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Delta: $2B higher fuel cost this year forces more expensive fares, less service  1 Week ago

Source:   USA Today  

Bracing for $2 billion in higher fuel costs this year, Delta Air Lines expects to raise fares and trim service, executives said Thursday.

The airline has already offset two-thirds of the nearly $600 million in higher fuel cost during the second quarter, CEO Ed Bastian told investment analysts during an earnings call. Average fares are up 4 percent from 2017, he said.

“While this is good progress, there is still more to be done,” Bastian said.

The carrier plans to reduce its capacity up to 1 percentage point through the end of the year, according to President Glen Hauenstein.

About 70 percent of capacity growth this year has come through the larger planes, such as Boeing 737-900 and Airbus A321 planes replacing MD-88 aircraft, and the length of flights, executives said. Delta may be the only major carrier whose total departures will be lower this year than last, Bastian said.

“I think we’re very prudent as to how we’re thinking about capacity,” Bastian said. “We are continuing to look for opportunities to reduce marginal flying in a higher fuel environment.”

But executives were cagey about where service would be reduced.

“Well, I have a dart board in my office,” Hauenstein said to laughter on the call.

Actually, teams of analysts work every day to scrutinize competitive dynamics of markets, opportunity costs of flights and even the times of day, Hauenstein said.

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