Thursday, June 11, 2009

Delta Air Lines Inc and American Airlines to cut capacity

ATLANTA/NEW YORK - TWO major US airlines, American Airlines and Delta Air Lines Inc, will slash capacity this year as the recession erodes travel demand, the carriers said on Thursday.

The cuts, which were broadly expected, are likely to be matched by rivals. US Airways Group and Continental Airlines also signaled plans to cut the number of seats available for sale.

The airline industry has barely digested last year's deep capacity cuts. But experts say more are needed to bolster fares and help compensate for rising oil prices and weak demand.

Delta said it plans to trim system capacity by 10% this year, with reductions beginning in September. Delta also said it plans to cut international capacity an additional 5% on top previously announced cuts, for a total reduction of 15%.

AMR Corp, parent of American Airlines, said it would cut available seat miles by 7.5% this year, compared with a previous forecast of a 6.5% decline.

US Airways said it expects further capacity cuts in its TransAtlantic flying but could announce "marginal reductions" in domestic routes, too.

Continental Airlines Inc said on Thursday it would outline further capacity moves in July, when it has a clearer picture of the status of business traffic.

Carriers have been hit hard as the weak economy has caused consumers and businesses to curtail spending on travel. Demand has also been hurt by this year's outbreak of the H1N1 virus, and rising fuel prices are now also pressuring costs.

Delta told investors that second-quarter revenue could drop by $150 million to $200 million because of reduced travel due to the virus.

Also on Thursday, plane maker Boeing Co cut its global outlook for aircraft demand, saying it now expects 29,000 new planes to be ordered worldwide in the next 20 years. - REUTERS


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