Delta Airlines posts loss; plans to ground freighters
Not exactly great news for my favorite airline. Today, Delta reported a $794 million first-quarter net loss, or $0.96 per diluted share. Delta cited slower demand for travel brought on by the current recession as reason for the loss.
“Despite the worst economic recession in our lifetime, the fundamental strength of Delta’s business allowed us to deliver breakeven results this quarter, excluding fuel hedge losses and special items. These results would not be possible without the hard work of all Delta employees – they are running a great airline while executing a seamless integration in the midst of this very difficult economic environment.,” said Richard Anderson, Delta’s chief executive officer. “We remain focused on making disciplined decisions about capacity, costs and capital, achieving merger synergies and finding new sources of revenue.”
On the cargo side of the business, cargo revenue declined 44 percent or $146 million during the first quarter. Again reasons for the decrease were attributed to the current global recession, decline in fuel surcharge revenue, and decreased demand for air cargo services.
As a result, Delta has announced plans to ground it’s entire fleet of 14 B747-200 freighter aircraft effective Dec. 31, 2009 due to that fleet’s age and inefficiency.
Delta also announced plans to reduce international capacity by 10%, compared to the prior year, beginning in September 2009.
So sad – total price for Alitalia Cargo? $19 million….
An apology to any Alitalia fans out there, but this is simply embarassing. Alitalia Cargo is being purchased by Cargoitalia for a whopping $19 million – that’s it. This comes after the airline declared bankruptcy back in September. More from Air Cargo World:
Cargoitalia told Augusto Fantozzi, Alitalia’s bankruptcy commissioner, that the sale must be completed by March 9. It said it would hire 15 pilots within one month of closing the deal and another 15 pilots for each MD-11 that enters the fleet over the next two years.
Airbus seeks to slow production
More gloomy news from the aviation sector – Airbus to slow production. Via CargoNewsAsia:
Airbus is reducing the production rates of its A320 family programme from 36 to 34 a month from October onwards, but the European planemaker said 2009 delivery targets will not be affected.
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Production rates of the A330/A340 family will be paused at the current level of 8.5 a month, and not increased further as previously planned.
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Airbus achieved a record high of 483 deliveries in 2008 and aims to achieve a similar figure in 2009. Today’s precautionary measure will not affect the 2009 Airbus delivery target.With a backlog of more than 3,600 aircraft, and the Power 8 improvement programme making good progress, Airbus is in a position to face up to the short-term challenges posed by the downturn whilst preparing for a strong future.
Having a backlog of production is a good thing in this economy, but regardless Airbus is still looking to save money. Slowing production means less work for workers now.
Airlines: “write off” 2009 – World Air Cargo Event
That’s according to Stan Wraight, the chair of the opening panel session at the event just held in Bangkok:
His advice for chief executive officers was to be optimistic and to assume that the “bottle of wine is half-full not half-empty” but to also be realistic. “They will have to make some tough decisions this year, which may include having to get rid of some employees, automate some processes and invest in areas that they wouldn’t normally think of investing in.”
While 2009 may have to be forgotten about for making a profit, he advised, it is vital to prepare for 2010 and be ready to take immediate advantage of opportunities when the market recovers next year.
Good luck with that. I have a bad feeling the air cargo industry is in for a prolonged downturn. Many companies that are or will be switching to ocean freight to cut costs will find it difficult from a cost perspective to return to air freight. Some of them are making significant changes in their supply chains that may not take air cargo into account at all.
