NICHOLAS IONIDES / ATLANTA
Delta Air Lines chief executive Leo Mullin has warned that more staff cuts may be in store at the carrier unless the bleak revenue outlook improves.
Mullin, speaking at a SkyTeam alliance event in Atlanta late last month, said the "picture is not pretty" for the period ahead. "Revenue is way off," he said, adding that business class traffic in particular is too weak. "The prices are the lowest they have been in years. We continue to discount and we are even offering discounts on discounts," Mullin said.
"The picture does not look like it is going to improve in the immediate future," he said. Delta is now considering taking "additional employee actions". The carrier has already cut 10,000 staff since 11 September and decreased capacity by 15%. Mullin said the carrier's revenues are around 16% below those of last year, not including the period after 11 September, and the outlook is not bright.
However, he pointed to the proposed tie-up with Northwest Airlines and Continental Airlines as one way in which Delta is trying to improve. He expects regulators will approve the tie-up, brushing aside comments made last week by US Airways chief executive David Siegel, who called the plan anti-competitive. Mullin said US Airways' proposed tie-up with United Airlines is aimed at challenging Delta, and it is "appropriate" for the SkyTeam carrier to take action to counter it.
Mullin sees low-cost competition as the biggest threat to major airlines. Last month Delta appointed senior vice-president John Selvaggio to lead a strategy revamp in this area and many expect the carrier to launch a new low-fare operation next year. Mullin believes it is likely that "some form of Delta Express will play a part" in the revamp.
Source: Flight International
