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Delta Pulls Back US-UK Capacity, Adjusting for Post-Brexit Currency Pressures

    Delta Air Lines has announced that it will adjust its capacity on U.S.-U.K. routes by six points, adjusting to the impact on demand from a stronger dollar, after the UK’s exit from the European Union.

    “While the revenue environment remains challenging, with persistent headwinds from close-in domestic yields and geopolitical uncertainty, we remain focused on achieving our goal of positive unit revenues by year end,” said Glen Hauenstein, Delta’s president.  “We’ll continue to move quickly and aggressively with all our commercial levers, including an incremental 1 point reduction in our December quarter capacity levels, to make sure we create the momentum we need to achieve this goal.”

    While Delta reported an overall pre-tax income for the June 2016 of $1.7 billion, $42 million higher than the same quarter last year, Delta’s operating revenue for the June quarter decreased by 2%–$260 million–due to currency pressures.

    Revenue per passenger dropped by 4.9% for the period, including a 3.2% drop attributable to increased capacity and a 1% drop caused by foreign currency exchange.

    The airline has decided to adjust capacity in response to global events, reducing capacity by approximately one percentage point during the quarter ending December 2016, and with a projected annual growth system capacity adjusted to 1% year on year.

    Increase (Decrease)

    2Q16 versus 2Q15

    Change 

    Unit

    Passenger Revenue

    2Q16 ($M)

    YOY

    Revenue

    Yield

    Capacity

       Mainline

    4,721

    0.2  %

    (5.2) %

    (4.4) %

    5.6  %

       Regional

    1,499

    (3.4) %

    (6.4) %

    (5.4) %

    3.2  %

    Total Domestic

    6,220

    (0.7) %

    (5.6) %

    (4.8) %

    5.2  %

       Atlantic

    1,511

    (2.6) %

    (4.4) %

    (3.6) %

    2.0  %

       Pacific

    662

    (8.3) %

    (5.1) %

    (7.0) %

    (3.4) %

       Latin America

    577

    (4.0) %

    (4.9) %

    (7.8) %

    0.9  %

    Total Passenger

    8,970

    (1.8) %

    (4.9) %

    (4.7) %

    3.2  %

    Cargo Revenue

    165

    (20.3) %

    Other Revenue

    1,312

    (3.6) %

    Total Revenue

    10,447

    (2.4) %


    Delta’s UK partner, Virgin Atlantic, feels optimistic about growth on tansatlantic and other long-haul routes, having announced that it will purchase of Airbus’ new A350-1000 aircraft during this year’s Farnborough Air Show.

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