Delta Air Offers Buyouts to Trim Jobs Amid 4% Capacity Cut

[john john]

In case you have missed it,

In case you have missed it, the new Southwest/AirTran deal was/is/be design to take market shares away for delta.

 

[WorldTraveler]

I never said that WN was doing anything spectacular, did I? Please try not to put words in my mouth. Perhaps my comment was not clear. The point I was aiming at is, when the two combine (WN & FL), look for a much stronger Air Carrier. Of course, the almighty Delta is not worried about their back yard in ATL and that is fine. There is room for better service for the Flying Public and my guess is it will expand once this goes through. WN knows it needs to improve On Times and FL definitely has the Lost Bags bit down to a science. The combination of the two will only provide a better service to the customers who just want to get from point A to B. Going forward, I won't say what's coming as it is not my place but from what is being said, It's gonna be a Fun Ride !!!! Unique insight will be kept Family! Let the others do as they may
Cheers, QA

I didn't say that DL is immune to competition nor did I say that DL isn't taking WN seriously. My point - and perhaps we weren't speaking to the same issue - was that WN's FINANCIAL advantage is largely due to them being a younger airline with few of the legacy costs that other carriers have, including far fewer senior and retired employees. If you took the employee profile of the network carriers and put it on WN, WN wouldn't look so great in comparison.
When you add in that WN's lower costs are largely driven by tight operational procedures that are not working in MDW, let alone in the NE, then it becomes apparent that WN's costs will have to go up or they will ruin their reputation very quickly by being seen in the NE - and throughout much of their network because their schedule is so integrated - as an unreliable choice for travel.
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DL is indeed taking WN very seriously. Part of DL's pulldown in mainline capacity in CVG and MEM is because they are shifting that capacity to ATL where DL is better prepared to compete with FL and WN when the two operationally merge. I just talked w/ several high mileage DL passengers in ATL this weekend and they all welcome the WN competition but are also well aware that WN isn't likely to significantly change their travel patterns because DL offers a far more premium product than WN. If you've been in Atlanta recently, you know DL is crazily pushing the Amex Gold Skymiles card that offers no checked bag fees, neutralizing one of the very few advantages that WN has. Further, history DOES SHOW that DL has competed very effectively w/ WN in markets... in fact, if you look at many point to point markets (non-hub) in the eastern US, DL is one of the few network airlines that is willing to compete with DL. WN knows this and knows that they can have a place in ATL but DL is going to aggressively compete for the ATL market and in time will likely give little of that market up to WN.

In case you have missed it, the new Southwest/AirTran deal was/is/be design to take market shares away for delta.

Yes, I get that... DL and NW also merged in order to give DL a leg up competitively and all the indications are that it has worked quite well. The primary benefits of the DL/NW merger have been in NW's markets because of the addition of DL's presence in other parts of Europe and in NYC and ATL where the NW presence in Asia has helped DL significantly there.
Up to this point, the DL/NW merger has not been "tested" by a low fare carrier. Although DL's size in ATL would have allowed DL to compete against WN even without the NW merger, DL's ability to compete against the WN/FL merger is better than it ever was and is driven in part because of the financial benefits in other parts of the world that have come from the DL/NW merger... further DL has even more mainline aircraft to use in ATL as a result of the merger that are allowing DL to offer more seats at competitive costs to WN. The older PMNW 757s are regularly used in ATL markets where IFE is competitively not necessary and where DL can add more seats while keeping the better equipped PMDL 757s on longer routes in ATL and elsewhere in the network (including DTW and MSP-west) where the higher level product can be better used. So, even the types and number of aircraft at DL's disposal post NW merger is allowing them to compete better w/ WN.
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No one doubts WN is out to win in ATL - but DL is not going to give anything to them either.
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Keep in mind also that DL gave up alot of Florida markets to low cost carriers including WN so there is something of a tradeoff that is going on. More recently, DL pulled out of LGA-MDW in order to add LGA-ORD even though DL and WN had almost identical revenue performance in LGA-MDW. It isn't lost on either DL or WN that they can compete quite effectively against each other, that WN needs strategically needs to have a presence in ATL, but that DL also needs strategically needs to grow its presence in key markets such as in the west where WN is strong.
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Because of having the lowest costs among the network carriers, DL is able to grow into the markets it needs to grow in, WN is able to grow into markets it needs, and DL and WN probably can peacefully coexist better than other network carriers that have given up more of their networks to WN. You don't have to look too far to realize how much WN has been able to grow in DEN and PHL; in DEN, WN carries nearly as many domestic passengers as UA while in PHL, WN is at half of the domestic size of US - and both are those are relatively new WN stations. In contrast, WN's share of the SLC market - the largest DL/WN overlap market - is unchanged in 10 years.
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If carriers don't aggressively compete against WN, they will grow in your key markets. ON the other hand, because there are other carriers where WN can grow, they don't try to pick a costly fight where they can't win.

