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

[WorldTraveler]

no, there are a number of seasonal suspensions of service esp. on routes to/from northern Europe.
Given that the entire industry is pulling down service to/from the Middle East and N. Africa, I don't think I would worry too much about DL losing anything. BTW, wasn't CO supposed to have started a route to CAI? I guess the political unrest in the ME must be quite real since CO NEVER pulls out of a route.
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You also haven't heard where and how DL will be redeploying these aircraft... nor have you seen all of the cuts from other carriers.
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And of course you haven't seen the financial results from the carriers that have decided that they will add capacity at the time when everyone else pulls down capacity since financials seem to indicate that would be the right thing to do...
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Once again, those who make the most about capacity cuts at other carriers are usually the ones left to defend the finAAnciAAl results of their own carrier when it's all said and done.
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Oh, BTW, AA and DL have both now reported traffic reports for May... of note, is that AA's load factor on the Pacific was down 11% on 30+% more capacity.. no other airline that has reported so far has reported a load factor decline that large in any global region. AA's load factor decline on the Atlantic at 2.7 points down was larger than the decline in any region reported by DL.
To demonstrate the differences in AA and DL's approach to managing Pacific capacity, DL quickly came out and said the HND flights were not developing and downgraded the route from the planned 744 to a 777. It then cancelled the flights for several months following the earthquake and is set to restart DTW in a couple weeks (LAX is already operating again IIRC). Shortly after DL announced its cutbacks, AA announced the same thing for JFK-HND. DL is now asking the DOT for a dormancy waiver on DTW-HND or for the authority to move the route to a beach market since they have held up better than mainland US to Japan markets.
Bottom line is that DL repeatedly gets flack for pulling key routes, usually does it first, but also somehow manages to report stronger financial results than the industry because of its willingness to pull routes when it is apparent they aren't working.

Let's see what UA has to say when it reports, probably within a day.
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Apparently, some carriers understand that matching capacity to demand is paramount to maximizing financial returns.
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If they can also manage costs, then there is all the more confirmation that capacity should come out in the current environment....
BTW, there are a number of reports that indicate that the IATA and other organizations believe the short-lived uptick in the industry is probably over as of this year.

 

[eolesen]

Whatever, WT. Hauenstein has been throwing darts at the map on his conference room wall, hoping that some of those new innovative routes would work out. The cynic in me says they did so to keep everyone on payroll until after the union votes were finalized... DL needs growth to mask what I think is a larger problem looming -- simply being too damn big for their own good. AA had the same problem, and UACO will have that problem. The point of diminishing returns turns negative at some point, and it's possible DL will be there sooner than not.

And that doesn't even start to take into consideration the impact of having WN to deal with in all of their hubs except JFK... At least AA doesn't have to worry too much about them at MIA or ORD, and DAL will still be capped at about 20% of AA's DFW capacity thanks to the physical gate restrictions.

 

[WorldTraveler]

Except that your cynicism exists because you really don't want to see DL succeed in all of these new routes...or in any other way for that matter.
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What you have a hard time accepting but which is the clear fact is that DL used its restructuring to not just rearrange its debt but also its business model and its whole approach to network management.
- Despite the apparent "dartboard" approach that you and others like to accuse DL of using, DL managed EVEN BEFORE the NW merger of having the most extensive route system as measured by route miles flown AND of becoming the US' first six continent carriers... and both of those distinctions haven't changed even though DL has already been through a network pulldown as a result of the weak economy and high fuel prices... bottom line is that DL has demonstrated that these "darts" do stick.
- Of course the real measure of whether a dartboard works or not is whether the person "playing the game" can make the mark - and on that measure, DL has delivered financial results that have been at the top of the industry for years.
- It is a given that not all routes for all airlines deliver the same financial results... mgmt doing its job at any airline is to ditch the ones that don't cut it and build on what does work. Sure I would have like to see KBP, but it wasn't that strong of a route to begin with - DOT data shows it... DL obviously said that the current fuel situation means it can't work... and DL has no desire to support loss-making flights. The Middle East/N. Africa? Again, you would have to have your head buried in sand to not realize that this isn't the year for tourism to that part of the world... and business relations are faltering as well. I've takled to people in my context who aren't even Americans who cxld plans to go to Egypt... if I can find multiple people in my circle of friends, then I am certain there are far more. Northern Europe in the winter? never been a barnburner financially.... I still haven't seen anything that really leaves a whole in DL's network or something they "SHOULD HAVE" held on to because of its strategic value during the winter... and once again, many of the routes WILL BE BACK - perhaps on a seasonal basis.s

