U.S. airlines are cutting back on once-lucrative overseas flights as a global recession prompts a sudden, steep decline in international travel.
Delta Air Lines Inc., the world’s largest airline, announced Tuesday that it would reduce its international flying by 10 percent, starting in September. The Atlanta-based carrier also is mulling additional job cuts, even though 2,100 employees have accepted buyouts and will be departing Delta in the next few months.
Hardest hit will be flights to Europe and Asia, 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 by 11 percent to 13 percent and its trans-Pacific flights by 12 percent to 14 percent by exiting markets where it isn’t making money, flying smaller planes on some routes, flying less frequently to some cities and eliminating year-round service.
United Airlines, meanwhile, expects to reduce its international capacity by 15 percent during the first quarter, Chief Financial Officer Kathryn Mikells told a conference of analysts and investors in New York on Tuesday.
Chicago-based United, which dominates flying from the U.S. to China, has been hurt by a 25 percent drop in the number of people flying across the Pacific as well as a plunge in business travelers, the carrier’s core customer base.
Airlines around the globe are struggling to attract passengers amid an unprecedented decline 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, an industry trade group.
Slowdowns in air travel are “usually a regional phenomenon and not occurring on both ends of an intercontinental route,” said aviation consultant Robert Mann.
Passengers who can afford to travel amid the economic chaos are finding an abundance of cheap fares and room to stretch out on lengthy flights. Chicago attorney Stan Orszula said he has flown to Europe four times in recent weeks and has found economy cabins to have been half empty.That’s because carriers are locked into summer schedules, crafted before traffic fell, and are turning to deep discounts to fill their seats, analyst said.
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 Inc. “Everybody’s pessimistic. But cash flow could be good this year unless demand really falls off a cliff.”