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Delta to trim flights as rivals' expansion hurts prices

Delta to trim flights as rivals' expansion hurts prices


Reuters
New York
Delta Air Lines Inc on Monday said it will fly fewer seats this winter than it had planned and defer the 2018 delivery of four large aircraft, as extra flights by rivals threaten to depress its ticket prices.
Delta, the second-largest US airline by traffic, will scrap 1 percentage point of its planned growth in the fourth quarter so flight capacity rises by less than 2 percent in the second half of 2016, according to a regulatory filing.
The move will help Delta reach its goal of reversing the decline of a closely watched financial measure - passenger revenue divided by its plane seats and mileage - before the end of the year.
US airline stocks have fallen in recent months as the companies continued forecasting that the measure, unit revenue, will plummet thanks to higher capacity and lower fares.
The airline also said it will keep its longer-term expansion in check by deferring the delivery of four wide-body A350 aircraft from Airbus Group SE to 2019 or later, from 2018.
Delta has 25 A350-900s on order, aimed at replacing its biggest plane, the Boeing Co 747.
Shares of Delta rose more than 3.3 percent after the news.
Delta said ticket revenue from corporate travellers has fallen 4 percent this year, although corporate passenger volumes are up 2 percent.
It said its trans-Pacific capacity will be down 15 percent and its trans-Atlantic capacity will be flat in the winter compared to two years ago.
Separately, Delta said it would increase its annual dividend to investors by 50 percent to 81 cents per share.

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