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Your fantasies about DL's ability to compete against low cost carriers belies the discussion (no surprise since you have a history of arguing points which have no factual basis - and you wonder why you get bloodied in debates w/ me) that WN really doesn't have a great track record in taking network carrier hub share, except from UA and US - and WN went after both network carriers while they were in BK.... WN has pulled back somewhat in PHL and it appears that F9 will be the casualty of the three way DEN slugfest. So, once again, the chances of WN doing any significant damage to DL in ATL or anywhere else are slim to none.
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While you obviously continue to hold on to the notion that DL and UA are too big to survive, there really is no evidence whatsoever of that line of thinking ANYWHERE in aviation history. In fact what is true is that mergers have often allowed carriers to rationalize their capacity and pull underperforming routes and then strengthen their positions in the ones that remain.
The simple fact is that DL and UA have alot of redundancy in their route systems now and other carriers including AA and US do not. DL has been quite successful in managing its capacity to/from Japan, for example, because it has so many flights... perhaps that is why in the first couple of months after the earthquake in Japan, all 3 US airilnes serving Japan (CO/UA report as one) saw substantial LF declines yet DL in the latest month managed to reverse the trend and is now reporting near stable load factors on its Pacific network. And then DL redeployed its capacity to new routes like DTW-GRU which many said would never work but yet somehow DL is manging to increase to dailiy service.
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UA is still integrating the UA and CO route systems but what is clear is that mergers DO allow carriers to better manage their networks and result in stronger financial returns... despite the fact that AA said it wanted nothing to do with mergers (couldn't really find anyone that would "marry" them in condition they are in).
In contrast, AA has very little redunancy in its network and can't cut capacity without affecting its entire network.
And as we see in the Pacific, every new route addition outside of AA's core network is a major addition that they have to fight for... in this case, the extra capacity is coming from AA's PEK and PVG additions which are facing tough competition from UA... and this is in an era when China demand has been strong...
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Finally, labor flexibility has been a hallmark of DL's operation for years and that has not changed post merger.... DL has the flexibility to restructure its workforce and provide incentives for people to leave.... something that other network carriers can't or don't do to anywhere near the same degree. So, no, DL is able to match the size of its workforce to its capacity and remove both when it is necessary to do so...
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Tell you what... let's check back in about six months when financial results will reflect the changes or not that each carrier is making... I'm pretty sure that the numbers will demonstrate who can more effectiveliy manage their business.

 

[eolesen]

Whatever Traveler... If I'm the one being bloodied in battle, why is your negative rating in triple digits, while mine is approaching triple digits?... Your credibility suffers daily as a result because you refuse to be transparent about who you are. Or aren't.

Oh, that's right. Everyone working in the industry and/or flying weekly is usually either wrong or in denial, and the guy who probably took a buyout and now sits at home, writing about the industry is always right...

You're obviously frustrated about being on the outside. Maybe you should go back to ATL and ask for your job back. At least then people might be a little more willing to take you seriously.

 

[WorldTraveler]

Whatever Traveler... If I'm the one being bloodied in battle, why is your negative rating in triple digits, while mine is approaching triple digits?... Your credibility suffers daily as a result because you refuse to be transparent about who you are. Or aren't.

Oh, that's right. Everyone working in the industry and/or flying weekly is usually either wrong or in denial, and the guy who probably took a buyout and now sits at home, writing about the industry is always right...

You're obviously frustrated about being on the outside. Maybe you should go back to ATL and ask for your job back. At least then people might be a little more willing to take you seriously.

except that I don't measure my success by whether people like what I write or not... I write what I based on whether it is accuarate or not. If the truth hurts, then you might want to think about figuring out why and adapt accordingly rather than knocking whoever says something you don't want to hear - as if that changes anything.
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Apparently, since you, Eric Olesen, approach this forum and others as places where you can advertise your services, you write what you do based on that reality. Apparently you also grew up with the mindset that getting a pat on the back was the most important thing in life.... others of us view life differently.
I'm quite happy with my perspective of the industry right now. I have all the benefits of understanding what is really going on without having to live in an industry that is constantly moving from one crisis to another...
which brings us back to the topic here... the industry has been turbulent for decades. Who knows whether it will ultimately level out but I can assure you that DL and UA are demonstrating that they are currently better able to adapt to the realities of the economy and the industry as they exist today than airlines in the US have in the past - and better than some of DL and UA's peers are today. And DL and UA still have global networks with redundancy that allows them to remove excess capacity and still maintain their network footprint. DL's advantage to UA is that it has essentially completed its merger and has the flexibility to offer its early outs - the original theme of this thread - to ALL employees, not only because it makes economic sense to do so but because there are people who will decide this is a good time to get out of the industry - or move on to retirement while there may be incentives to make it personally worth it to do so.
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At some point, other carriers may be able to copy DL's strategic advantage and rapidly adapt to market conditions... but for now, DL has a strategic advantage in being able to add capacity when the market dictates and then pull it out when it is necessary to do so.
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DL's ability to add capacity in the "up" times is tied to its ability to get it out when the market dictates.

