Delta Air to reduce capacity as demand slows
Nine days after announcing new overseas routes for 2009, Delta Air Lines Inc., the world’s biggest carrier, said in a regulatory filing Friday that it planned to reduce future domestic and international capacity because demand for seats had slowed amid the global financial crisis.
The Atlanta-based airline said it would give more details about its outlook in early December. Spokeswoman Betsy Talton said Delta still planned to add the 15 new international routes it announced Nov. 12 starting next spring, but the company would continue to monitor performance.
It was unclear whether future reductions would mean a net cut in international capacity next year or simply smaller growth. When the new overseas routes were announced, a Delta executive told reporters that overall international capacity in 2009 would be slightly larger than in 2008.
In a Securities and Exchange Commission filing Friday, Delta said demand had slowed in the fourth quarter, which began Oct. 1 and ends Dec. 31. Domestic advance bookings are running two percentage points higher year over year, reflecting capacity reductions in the domestic system. International bookings are down 4 to 5 percentage points.
“As a result, we are evaluating our capacity plans for 2009 on both the domestic and international system and expect to reduce future capacity to better align supply with current levels of demand,” Delta said.
JPMorgan Chase & Co. airline analyst Jamie Baker said in a research note that Delta’s guidance appeared to affirm the widely held view that domestic capacity cuts and international corporate travel curtailment are likely to result in domestic trends outperforming international next year.
He noted that the industry has been through challenges before, like the aftermath of the Sept. 11 terrorist attacks. “Perhaps the steeper cliff is yet to come, but it is interesting nonetheless travelers appeared to grow more averse to air travel more quickly in 2001 than is so far the case in 2008 -- despite September and October’s global upheaval,” Baker wrote.
