U.S. carriers pull back on international flights
U.S. airlines are cutting back on once-lucrative overseas flights as a global recession prompts a sudden, steep decline in international...
U.S. airlines are cutting back on once-lucrative overseas flights as a global recession prompts a sudden, steep decline in international travel.
Delta on Tuesday said it would reduce its international flying 10 percent, starting in September.
The Atlanta-based carrier said it is also considering more job cuts even though 2,100 employees have accepted buyouts and will leave in the next few months.
Hardest hit will be flights to Europe and Asia, Delta Chief Executive Richard Anderson and President Edward Bastian told Delta's 70,000 employees in a memo.
Delta plans to reduce its trans-Atlantic capacity 11 to 13 percent and trans-Pacific flights 12 to 14 percent by leaving money-losing markets, flying smaller planes on some routes, flying less frequently to some cities and even eliminating year-round service.
Delta was the only one of the five largest U.S. airlines at a JPMorgan Chase conference Tuesday in New York to detail flying changes, but other carriers signaled readiness to limit available seats.
United expects to reduce its international capacity 15 percent during the first quarter, Chief Financial Officer Kathryn Mikells said.
United, which dominates flying from the U.S. to China, has been hurt by a 25 percent drop in traffic across the Pacific as well as a plunge in business travelers, the carrier's core customer base.
Any further capacity cuts at Houston-based Continental would be done "in tandem" for domestic and international flights, President Jeff Smisek told investors.
Continental didn't change its forecast for paring 2009 seating capacity in its main jet operations by 3.5 to 4.5 percent.
A "lot of uncertainty" surrounds travel demand, said Tom Horton, chief financial officer at American Airlines. Based on bookings for the next four months, the share of seats sold on American's planes is down 2.5 percentage points. The slide is 4.5 points on international routes.
"The first quarter is shaping up to be a challenging one," Horton said. "If we need to take out more capacity, we'll do it. And we can do it."
Southwest's February traffic tumbled 6 percent, its sixth decline in eight months. The Dallas-based carrier will break a 20-year growth streak this year as it trims flying 4 percent.
"It appears the first week of March is weaker still than what we had in February," CEO Gary Kelly said.
Airlines worldwide are struggling to attract passengers amid an unprecedented plunge in demand for travel, analysts said. Traffic has plummeted in nearly every region aside from the Middle East, according to the International Air Transport Association.
Slowdowns in air travel are "usually a regional phenomenon and not occurring on both ends of an intercontinental route," noted aviation consultant Robert Mann.
Passengers who can afford to travel are finding an abundance of cheap fares and plenty of room to stretch out on lengthy flights.
Airlines are also slashing fares within the U.S. On Tuesday, Southwest Airlines unveiled $39 one-way fares on a host of routes for tickets purchased before Monday, March 16. American Airlines and AirTran Airways are also offering bargains.
Those developments indicate the industry's contraction isn't over after the biggest U.S. airlines cut 29,400 jobs and parked more than 500 jets since the start of 2008 as part of plans to shrink seating capacity about 10 percent.
Despite this gloomy backdrop, Delta executives think their carrier will make money in 2009. Several analysts agree, saying airlines should benefit from lower fuel costs, particularly if the economy starts to pick up later this year.
"You never want to forecast your year from the first quarter," said Roger King, airline analyst with CreditSights.
"Everybody's pessimistic. But cash flow could be good this year unless demand really falls off a cliff," King said.
"We are encouraged to see Delta responding to worsening passenger demand and expect most mainline peers to react with similar reductions," Standard & Poor's analyst Jim Corridore in New York wrote in a note Tuesday. He rates Delta as "buy."
Material from Bloomberg News was used in this report.
Sea-Tac to lose
SAS service sooner
Scandinavian Airlines (SAS) said Tuesday it will end its nonstop service between Seattle and Copenhagen on July 31, earlier than previously announced.
SAS said in February it would stop flying the route late this year or early in 2010, saying it has been "severely affected by the current recession."
"We regret that this date is earlier than first communicated," said spokesman Jorgen Holme.
SAS has flown the route for 42 years. It carried 137,000 passengers through Seattle-Tacoma International Airport last year, 4.7 percent of the airport's international traffic.
SAS will continue flying between Chicago, Washington, D.C., and Newark, N.J. Customers booked on the Seattle/Copenhagen route can rebook or obtain a refund, the airline said.
— Seattle Times staff
Copyright © 2009 The Seattle Times Company
Seattle Times transportation reporter Mike Lindblom describes some of the factors that may have led to the collapse of the I-5 bridge over the Skagit River in Mount Vernon on Thursday, May 23.