Delta Air Lines is focusing on international opportunities in 2019, as it heeds economic forecasts of a potential slowdown at home.
The Atlanta-based carrier plans to grow system capacity by roughly 3% in the new year, but with a greater emphasis on international than in 2018, an investor presentation on 13 December shows.
Delta will launch new routes, including flights to its joint venture partner Korean Air's Seoul Incheon base from Minneapolis/St Paul as well as a return to Mumbai, and expand its joint venture partner relationships in 2019.
The new routes will boost international growth at Delta in the new year, while de-emphasising domestic capacity expansion. Evercore analyst Duane Pfennigwerth expects domestic capacity to increase roughly 3.5%, or 1.5 points slower than this year.
Numerous economic outlooks forecast a slowdown in US economic growth in 2019, with the World Bank expecting it to slow nearly half of a percentage point to roughly 2.5%. However, a new survey of US chief financial officers by Duke University and CFO Global Business Outlook finds that nearly half expect the the country to slip into a recession by year-end.
The airline will launch Minneapolis-Seoul flights and relaunch Seattle-Osaka flights in April, and plans to return to Mumbai from either Atlanta or New York John F Kennedy in the "latter part of 2019", said Delta chief executive Ed Bastian during the presentation.
Delta has high hopes for its joint venture partnerships in the new year. It expects regulatory approval for a new immunised tie-up with Air France, KLM and Virgin Atlantic Airways across the Atlantic in the second half, and of its WestJet pact sometime during the year.
On the question of Alitalia, which is not part of the expanded transatlantic pact though there are reports that Delta is interested in investing through Italy's closed-door bankruptcy process, Delta president Glen Hauenstein simply called the carrier an "adjunct" to the joint venture without elaborating during the presentation.
In addition, the carrier plans to forge a joint venture agreement with Gol sometime in 2019, says Hauenstein. Delta owns a 9.5% stake in the Brazilian airline.
Once these partnerships are in hand, Delta will have joint ventures reaching every direction from the USA – to Asia with Korean Air, Australia with Virgin Australia, Canada with WestJet, Europe with the three European carriers, and Latin America with Aeromexico and Gol.
"We have so much more opportunities," says Hauenstein of the joint ventures.
Delta is also upgauging its widebody fleet to further improve the economics and competitiveness of its international network. In November, it added 10 more Airbus A330-900s to its orderbook for a total of 35, with the aircraft slated to replace aging Boeing 767-300ERs. The shift will result in a 22% fuel burn per seat savings, as well as a 50% increase in premium revenue opportunities, the presentation shows.
The airline continues to evaluate alternatives to replace the rest of its 767, as well as its Boeing 757, fleet, says Bastian. It is discussing this with both Airbus and Boeing, with a target of replacing both types within a decade.
Delta operates 111 757-200s, 16 757-300s, 56 767-300ERs and 21 -400ERs, Flights Fleet Analyzer shows.
The carrier retired its venerable Boeing 747-400s at the beginning of 2018, replacing them with new Airbus A350-900s.
Source: Cirium Dashboard
