Market Report - Airlines in Asia

CHAN:
For our market report today, let's take a look at a special report about the health of Delta airlines in Asia.


STORY:
Delta, the world's largest airline, expects a profit in 2009 on lower oil costs, but sees industry revenues falling by the greatest amount since September 2001.

CEO Richard Anderson, eyeing $500 million in initial benefits from the $2.6 billion takeover of rival Northwest last year, says the sharp fall from record energy prices in July will keep his carrier out of the red this year.

[Richard Anderson, CEO Delta Airlines]:
"We expect overall industry revenue to decline 8-12%, sort of consistent where traffic was after 9-11. But remember fuel is dramatically lower - fuel prices in the summer of 2008 peaked at $150 a barrel and now we're pushing close to $30. So for Delta a $1 change in a barrel of oil is worth $100 million to our P/L."

Delta has cut its airline capacity and over 4,000 staff, as the slowdown in passenger demand becomes more severe.

Anderson told Reuters in Tokyo that Delta can also ride out the economic storm by keeping planes on the ground.

[Richard Anderson, CEO Delta Airlines]:
"The fortunate thing about being an airline is you can sit your capacity on the ground, essentially free of cost, while the economy is recovering."

In contrast, Japan Airlines plans to slash spending by over $1 billion as international travel demand falls, while rival All Nippon Airways is postponing plans to buy the A380, which would have been Airbus' first super jumbo foothold here.

Category:

News & Politics

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