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Delta Cuts International Flights as Strong Dollar Grounds Fliers

By    |   Thursday, 16 Apr 2015 09:15 AM

Delta Air Lines announced it's cutting international flights as fewer passengers travel to the United States because of a stronger dollar.

While the Atlanta-based carrier said it is cutting international flights by three percent total starting this winter, a handful of locations are taking the brunt of the reductions, according to the Atlanta Journal-Constitution. For example, flights to and from Japan are being reduced from 15 to 20 percent.

Delta flights to Brazil, where the Summer Olympic Games will be hosted next year, will be slashed by 15 percent while trips to Africa, India and the Middle East will be cut from 15 to 20 percent. The airline said it was suspending fights to Moscow all together during the winter months.

The Wall Street Journal reported that Delta's first-quarter results beat analysts' expectations by a penny a share. The airliner tripled its profit from $213 million, or 25 cents a share, a year ago to $746 million, or 90 cents a share.

While revenue rose five percent to $9.4 billion, the company took a hit by compiling $1.1 billion in fuel hedge losses, plus $300 million in early payments on contracts that were supposed to settle later this year.

Delta chief executive Richard Anderson told the Journal that demand for domestic flights "is solid." Ed Bastian, Delta's president, told the newspaper that he is anticipating second-quarter revenue to jump two percent.

"Our summer revenue performance combined with significantly lower fuel prices and continued strong cost controls should result in another record quarter," said Bastain.

Anderson told CNN he expects Delta's fuel losses to turn around as well, saying the airliner will save more than $2 million in fuel cost this year.

"The biggest airlines are no longer engaging in as many fare wars," wrote CNN Money's Paul LaMonica. "Big price cuts may have been great news for consumers but they were a big reason why many airlines – including Delta – have been forced to file for bankruptcy in the past."

"So Delta is probably acting prudently by pulling back on some international flights. But try telling travelers to Rio or Russia that the strong dollar is a positive for Delta. They might feel a little differently," wrote LaMonica.

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Delta Air Lines announced it's cutting international flights as fewer passengers travel to the United States because of a stronger dollar.
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2015-15-16
Thursday, 16 Apr 2015 09:15 AM
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