 

[eolesen]

I don't sell anything here, WT. I consult on IT systems strategy.

But please, do try to keep driving up my SEO with Google by correctly spelling my full and complete name.

Your grand plan to to try and draw negative attention to my professional life isn't going to work. There aren't too many airline CIO's who have to Google my name to know who I am...

 

[topDawg]

This looks like more than just down gauging. Five cities gone from the DL network -- CAI and KPB plus AMM, ARN, and TXL

Reductions in service to four others -- ATL-SVO, PHL-CDG, JFK-CPH and JFK-MAN are axed but served thru other hubs.

Yet the Three Little Pigs remain...

http://bit.ly/iCJhmB

Er just a note
JFK-ARN
JFK-CPH
JFK-TXL
JFK-MAN
ATL-SVO
PHL-CDG

are seasonal cuts.

JFK-AMM/CAI/KBP are gone for good(Note expect CAI to be back. Delta has been on the route for a very long time(though it has been a bit off and on, IIRC it was cut after 9/11 and may have been via FRA(or some other euro city before 9/11...just can't remember) once (if) things cool off.) IMO AMM and KBP are gone for good.

 

[topDawg]

Whatever, WT. Hauenstein has been throwing darts at the map on his conference room wall, hoping that some of those new innovative routes would work out. The cynic in me says they did so to keep everyone on payroll until after the union votes were finalized... DL needs growth to mask what I think is a larger problem looming -- simply being too damn big for their own good. AA had the same problem, and UACO will have that problem. The point of diminishing returns turns negative at some point, and it's possible DL will be there sooner than not.

And that doesn't even start to take into consideration the impact of having WN to deal with in all of their hubs except JFK... At least AA doesn't have to worry too much about them at MIA or ORD, and DAL will still be capped at about 20% of AA's DFW capacity thanks to the physical gate restrictions.

Not that I'm wanting to jump into this fun pissing match but two points
1) the union thing isn't over and Delta offered buy outs to the employees before....08-09 IIRC
2) not sure what your talking about with the dart thing. Lets think of all the new routes Delta has started during or after BK,
Atlanta-Tel Aviv, Israel*
Atlanta-Düsseldorf, Germany*
Atlanta-Copenhagen, Denmark*
New York (JFK)-Budapest, Hungary*
Atlanta-Nice, France*
New York (JFK)-Dublin*
New York (JFK)-Shannon, Ireland*
New York (JFK)-Manchester, England*
Atlanta-Athens, Greece*
New York (JFK)-Kiev, Ukraine
Atlanta-Edinburgh(moved to JFK)
Atlanta-Venice, Italy*
Atlanta to Dakar, Senegal*
Atlanta to Johannesburg, South Africa*
Atlanta to Prague, Czech Republic*
Atlanta to Vienna, Austria
Atlanta to Dubai, United Arab Emirates*
Atlanta to Seoul-Incheon, South Korea
New York(JFK) to Mumbai (moved to ATL, then JFK, then ATL)
New York(JFK) to Accra*
New York(JFK) to London*
New York(JFK) to Pisa/Florence, Italy*
New York(JFK) to Bucharest, Romania
Salt Lake City to Pairs(CDG) France*
Atlanta to Shanghai China*
Atlanta to Lagos Nigeria*
New York(JFK) to Lyon France
New York(JFK) to Tel Aviv, Israel*
New York(JFK) to Dakar, Senegal*
New York(JFK) to Cairo, Egypt
New York(JFK) to Malaga, Spain*
New York(JFK) to Amman, Jordan
Dakar Senegal to Cape Town, South Africa
Atlanta to Abuja Niigeria*
Accra Ghana to Monrovia Liberia*
Atlanta to Stockholm (moved to JFK)*
Atlanta to Kuwait city, Kuwait
plus newer adds of JFK-CPH*,JFK-NRT*,LAX-HND*, DTW-PEK*, DTW-ICN*, DTW-HKG*, SEA-PEK*, DTW-HND,LAX-SYD*, BOS-LHR(1 out of two*), MIA-LHR*,BOS-CDG*, JFK-CDG* plus I'm sure I've missed some

