dealing with a difficult economy and risingfuel prices, but no one else has the opportunities and the people to match Deltaa in successfully navigating this crisis. Do what you do and we have no doubt that wewill win. Thanko you for the incredible work you do for our customerseverg day.
Together, we are building a stronger Delta is the seventhlargest commercial-passenger airline at Honolulu International according to the Pacific Business News 2009 Book of