Delta cutting more capacity

Delta to cut capacity more than expected as declining revenue overtakes merger benefits.

Delta Air Lines Inc. will shave additional capacity later this year as it warns that more than $6 billion in benefits it expected from lower fuel prices, its merger with Northwest Airlines and previous capacity reductions will be overtaken by declining revenues. The reduction in available seats could mean further job cuts at the world's largest airline operator. Delta also said it projects it will take a $125 million to $150 million revenue hit in the second quarter because of the impact on air travel from the swine flu virus. The quarter ends June 30.

Delta executives told employees in a memo Thursday ahead of a presentation at an investor conference in New York that Delta will reduce system capacity by 10 percent this year compared to 2008. That is up from Delta's previous plan to cut system capacity by 6 percent to 8 percent. Delta also will reduce international capacity 15 percent, up from a previous plan to cut it by 10 percent. Delta said capacity reductions will begin in September. Some routes will be suspended, while the number of weekly flights to other destinations will be reduced.

"The additional capacity reductions mean we again must reassess staffing needs," Chief Executive Richard Anderson and President Ed Bastian said in the memo. "While the challenges of the current environment preclude us from making guarantees, our goal remains to avoid any involuntary furloughs of frontline employees."

Delta Airlines stock closed at 6.40 on 6/12/09