Travel Slump Pushes Delta, American Toward 5% Cut in Seats to Raise Fares

[marmar]

Travel Slump Pushes Delta, American Toward 5% Seat Capacity Cut
By Mary Jane Credeur and Mary Schlangenstein


June 10 (Bloomberg) -- Delta Air Lines Inc., American Airlines and other U.S. carriers may need to trim as much as 5 percent more seating capacity after the summer travel season to increase fares.

About two-thirds of any reductions probably will come on overseas routes where planes are emptier, said Kevin Crissey, an analyst at UBS Securities LLC. Carriers may announce capacity cuts as soon as tomorrow at a conference in New York hosted by Bank of America Corp.’s Merrill Lynch unit, analysts said.

A 12-month slide in traffic among the biggest U.S. carriers means there are still too many seats to support higher prices. A new round of cuts would build on the elimination of 10 percent of U.S. airlines’ capacity since the start of 2008, including the parking of 500 jets.

“Something in the 3 percent to 5 percent range is probably what we’ll see, and the more the better,” said Crissey, who is based in New York and recommends buying Delta, the world’s biggest airline.

Global airline revenue may fall 15 percent to $448 billion this year amid the “most difficult situation that the industry has faced,” the Geneva-based International Air Transport Association said on June 8. North American carriers will probably lose about $1 billion, the trade group said.

Carriers will trim at least 4 percent more capacity as ticket sales languish, estimates Helane Becker, an analyst at Jesup & Lamont Securities Corp. in New York. She recommends buying Delta, American parent AMR Corp., United Airlines parent UAL Corp. and Continental Airlines Inc. ..............(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601109&sid=aNK3goAjqEpQ

[thunder rising]

1. They can always run routes to India. We just can't get enough of those H-1Bs