Delta Air Lines said 2,000 workers took voluntary buyouts and it will scale back flying more than planned later this year as it cuts costs to make up for higher fuel prices.
The high cost of jet fuel was the main reason Delta’s second-quarter net income fell by 58 percent compared to a year ago. It earned $198 million, or 23 cents per share, compared with $467 million, or 55 cents a year ago. Fuel costs rose 36 percent to $2.66 billion in the latest quarter.
Revenue rose 12 percent to $9.15 billion as Delta raised fares to try to pay the increased fuel costs.
Delta would have earned 43 cents per share if not for one-time items including severance costs and reducing its facilities. On that basis, profit was less than analysts expected — 46 cents per share on revenue of $9.16 billion, according to FactSet.
Investors sent Delta shares down 70 cents, or 8.7 percent, to $7.32 in morning trading.
‘Resizing the airline’
Delta, the world’s second biggest airline, was already planning to reduce flying more than usual later this year. Along with that, in May it said it would offer voluntary buyouts and early retirement incentives. The employees who accepted the buyouts represent more than 2 percent of the airline’s workforce of roughly 80,000 people.
“We will resize the airline to new flying levels and reduce the size of our fleet, staff, and facilities,” CEO Richard Anderson said on a conference call.
In addition to raising fares, airlines have been making plans to cut flying and focus on the routes passengers are willing to pay to fly. Delta said third-quarter capacity would be flat, and fourth-quarter capacity will fall 4 percent to 5 percent — one percentage point more than its previous plan.
The cuts will be “focused in markets where revenues do not cover higher fuel costs,” the airline said. Domestic capacity will fall 1 percent to 3 percent, and international capacity will fall 4 percent to 6 percent.
Delta is now coordinating fares and schedules for Europe flying with Air France-KLM and Alitalia, and their combined reduction in flying will be 7 percent to 9 percent for the quarter.
Delta said it expects a third-quarter profit.
Delta Air Lines Inc. is based in Atlanta.