The world’s second-biggest airline said next year’s flying capacity will be down 2 percent to 3 percent from this year. And it is reducing flying in this year’s October-to-December quarter by 4 percent to 5 percent.
The industry calls it “capacity discipline” — ruthlessly matching the amount of seats to what passengers are willing to pay for. Wall Street applauded Delta’s moves, sending its shares up 62 cents, or 8.4 percent, to $8 in afternoon trading. Other airline shares rose, too.
Delta didn’t give details on next year’s flying cuts. But the reductions in the fourth quarter include slicing its flying to Europe by as much as 12 percent, with domestic U.S. flying and flying to Asia each down 1 percent to 3 percent.
Airlines usually make money over the busy summer months, but it’s tougher to be profitable over the winter. Airlines always reduce their fall schedule compared to the summer, but Delta’s will be down by 20 percent compared to the summer, much more than usual, said Delta President Ed Bastian told an investor conference Tuesday in New York.
“It’s what you need to do,” he said. “For us to make money in the summer and give it back in the winter — we’re done doing that. We need to make money year-round.”
Delta recently ordered 100 new Boeing Co. 737-900s, after saying earlier this year it might order as many as 200. The Delta order came soon after American Airlines divided a huge jet order between Boeing and Airbus. Delta’s order left open the question of whether it had an additional order in mind, perhaps from Airbus or a smaller jet-maker. Bastian said they don’t.
Delta plans no new orders “in the next couple of years,” he said. The new planes won’t arrive until 2013. But they add to Delta profits starting in the fourth quarter, he said, because Delta won’t need to spend as much maintaining the planes the new jets will replace.