*are routes that have not failed
(note seasonal doesn't = fail)

Oh and one more point,

"And that doesn't even start to take into consideration the impact of having WN to deal with in all of their hubs except JFK... At least AA doesn't have to worry too much about them at MIA or ORD, and DAL will still be capped at about 20% of AA's DFW capacity thanks to the physical gate restrictions."

eh? So even if they are in the same market but not at that airport it doesn't count? MDW isn't in Chicago? (oh and FYI American isn't top dog at O'hare United is a good 200 flights larger than AA. So AA has to deal with UA and WN, while Delta pretty much owns DET) And American doesn't feel any pressure from B6,NK and WN over at FLL?

 

[Kev3188]

Not that I'm wanting to jump into this fun pissing match but two points
1) the union thing isn't over and Delta offered buy outs to the employees before....08-09 IIRC

Offered before at NW as well. In fact, they're offered every year to PMNW ramp employees.

 

[WorldTraveler]

Kev,
can you tell us how many severance packages NW and the IAM allowed during the most peak "take" period? Does it approach the 10% of DL's non-union workforce that took packages in the early 2000s?
Yes, Dawg, DL has offered packages multiple times before and I submit they have used them more effectively to reduce staffing than any other airline in US history. If anyone has numbers for any other carrier for comparison, I'd be interestd in seeing them but I don't think anyone has exceeded 4000 volunteers for programs which was probably the highest number during a time when DL's workforce numbered about 50,000 (including pilots).
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and Dawg, apparently WN can't put pricing pressure on AA if they serve another airport....
although a search of AA and WN's websites shows that WN is selling DAL-MDW for $320 (one stop due to Wright Amendment) while AA is selling DFW-ORD for $369 via STL, MCI etc.
Suppose AA threw in those walkup fares because they love Texans? Doubt it.
WN is SALIVATING at the opportunity (which they will get in a couple years) to add another 100 flights/day to DAL - which should be enough to put about 5 flts/day in AA's 20 largest domestic markets that are currently beyond the limits of the Wright Amendment.
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back to FL and DL... what people here (or at least some of them) can't quite seem to grasp is that DL is already fully compettiive with its low fare competitors.
Take ATL-SFO for travel one-way today.
FL has two remaining nonstops and several one-stops for $436.
DL has two remaining nonstops (coincidentally with timings very close to FL's nonstops) and then several other flights for various prices....
UA's lowest fare is $50 higher than DL or FL and UA apparently doesn't fly the route nonstop any longer
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DL isn't giving FL AN INCH of competitive advantage... with DL's market strength, it's no wonder that DL has 5X more revenue than FL in the market, a 30% average fare premium, and UA no longer serves the market.
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Despite what all the prognosticAAtors want to believe, DL has figured out how to effectively compete against low cost carriers, they do it day in and day out now, and it is their network carrier peers who have been most bruised by low fare competitors.

 

[eolesen]

Don't know how you think DAL the airport is going to support another 100 flights a day. WN is already pretty well peaking their gate utilization.

Sure, you'll find those $320 walk ups. But you won't find many of them on the DFWORD non stops.

I've seen more than enough examples of MDW/ORD to DAL/DFW pricing to convince me that there are some revenue premiums that exist where you have alternate airports at both ends, even on non stops.

When you have an alternate at only one end, the premiums diminish. And that's the danger zone for DL or any other carrier, especially in markets with limited frequencies. If WN can increase frequencies, or worse, increase frequencies in the same airports at both end, they tend to win a larger share in most cases.

I'm not by any means writing ATL's obituary, but I do think the revenue story there is going to require a lot more more attention than FL drives today. Whitewashing it by saying DL already knows how to compete isn't going to go very far come November.

 

[WorldTraveler]

E,
If we were sitting down together, I’d draw pictures. But since there is distance between us, I will use words…here.
I don’t know what part you don’t grasp but DL is ALREADY more competitive in its pricing with low cost carriers, has been for years, and still manages to get a substantial revenue premium in markets competitive with FL.
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I’m not sure how you can expect DL to lose its revenue premiums when they already are fully competitive with low fare carriers and yet still retain a premium.
DAL is building a new terminal…. WN officials have already said they plan to substantially grow their DAL operation once the facility is open… which will happen in time for them to take advantage of the elimination of the Wright Amendment.
Even if WN only initiates 3 flts/day to 20 key AA markets beyond the current Wright perimeter, AA will feel the effect…and more importantly, there is a greater opportunity for WN to expand to new markets like DAL than there is to go head to head against DL in ATL in nearly all of the markets which already have been stimulated by low fares.

