Delta to Trim Its Flight Schedule

Delta Air Lines said yesterday that it will cut its domestic flight schedule by at least 10 percent next year, becoming the first major U.S. airline to announce service reductions in response to the recession.

Delta, which is merging with Northwest Airlines, said it plans to reduce flights at the combined carrier by as much as 8 percent next year. International flights will be pared by as much as 5 percent compared with a year ago.

In a note to employees, Delta chief executive Richard Anderson and Edward Bastian, the chief financial officer, said the action "comes as a result of the global economic recession and weaker demand for air travel."

The executives promised to move quickly to overcome economic hurdles while at the same time building the new airline, saying that "speed wins."

Anderson and Bastian didn't specify how many jobs would be lost. Delta has cut about 4,000 jobs this year, mostly through voluntary retirement offers, while Northwest has trimmed 2,500. Major airlines have been slashing costs all year -- parking planes, cutting flights and charging customers for in-flight amenities and baggage -- to recover the costs of rising fuel prices.

Now that oil prices are falling, concern over the slowing economy has become the industry's dominate preoccupation.

"The weakness in the economy is immediately reflected in air travel -- that's always the case," said Mike Miller, an aviation analyst. Miller said airlines can use their real-time reservation data to gauge the economy.

"Sometimes even before the economic indicators are known publicly, the airlines can see privately what trends are," he said.

Delta said it had $6 billion in liquidity to cope with the recession. It also said it hoped to reap $2 billion in savings after the two airlines merge operations.

Other major airlines are also making moves to shore up cash positions in anticipation of weaker demand next year. But Delta will have to maneuver an even trickier path because of the merger, analysts said. Bastian, speaking at a analyst conference yesterday, said 2009 will be a transition year for the company.

Besides managing cash, Bastian said the carrier has to focus on getting appropriate certification from the Federal Aviation Administration so the two airlines can operate as one carrier.

He said the airline plans to move to a single reservation system for both carriers. Additionally, Delta has to focus on how to bring together the workforce at the two companies, which have distinct cultures and different layers of union representation.