 

[WorldTraveler]

deleted - dupe

 

[eolesen]

DL and AF have said 7-9% cuts on the transatlantic JV, which implies 19 flights a week coming out, or three a day.

Who wants to place bets on those strategic LHR-BOS and LHR-MIA flights staying in the schedule?....

 

[WorldTraveler]

The entire DL/AF/KL transatlantic system is operated under the JV, including AF/KL to/from Canada and some Latin America countries, and including DL to the Middle East/North Africa. DL has already cancelled CAI and KBP and I don't know what else (I believe there are 4 routes) so it would appear that the "quota" of DL's cuts has already been met. Further, DL already said it would be downgauging TATL flying in favor of increased capacity to Latin America- likely meaning that 764s will sub for 333s which I am betting will start flying to S. America this winter.
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As for LHR, as much as I am sure you want to see the routes fail, all the indications are that DL has been able to stimulate traffic, albeit w/ low fares, and it has given them access to several new key AA competitive markets. They could well throw in some random day of week cancels as much as they can get by with slot rules and may put on some of the 763s with the new lie flat cabin which will reduce capacity, but I can pretty well say that DL won't walk away from these markets. They knew when they started them they were going to require time to develop and that they were strategically necessary.
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We can check back in a couple months to see who was right, okie dokie?

 

[eolesen]

If they were strategically necessary, then why did they wait until AABA had to surrender slots? Surely DL could have offered low fares to stimulate traffic without needing artificial capacity controls from the competition authorities....

I don't want to see them fail. They just make no sense, in that the network value does't appear to be commensurate with the cost of serving the market, nor does the network contribution appear to be all that significant. Even MEM-AMS made more sense than The Three Little Pigs do.

I'd say the same thing if AA resurrected RDU-CDG, or started flying international routes outside their primary markets.

You say they stay, I say they get pulled. Let's see what happens, and hear a few other opinions...

 

[WorldTraveler]

If they were strategically necessary, then why did they wait until AABA had to surrender slots? Surely DL could have offered low fares to stimulate traffic without needing artificial capacity controls from the competition authorities....

I don't want to see them fail. They just make no sense, in that the network value does't appear to be commensurate with the cost of serving the market, nor does the network contribution appear to be all that significant. Even MEM-AMS made more sense than The Three Little Pigs do.

I'd say the same thing if AA resurrected RDU-CDG, or started flying international routes outside their primary markets.

You say they stay, I say they get pulled. Let's see what happens, and hear a few other opinions...

DL couldn't add any more flights to LHR, because there were no slots available. DL might have opted for other LHR markets/additional flights in existing markets instead of BOS and MIA if there were an option but the EU and US gov'ts said that slots had to be divested from AA/BA to allow add'l competition in LHR-BOS and MIA.
DL has long had a presence in BOS so it is not accurate to say that BOS-LHR makes no more sense than it does for AA. BOS is a market that has traditionally been divided between a number of network carriers. More recently, B6, WN, and VX have all added significant capacity to BOS requiring most network carriers to pull back to serving just their hubs. As such, DL used the NW merger and the AF/KL JV to grow to the largest network carrier in BOS. With service from BOS to LHR/AMS/CDG/FCO, Skyteam now has the largest presence from BOS to Europe; Star and oneworld are doing the same thing in competitive US markets like this to bundle their networks together but Skyteam with the LHR additions has the largest presence, which has also helped DL to become the largest network carrier in BOS, a position that does not appear to be challenged by the UA/CO merger where neither airline had much of a presence other than to/from their hubs.
Deriding DL's decision to fly a key business market demonstrates that you are more afraid (and with good reason) about DL's pushing into traditional AA markets than you are in your understanding of the industry and why it does in fact make a lot of sense for DL to serve LHR.

