In the tailwind of its
$2.6 billion merger with Northwest Airlines Corp., Delta Air Lines Inc. announced plans on Wednesday to cut capacity and jobs. In a memo to employees, as reported in the
Atlanta Business Chronicle, CEO Richard Anderson and president Edward H. Bastian said the airline will cut capacity by 8% in 2009 and indicated job cuts could result.
While it might seem the combination with Northwest would be the catalyst for the downsizing, the executives attribute the cuts to "the global economic recession and weaker demand for air travel," which they estimate will drop between 6% to 8% worldwide in '09. Rather, they indicated the merger will actually help shield Delta from volatile demand, as Northwest's international presence adds geographic diversity.
In the letter, Anderson and Bastian said the integration is progressing smoothly. When the deal closed in October, Delta indicated it would spend about $600 million combining the airlines, and that the merger would generate $2 billion in synergies by 2012. Of course, the biggest integration hurdle, combining pilot seniority lists, has yet to be cleared. And as
The Deal's Lou Whiteman reported on Dealscape Monday: "Anything that rocks the boat could have serious long-term implications for the new world's largest airline."
- Suzanne Stevens
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