 

[eolesen]

I know WN is quite capable of pushing the envelope, but it's probably not realistic to expect them to be able to cram another 100 flights a day into DAL come 2014.

Here are the facts, WT....

• By law, DAL will only have a maximum of 20 gates after the new terminal is done
  
• WN only has 14 gates today, operating 130 flights a day, or approximately 9.something per gate
  
• Other airlines might want to serve DAL... Jetblue and Virgin are two I'd expect to jump in, and I'm sure DL and CO will upgauge and expand their services. No idea if AA still has rights to the three gates they had when the compromise was signed.

Even if they got every gate at DAL, it would be a stretch to see them get up to 230 flights a day.

 

[WorldTraveler]

WN management has already said that they expect to grow DAL once the new terminal is available and that they expect to be able to reallocate their flying to more long haul destinations once the Wright Amendment falls.
Of course neither you or I know exactly how that will shake out but WN will continue to put even more pressure on AA as WN is able to add nonstop competitive routes. IF AA and CO both feel the need to be competitive with WN fares out of DAL and HOU respectively now, even with a premium for for nonstop service it will ony increase as WN is able to add nonstop service. The impact of WN's pricing on AA and CO fares to/from AA and CO's large hub cities ALREADY increases.
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In contrast, DL has long been fully competitive with its low cost carriers, even now obviously being straight up competitive on price for flights directly competitive w/ FL and WN in ATL and SLC while having premiums for flights at times other than when FL/WN flies.
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the bottom line remains that the amount of low fare competition in other markets, esp. WN's home of Dallas will increase, and WN will likely get a disproportionately large share of those new flights - but your point is valid that all of those new carriers including some network carriers that will return to DAL - will put even more pressure on a market which has largely been protected from low fare competition.... while WN will have to choose between fighting to gain marketshare in ATL against DL which has shown it will be fully competitive w/ LFCs or other markets including the Caribbean and DAL where WN has not had any presence - either on their own or through their merger partner FL.
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As with all things, time will show who is right but I am quite confident that we will see a larger WN route map from N. Texas, not near as much of a presence in ATL as alot of people think - and WN talks as if it will do (remember they also promised not to close any FL cities BEFORE the merger was announced and now are not willing to make that commitment), and that WN will get enough of a share of the ATL market to have a meaningful presence - FL still flies to all of the key business markets from ATL - but not get into a bruising battle that will only hurt WN when it could move into other markets much easier....
WN has demonstrated in the past there are many opportunities to grow WITHOUT getting into bloody battles with other carriers.

 

[FWAAA]

Nobody really knows how many customers WN will steal away from AA once WN is able to fly anywhere it wants from DAL. Could be that the only real change is that Texas Two-Step customers don't need to go thru that charade anymore and thus, WN gains very little. On the other hand, perhaps lots of high-yield business travelers in Dallas will suddenly abandon AA for their nonstop trips to NYC or LAX or SFO or MIA. Who knows?

I doubt that any high-yield business travelers in Fort Worth (there are a few, right?) will drive even farther to DAL so they can put up with corny singing and joke-telling flight attendants (some of whom aren't aging any better than the grannies at AA), no assingned seats and a revamped frequent flyer program that by all accounts is a complex disaster. Dunno how many corporate accounts WN will steal away from AA in the Metroplex. Maybe all of them. Maybe none.

WN already gets lots of suits on its frequent flights to HOU, AUS, ELP, SAT and other short-hop flights from DAL. Perhaps it will attract significant numbers of suits on longer-haul flights to key AA markets. It's better capitalized than Legend but doesn't offer quite the level of service that caused AA to respond with its scorched-earth methods against Legend (or Vanguard).

Same thing with ATL. Might be a few or might be a lot of suits in Atlanta whose employers mandate "cheapest" flights and over the long-term, that title belongs to WN more often that it has belonged to DL. Southwest drives down fares. The good news for WN is that in some respects, the Delta Skymiles program is a Delta weakness, not a strength (not unlike RR ver2.0).

Past results are usually a dismal method of predicting the future, so the interactions of DL and WN in places like SLC or SEA or PHX or even LAX aren't all that meaningful, IMO. The topic is how the arrival of WN at ATL might shake things up, and I don't think anyone really knows how that plays out.