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MIA-LHR is a bit more strategically "ballsy" but DL has long been the largest network carrier to/from Florida as a whole and the #2 network carrier in MIA, an airport in which AA has the only US carrier long-haul int'l service - a rarity at any other US gateway.
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You also fail to consider that it is indeed possible that DL is starting LHR-BOS and MIA to put some pressure on Virgin to either be acquired by AF/KL/DL or to agree to revenue sharing. If VS and Skyteam had a joint venture at least/ possible merger/acquisition, some of VS' slots serving MIA and BOS could be reallocated to other DL gateways such as JFK and ATL where DL still wants a larger presence to LHR.
There is more than one strategic reason for DL to choose to be aggressive in expanding at LHR for now.
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Given DL's success in other AA competitive markets and the large London-Florida market - which DL is connecting via MIA with the new RJ flights - it isn't that difficult to see that DL will do just fine in MIA-LHR. Not only are DL and Skyteam building a coordinated presence at MIA but it potentially sets up a platform and presence for DL's addition of MIA-Latin America flying, eliminating one of the few competitive int'l network strategic advantages that AA has relative to DL and allowing DL to further increase its corporate business, something they are apparently doing quite well based on their comments about a 25% increase in corporate business in just the first quarter based on their most recent SEC filing.
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Opinions are welcome and others can weigh in but the strategic direction DL has chosen is clear - they will be the lowest cost network carrier which allows them to develop every route regardless of whether it is operated by another carrier or not and that has the possibility of making any money if it allows them to become the preferred carrier for the highest value travelers, which is the backbone of any airline.
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I suspect the greatest discord between DL and AF/KL over these cuts is that DL is disproportionately cutting its CDG and AMS overflight markets, forcing more traffic over AMS and CDG.
I would strongly bet that the decision about whether any LHR markets will be cut was not even a subject of discussion.
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Of course we will find out in the next couple months but based on what DL has accomplished strategically over the past 5 years, I don't think there will be a significant change in DL's network expansion, including at LHR.

 

[WorldTraveler]

E was hoping for some other opinions... you clearly aren't doing your part to contribute, blacknblew.

 

[eolesen]

WT, you mean to tell me that none of the Skyteam slot holdings could have been freed up for DL to add such a strategic set of routes?...

Surely there must have been a couple frequencies from LHR to AMS, FCO, CDG, ORY, or MIL that AF,KL, or AZ could have given up for the team...

As for the zzzzzzzzzz's....

There's a reason I try sticking to short, simple responses, and avoid responses requiring scroll downs unless there's no other choice....

 

[WorldTraveler]

WT, you mean to tell me that none of the Skyteam slot holdings could have been freed up for DL to add such a strategic set of routes?...

Surely there must have been a couple frequencies from LHR to AMS, FCO, CDG, ORY, or MIL that AF,KL, or AZ could have given up for the team...

As for the zzzzzzzzzz's....

There's a reason I try sticking to short, simple responses, and avoid responses requiring scroll downs unless there's no other choice....

You would have to look at the Skyteam schedule and see if you could find a viable slot pair for TATL use... but you also have to factor in that Skyteam is not willing to let all of their service to LHR be transferred to service to the US.
But I'm not sure what the point of that exercise is anyway since the US and EU both said that AA and BA needed to divest slots and DL was the only US carrier that decided to go after the opportunity. Doesn't really matter whether Skyteam could have provided more slots; DL saw an opportunity and went for it. They strategically decided that BOS and MIA to LHR was important enough (not surprisingly since DL has flown from both cities to LGW), and is apparenty goign to stick it out until those routes develop.
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If you or anyone else find my posts boring, let them go to sleep.
I was addressing the issues you raised and I will give you the courtesy of a decent and full response.
I never pretended to be a comedian and I am not looking for laughs.
I am addressing the issues of the industry... if you or anyone else finds that of interest, you'll read and/or respond. If you don't have an interest (and a whole lot of airline forum readers are more interested in labor issues than the business of aviation), then you are probably not interested no matter how few words I write.
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In the final analysis, I still don't think DL is goign to walk away from LHR to BOS and MIA which is what you asserted was possible to happen.

