ATLANTA, June 11 /PRNewswire-FirstCall/ -- Delta Air Lines (NYSE: DAL) today issued the following memo to its more than 70,000 employees worldwide from CEO Richard Anderson and President Edward H. Bastian.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090202/DELTALOGO)
To: Delta Colleagues Worldwide
From: Richard Anderson and Ed Bastian
Subject: Global Recession and Rising Oil Prices Forcing Additional
Changes To Our Business
We are all seeing negative impacts from the global recession and rising oil prices not only in the news, but also in our communities and personal finances. Clearly, the airline industry is not immune. Industry passenger revenues have declined nearly 20 percent in the first four months of the year compared to the same period in 2008. That trend is expected to continue in the near term. On top of this, cost pressures from rising jet fuel prices - up more than 20 percent since the start of the year - coupled with softer travel demand due to the spread of the H1N1 virus, have created a difficult business environment.
These forces that are affecting the industry are creating significant headwinds for Delta. Declining revenues will overtake the more than $6 billion in total benefits we expected this year from lower year-over-year fuel prices, merger synergies and capacity reductions.
This morning, at an investor conference in New York, we will announce additional steps to align our capacity with market demand, preserve liquidity, and ensure Delta's long-term success. This plan includes reducing our system capacity by 10 percent compared to 2008. Capacity reductions will begin in September. In this environment, our merger makes more sense than ever and we will continue to accelerate our integration, as it gives us a competitive advantage and strengthens our financial foundation. We also will maintain tight controls on our costs and capital spending.
Customer demand for international travel has fallen significantly. Accordingly, we plan to reduce our international capacity by an additional 5 percent from what we announced in March, for a 15 percent total reduction in international capacity.
