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VOL. 127 | NO. 131 | Friday, July 6, 2012

Delta Touts Gains as MEM Cuts Continue

By Bill Dries

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Delta Air Lines continued to tout passenger unit revenue gains and an increase in load factors on its jets for the month of June.

As Delta Air Lines touts passenger unit revenue gains in June, it says more cuts in service are on the way at Memphis International Airport. (Daily News File Photo: Lance Murphey)

Meanwhile, the airline with a Memphis hub won an important concession during the month that scrambled bankruptcy reorganization plans by its biggest regional carrier, Memphis-based Pinnacle Airlines Corp.

And Delta announced cuts in more passenger air service at Memphis International Airport that will take effect in August. Delta will go from 150 passenger flights a day to 125 – a year after its first round of cuts slashed service at Memphis by 20 percent, mostly regional service.

Across its system, Delta posted a 0.8 percent increase from a year ago in passengers boarded for June with 15,204,443 and a 1.3 percent increase year to date of 80.6 million.

The passenger count increased as Delta dropped its available seat miles – all of the seats available on every route multiplied by the length of the route – by 1.7 percent from a year ago. That came as the airline increased its revenue passenger miles – the number of seat miles in which seats are occupied – by 0.4 percent from a year ago.

The biggest percentage drops in available seat miles were in Latin America’s regional service at 9.5 percent and transatlantic international service at 8.7 percent. But Delta’s domestic regional service showed a 4.1 percent drop in available seat miles from a year ago.

Meanwhile, Delta and pilots represented by the Air Line Pilots Association came to terms on a new contract that was ratified by rank and file by month’s end. The agreement came after just two months of bargaining.

The pilots flying for a carrier that has consistently preached the gospel of permanent cuts in capacity that will remain even with drops in fuel prices won more flying in the contract. Delta agreed to buy 88 smaller 717s that it and not its regional carriers by contract will fly. Delta also gets to add 70 jets to its regional operations.

But ALPA in return got an agreement in which Delta will phase out the 50-seat jets flown by its contract affiliates – namely Pinnacle.

Before the contract was ratified, Pinnacle CEO John Spanjers had told employees Pinnacle would “reformulate” because of the ALPA agreement.

Before the fast track labor negotiations Pinnacle had acknowledged the industry’s move away from jets seating 50 passengers and less but noted that it would still fly some of the jets.

The Delta agreement accelerated the need to move even further away from the 50-seaters.

Without a further reduction in them, Spanjers told employees Pinnacle would not be able to compete with other regional carriers competing for contracts with Delta.

Pinnacle was at a disadvantage with 140 of the 50-seat CRJ-200s in a “end state” fleet of 181.

“Ultimately as we look toward the future we must envision a Pinnacle fleet with far fewer CRJ-200 aircraft,” Spanjers wrote. “And if we hope to replace those losses with more 76-seat aircraft, we must reduce our cost structure even more than originally planned in order to be competitive.”

In the month before Pinnacle filed for bankruptcy reorganization in April, it had more aircraft in the Delta Connection fleet at 198 than any other regional carrier including Comair, the Delta-owned regional carrier. The bulk of them were the 50-seaters.

The bankruptcy reorganization changed Pinnacle’s contract terms with Delta.

Before Delta was one of several global carriers Pinnacle flew under contract with. The reorganization plan was to phase out the other global carriers and focus on flying only for Delta.

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