Delta's New World Order

[WorldTraveler]

Transportation
Delta's New World Order
By Ted Reed
TheStreet.com Staff Reporter
6/1/2006 11:49 AM EDT
URL: http://www.thestreet.com/stocks/transportation/10289189.html

The biggest surprise in the airline industry may be taking off in Atlanta.
Conventional wisdom has it that Delta Air Lines (DALRQ:OTC BB) is trapped in a downward spiral, fueled by a flawed strategy to boost revenue by throwing capacity at any international destination with an airport.
A top Delta executive disagrees, saying the airline industry will abandon that view in just a few months.
"The second quarter will drop some people's jaws," says Executive Vice President Glen Hauenstein in an interview. "It will change they way people think [about] how this airline is digging out from a $2 billion loss last year."
Hauenstein, who oversaw the international expansion behind the turnaround of Continental Airlines (CAL:NYSE) , has mapped out a similar strategy for Delta.
"We have international expansion as far as the eye can see," he says, adding that the airline's goal is to do 50% of its business overseas within three years. That exceeds the carrier's previously announced intent to have international flying account for 35% of systemwide revenue by the end of this year, up from about 20% in June 2005.

follow the link above to continue with the article.

 

[Flying Titan]

DL's most recent numbers are certainly better than what I expected to see, especially given the airline's dismal performance in the first quarter.

It's nice to see such confidence in DL's plan to become such a large international carrier, but this is truly a sink-or-swim proposition. If the international market stays as is, then the only downside may be seasonal fluctuations (no small thing), which DL says it can handle. OTOH, if there a disruption in international travel (e.g. bird flu or another SARS-like event) then DL may be caught with too many eggs in one basket.

Time will tell if this is the right gamble. For the sake of everyone at DL, I hope it is.

 

[Deleted by Moderator]

I recall another carrier that greatly expanded their international flying right before they filed Chapter 7.

 

[winedndined]

I recall another carrier that greatly expanded their international flying right before they filed Chapter 7.

__________________________________________________________
Thanks for the lovely words of encouragement <_<

 

[NewHampshire Black Bears]

Well I find myself somewhere between World Traveler, and "Moderator"

As to DL's international "dominance", they fail miserably in the region that REALLY MATTERS..........ASIA !!!!!!!

Specifically............."CHINA/CHINA/CHINA" !!

Any Questions ?????????

NH/BB's

 

[Ch. 12]

Well I find myself somewhere between World Traveler, and "Moderator"

As to DL's international "dominance", they fail miserably in the region that REALLY MATTERS..........ASIA !!!!!!!

Specifically............."CHINA/CHINA/CHINA" !!

Any Questions ?????????

NH/BB's

Seems that China is treated the same way at LHR...whoever has the most lobbying power (i.e. AMR and UAL) gets the rights. If you will recall, DL tried to acquire the rights to China but these went to AMR/UAL/CAL. I find it interesting that UAL and AMR are helped along by the gov't so much (why do they get exclusive rights to Europe's largest airport AND (until CAL), also have exclusive rights to the world's fastest growing economy?

So the fact that DL doesn't fly to China isn't an "oversight"...they tried and did all that they could.

Bottom line on this article, though...it's pretty impressive to be down to a $27M loss...mostly on revenue gains and NOT cost cuts.

 

[SoftLanding]

Delta will have their work cut out for them...with that huge int'l expansion.

Economy is slowing, will the int'l traffic slow also?

This also goes for LCC/CAL/AMR etc. etc. Will be interesting to watch.

Delta did have an operating profit (around $22 Mill.) for April.


SoftLanding

 

[Deleted by Moderator]

I find it interesting that UAL and AMR are helped along by the gov't so much (why do they get exclusive rights to Europe's largest airport AND (until CAL), also have exclusive rights to the world's fastest growing economy?

Maybe because the airplanes are cleaner, the service is better and the flight attendants aren't as surly. B)

 

[flyhigh]

12...you forgot to mention NWA rights in China...paralleled only by UA. AA & CO have only a marginal presence in China comparatively.

There really is no one carrier that serves all markets (South/Central America, Europe, Asia). UA is close, but it's difficule to position oneself in this manner. You could argue that BA and other Euro carriers do...however they have tiny domestic systems comparatively..

 

[Borescope]

There really is no one carrier that serves all markets (South/Central America, Europe, Asia).

It depends how you look at it. Anyone that is in an alliance can advertise flights from Omaha to Joberg, Iowa city to Sydney, or Minot to Bejjjing.

 

[Vikedog64]

Maybe because the airplanes are cleaner, the service is better and the flight attendants aren't as surly. B)

Thats a good one!

 

[TheWatcher]

Im very impressed with Delta's INTL expansion. I think it will be successful and i wish Delta and thier employees, the best of luck and success!!!!

 

[Ch. 12]

Maybe because the airplanes are cleaner, the service is better and the flight attendants aren't as surly. B)

It amazes me that you haven't flown UA or AA then b/c they are no better. Sorry to burst your bubble. Money talks in politics and AMR and UAL have always put plenty of $$ and effort into lobbying the government. Again...look at LHR rights and the new China rights.

 

[Nor'Easta]

It's great that DL is expanding Intl'. The only thing I wonder about is; how can they expand without new aircraft? You can only expand so much before you have no additional planes.

 

[FWAAA]

[quote name='Nor'Easta' post='385565' date='Jun 2 2006, 07:17 PM']It's great that DL is expanding Intl'. The only thing I wonder about is; how can they expand without new aircraft? You can only expand so much before you have no additional planes.[/quote]

Unlike most other airlines, DL flew an amazing number of 763s and 764s on domestic routes - there's no shortage of widebody aircraft to shift from ATL-MCO to supposedly/hopefully lucrative JFK-Europe routes.