Delta Pares Ghana Flights by 20% on Decline in African Demand

[700UW]

http://www.businessweek.com/news/2014-12-01/delta-pares-ghana-flights-by-20-percent-on-drop-in-africa-travel-demand
 
 

Delta Air Lines Inc. (DAL:US), the U.S. carrier with the most service to Africa, is cutting flights to Accra, Ghana, by about 20 percent as the Ebola outbreak in nearby countries damps travel demand.
The third-biggest U.S. airline wouldn’t say yesterday whether the epidemic in West Africa was turning away consumers. Airlines including British Airways and Emirates have cited the virus in canceling trips to the hardest-hit regions, which don’t include Ghana.
Round trips between New York’s John F. Kennedy International Airport and Accra’s Kotoka International Airport were pared to 18 in November from 22 a year earlier, said Anthony Black, a spokesman. Delta cut one flight per week from the route starting in November and expects the reduced schedule to continue indefinitely, Black said.
 

 

[metopower]

Smart move...pro active.... Let the criticism begin.

 

[USFlyer]

Man.  If this were AA cutting back like this, we'd see endless pages about how AA can't compete, AA can't grow, AA isn't forward thinking, AA doesn't have a good product, and so forth.
 
That said, I'm not the least bit surprised by these cutbacks.  It was inevitable given the circumstances.

 

[WorldTraveler]

No, AA doesn't even fly to Africa.

they don't compete in the market so there is nothing to cut.

can you provide a list of other US carrier service to Africa?

it won't be long and DL will dominate the list.

 

[does this plane go to paris]

I realize that this is about Africa flights, but this does relate to Delta's financial performance and would explain why the stock is trading down.
 
"...Keay also notes that falling oil might not be as much of a help for Delta as some of its peers:

This is the second straight month that Delta didn’t update fuel guidance, which is not customary. It’s hard to know where Delta’s fuel costs are going to shake out, because Delta changes its hedge portfolio every day. A review of the most recent 10-Q (noting that these numbers have probably changed materially since the filing) shows that a 20% decline in jet fuel prices (which has happened) would result in an $850M gross hedge loss and a required posting of $800M in hedge margin posted to counterparties (e.g. banks) with the hedges that span through the end of 2015…
The impact of lower fuel is still a near-term positive for Delta’s earnings per share, but relative to other carriers we believe it is a growing disadvantage due to hedging headwinds....."

 

[metopower]

Didn't take long did it

 

[FrugalFlyerv2.0]

Smart move...pro active.... Let the criticism begin.

 
Yes, it is a smart move.
 
Proactive?
No way!  Ebola has been ravaging west Africa since this spring.

 

[FrugalFlyerv2.0]

Didn't take long did it

 
WT brings it onto himself.  If you don't believe me, just look at his doomsday diatribes about AA cutting back in Latin America.  As they say:  "What’s sauce for the goose is sauce for the gander"

 

[WorldTraveler]

I talk about the issues. those who can't discuss the issues of the business are the ones that bring it on to themselves.

Africa is not a separate reporting region and so there is no way to know how profitable it is or is not.

Africa is part of the TATL reporting entity and DL has been consistently profitable in that region.

Latin America IS a separate region and AA's RASM decline in the most recent quarter was the biggest of any US carrier in any region in many, many years.

I realize that this is about Africa flights, but this does relate to Delta's financial performance and would explain why the stock is trading down.
 
"...Keay also notes that falling oil might not be as much of a help for Delta as some of its peers:

This is the second straight month that Delta didn’t update fuel guidance, which is not customary. It’s hard to know where Delta’s fuel costs are going to shake out, because Delta changes its hedge portfolio every day. A review of the most recent 10-Q (noting that these numbers have probably changed materially since the filing) shows that a 20% decline in jet fuel prices (which has happened) would result in an $850M gross hedge loss and a required posting of $800M in hedge margin posted to counterparties (e.g. banks) with the hedges that span through the end of 2015…
The impact of lower fuel is still a near-term positive for Delta’s earnings per share, but relative to other carriers we believe it is a growing disadvantage due to hedging headwinds....."

the likely reason why DL quit reporting fuel cost data is because other carriers quit doing it as well. AA, post merger, did not. UA did for a short time but quit.