 

[Veritas]

I don't want to see them fail. They just make no sense, in that the network value does't appear to be commensurate with the cost of serving the market, nor does the network contribution appear to be all that significant. Even MEM-AMS made more sense than The Three Little Pigs do.

According to MAH4546's postings on FlyerTalk, Delta's BOS-LHR flights are struggling. Load factors are below 30%. Delta has already downsized one of its daily flights on that route to a 757.

Delta's MIA-LHR service, on the other hand, is doing well with average loads over 85%.

 

[WorldTraveler]

as we all know, loads don't indicate profitability... and DL stimulated both markets pretty aggressively to let the world (that cared) know that they were in those markets.
That said, I have said before that I never believed DL wanted to start 2 LHR-BOS flights at the same time. That is virtually unheard of in any int'l market w/ any int'l carrier.
DL does have options to pull some capacity including replacing the 764s which they originally had in their w/ smaller aircraft including the 757 which you note as well as some of the 763s which do have lie flat seats.
Even if DL realistically only can make 1 BOS-LHR flight work and MIA-LHR is paying the bills, that leaves one BOS-LHR as deadweight and that really isn't that bad when you consider that the bill is being split by DL and AF/KL/AZ. Considering the strategic advantages that could come from being in the BOS-LHR market w/ a large presence - including influencing the VS decision, gaining corporate contracts in BOS, and keeping AA/BA from using that slot pair for their own TATL flights, the price is probably not that big. BOS-LHR is one of the shortest TATL routes.
I still stand by my prediction that DL may tinker w/ the capacity on BOS-LHR but they knew what they were getting into when they started both BOS and MIA to LHR and did so w/ the intention of staying there to accomplish their intended goals. I don't see BOS-LHR leaving although it is very possible they could reach their strategic goals w/ less capacity. If a deal w/ VS comes, then even more capacity could come out of the market.

 

[29palms]

The articles says that this is only open to 70% of the workforce, are the mechanics included in the offer?

I would suspect ALL GROUPS are included in the offer from what I've read. Usually for early retirements, all groups are included. Early retirement at ten years service plus age equals 55? I'd like to know if this includes flying priveledges for life or do they use something like a full year of flying priveledge per year of service worked, which I have seen done before at CO.
So if you had 15 years of service, you fly for 15 years, but after that, no more flying priveledges. Of course, the MONEY factor is the main driving force to get you to go when they wave that 20 grand in front of you. So depends on the deal they offer.
I think the best way is if you are all ready eligible for retirement and you need that little "Kick" to get you off the tit of the airline. Borderline wannabe retirees that wait around for moments like these to walk away with a little more cash.

I guess this move by Delta may be indicative of what's to follow for other airlines over the price of fuel. *If attrition doesn't cut it, then what? Employees with less than what? 3? 5? 2? Maybe higher? Who knows.....they go.

 

[Kev3188]

29--

All work groups are included/eligible. If your age & years of service do not equal 55 or more, then you're correct: 1 year of flying for each year of service.

As for those that are already eligible to retire (and planning to anyway), you'd be insane to leave the severance $$$ on the table. For PMNW employees, this is also a good chance to lock in subsidized retiree medical while they can...

 

[WorldTraveler]

29--

All work groups are included/eligible. If your age & years of service do not equal 55 or more, then you're correct: 1 year of flying for each year of service.

As for those that are already eligible to retire (and planning to anyway), you'd be insane to leave the severance $$$ on the table. For PMNW employees, this is also a good chance to lock in subsidized retiree medical while they can...

subsidized because the retiree medical follows the PMNW contracts? If so, then heck yes... that could be worth a fortune over a lifetime.