Delta Air Lines holds back expansion plans for H2 2016
17 May 2016
Delta Air Lines said it is holding back its expansion plans for the second half of this year to shield its revenue from the impact of rising fuel prices and a weak European economy, the company said yesterday.
The Atlanta-based carrier added in a filing for investors that it would delay taking delivery of four new wide-body aircraft by a year or two in order to better match its "expected pace of international market improvement," .
According to commentators, the move was in line with Delta's reputation as being conservative and calculated with growth.
Delta still planned to raise capacity, but about one point less than earlier expected. Domestic growth would slow from 4 per cent in the first three quarters to about 2.5 per cent in the fourth quarter while international capacity remained relatively flat.
The carrier did to name the "underperforming" domestic markets that may experience lower growth in the fourth quarter. Delta executive Glen Hauenstein said in April that "all of our domestic hubs improved margins in the quarter with the best performances in Salt Lake City, Atlanta and Minneapolis, startribune.com reported.
Internationally, a weak euro coupled with a strong dollar, uncertainty over fuel prices and geopolitical strife - like the 22 March terrorist attack in Brussels were all factors that that the carrier continued to address with capacity actions, Hauenstein said in April.
Delta and other US airlines had taken a hit from the weak euro, which had fallen 17 per cent against the dollar in the past two years, even as a surge in seating capacity between the US and Europe kept fare increases in check.
Revenue from trans-Atlantic flights accounted for as much as 20 per cent of Delta's total revenue, president Hauenstein said in an April call with analysts.
"Broad commercial initiatives should result in Delta being the first network carrier to return to positive unit revenue growth later this year," the airline said in the filing, which was prepared for a presentation to investors.