There is little reason for one company to produce data that is not equally provided by other carriers.

UA doesn't even provide RASM data on a monthly basis but they do provide quarterly guidance; each carrier has provided quarterly guidance on fuel as well. So quarterly guidance on fuel and RASM may be as much as the industry gets o a consistent basis.

DL very well might report significantly hedge losses this quarter but they already took mark to market adjustments in the 3rd quarter for future hedges so their losses will likely not be near as large as some might believe because they already wrote down their hedge book to the value at the time they reported their 3rd quarter results.

further, every other carrier will show significant hedging losses except for AA.

and as I have noted, AA has over $700 million in currency impairments in Venezuela for which they have made no adjustments to date.

And even if they don't take adjustments for currency losses in other countries (AA does not hedge any currencies either while DL and UA both have active currency hedges for multiple countries), they will have to take revenue adjustments.

 

[does this plane go to paris]

metro,
 
As Frugal stated, WT brings it onto himself/herself.  There is isn't a conversation or topic on these boards that he/she can't resist inserting the Delta dominance theory is alive and well.
 
I have many friends at many different airlines, including Delta.  I have great respect for Delta, heck, look at the picture I chose and it should give you some idea of my likes.  What is most tiresome to a majority of folks that dislike the Delta Cheer leading on every topic is the constant degradation of most any other airlines.  There probably are some voices from non-Delta employee out here that would applaud Delta on some topics.  Heaven forbid if these same voices start a topic and not include how Delta did this better, or complement Delta for achieving a  premium, blah, blah, blah.
 
I did not post the previous comments to bash Delta and if you took it that way, I apologize.  My fault for not starting a new topic.  What is interesting to me in the  comments regarding PRASM not hitting the 6% mark because Domestic is going strong but International is weak.  I saw the post where Delta is parring down African flights and that is where my thinking was going. 

 

[WorldTraveler]

and my comment regarding RASM is that DL is always the first to report it and has not been beat in RASM by AA or UA until UA just did it in the most recent quarter.

Since UA has said they will not produce the RASM that DL said it would, and AA has said the same thing, it is not boasting about DL or denigrating anyone else to note that DL will likely outperform at least its network peers and perhaps also WN and B6 given that WN's RASM guidance is in line with or lower than DL's.

again, these are basic factual discussions.

if you or others can't participate in them without realizing what someone else does right, then you should probably not participate.

DL has done the best job of RASM growth among US airlines for several years.

that is just a fact. and a very confirmable one.

 

[robbedagain]

how well did dl do on that ACC run before the cutbacks vs now

 

[WorldTraveler]

based on DOT data, most of DL's African flights had yields that were above average compared to the Atlantic and more in line with deep S. America.

 

[FrugalFlyerv2.0]

I talk about the issues. those who can't discuss the issues of the business are the ones that bring it on to themselves.

Africa is not a separate reporting region and so there is no way to know how profitable it is or is not.

Africa is part of the TATL reporting entity and DL has been consistently profitable in that region.

 
There is no doubt that you like to talk about many issues.
 
The problem is that:
i)  you spin way too much
ii)  repeat things that are either outright false or inaccurate way too often (probably hoping that either nobody notices or hoping that somebody believes you)
iii)  too often you are corrected (caught lying)
 
A good example is here:  "Africa is part of the TATL reporting entity and DL has been consistently profitable in that region"
 
As has been pointed out to you previously, in the Atlantic region DL suffered losses except for 2007, 2012, 2013 and currently in 2014.  Here is the link to the post by FWAA in a different topic:   http://www.airlineforums.com/topic/57885-rumor-has-it-dl-phl-lhr/?p=1133802
 
WholeTruth!

 

[WorldTraveler]

no, DL did not suffer losses in the TATL region in 2014.

everything else is wrong because you started with wrong data... garbage in, garbage out.