Once again, there was a message about Memphis International Airport’s importance to Delta Air Lines in comments Delta’s leaders made this week when the company released year-end and fourth-quarter 2011 earnings figures for its global system.
ANDERSON
The message, written below the dollar figures, estimates and safe harbor statements in its earnings report, was that there could be a third round of capacity cuts at the airport and that the airline industry is again in shuffle mode, with new possible scenarios surfacing for Memphis International Airport.
Delta CEO Richard Anderson resolutely dodged a few questions about a possible merger with the parent company of American Airlines – a merger being pursued by both Delta and rival global carrier US Airways Group Inc.
Anderson rejected even general questions about the nature of past airline mergers.
And he also declined comment on what Delta’s reaction might be if Memphis-based regional carrier Pinnacle Airlines Corp. files for Chapter 11 bankruptcy protection, which allows for reorganization.
Pinnacle CEO Sean Menke specifically mentioned the possibility of such a filing in a written statement he recently sent Pinnacle employees after a month of continuing drama in a different part of the city’s commercial aviation scene.
Anderson again this week touted Delta’s “conservative” stance on capacity, which will be cut another 2 to 3 percent in 2012 including cuts that began this month at Memphis International and other airports.
“We will remain flexible with the ability to further reduce capacity if conditions so dictate,” Anderson said.
In later comments, Delta Executive Vice President Glen W. Hauenstein specifically said the Memphis hub is “generally in the vicinity of where it needs to be” but added it wasn’t exactly where Delta wants it.
An analyst asked Hauenstein if Delta could improve its return to investors if it readdressed its capacity in the region, specifically in Charlotte and Atlanta.
Atlanta’s Hartsfield-Jackson International Airport is Delta’s “flagship” hub, and the company’s philosophy has been it sees the role of Memphis International as a place for overflow Delta passenger traffic from Atlanta.
Charlotte is a US Airways hub.
At neither Charlotte nor Atlanta has Delta made the capacity cuts it has at Memphis.
“Atlanta continues to lead the hubs in terms of core profitability,” Hauenstein responded.
He also cited rising fuel prices and other economic conditions in the last five years after a trend in which 50-seat regional jets “somewhat diminished the pull, if you will, of the geographic historical hubs.”
With the recent economic changes, that regional service was re-examined along with industry trends “which is not to fly in uneconomical areas.”
The geographic pull of the hub becomes more relevant, Hauenstein added.
Meanwhile, Memphis International made an important list earlier this month when Southwest Airlines announced Memphis was one of 53 cities where AirTran Airways service will be converted to Southwest service “over time.”
Six other AirTran cities didn’t make the cut.
Memphis frequent fliers have speculated about the possibility since Southwest bought AirTran in May. Southwest’s response at the time was to be cautious, and the airline remained guarded in its statement about any steps beyond replacing existing AirTran flights.
The Memphis-Shelby County Airport Authority’s most recent figures, which run through the end of December, show four scheduled AirTran flights at MEM in December, accounting for 3.78 percent of the monthly passenger count at the airport.
That was a total of 23,783, counting the total of about even amounts of enplaned and deplaned passengers.
For the first half of the current fiscal year that ended Dec. 31, AirTran’s enplaned and deplaned total was 147,445 compared to 1,483,038 for Delta.
US Airways had the fewest passengers by that count, with its 47,826 below American Airlines, which counted 94,092.
The US Airways numbers could go up starting in March because of an agreement elsewhere with Delta that Delta leaders touted this week.
They were touting the growth in share of business travelers in the “slot swap” with US Airways that gave Delta 132 take-off and landing slots at LaGuardia Airport – the airport Anderson termed “New York’s No. 1 business airport.”
The impact for US Airways has meant a coming expansion of service between Memphis International and Reagan National Airport in Washington starting in March. The other end of the slot swap was 43 slots for US Airways at Reagan National, which the airline will use to serve Memphis and other destinations.