Delta Airlines To Decrease International Flights

Delta Airlines To Decrease International Flights

Delta Airlines will be cutting back on international flights in the last quarter of this year by 3 percent.  The cut back comes due to the increase in the value of the dollar, affecting demand reported CNN.

The countries that will experience the most cut-backs will be those which have experienced the most instability due to the changes in currency and oil. According to CNN, “The airline said that there will be a 15% to 20% reduction in service from Japan, 15% reduction to Brazil, 15% to 20% reduction to Africa, India and the Middle East, and suspension of service to Moscow.”

Chief Executive Richard Anderson clarified that although this first quarter has been Delta Airlines’s strongest first quarter, ever. He explained, “While the strong dollar is creating headwinds with international revenues, it also contributes to the lower fuel prices, which will offset those headwinds with over $2 billion in fuel savings this year” reported The Wall Street Journal.

According to The Street, investors agree with Delta Airlines’s move, Cowen & Co. analyst Helane Becker said the profits per available seats should increase. Becker added, “The international markets have been a drag on results recently,” Becker wrote. “This reduction in capacity should benefit (passenger revenue per available seat mile) and reduce the negative foreign currency effect.”

Anderson anticipates $1.5 billion of free cash flow, he stated, “These record results and cash flows show that the strong dollar is a net positive for Delta Airlines.”