Delta's Comair to Cut Half Its Fleet, Eliminate Jobs
Delta Air Lines Inc.’s Comair regional carrier will eliminate most of its 50-seat jets and cut an unspecified number of jobs to lower costs by at least $110 million during the next four years.
“Absent any action on our part to change our current direction, our future remains in question,” Comair President John Bendoraitis said today in a memo to employees.
Comair will get rid of 53 of its oldest planes by 2012, said Kristin Baur, a spokeswoman. Most will be 50-seat Bombardier Inc. CRJs, shrinking the fleet to 44 jets, and the 2,600-person workforce also will contract, Bendoraitis said, without giving a figure.
Consolidation among regional airlines, including Delta’s sale of its Compass and Mesaba units and SkyWest Inc.’s purchase of ExpressJet Holdings Inc., is forcing Cincinnati-based Comair to “dramatically change course,” Bendoraitis said. Comair’s cost structure is 20 percent higher than peers, he said.
Regional carriers such as Comair have been under pressure as the large airlines for which they fly under contract chop seating capacity to hold down expenses.
Delta rose 22 cents, or 2.1 percent, to $10.68 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 6.2 percent this year.
Delta studied selling Comair in 2007 then postponed a decision while holding talks that led to the 2008 purchase of Northwest Airlines Corp. Atlanta-based Delta said last month it was still exploring options for Comair after SkyWest signaled interest in the unit.
Keeping Comair
During 19 months in Chapter 11 bankruptcy protection that ended in April 2007, Delta held onto Comair after competitors such as Continental Airlines Inc. sold shares in ExpressJet in 2002 and Northwest held an initial public offering for regional carrier Pinnacle Airlines Corp. in 2003. Compass and Mesaba had been Northwest subsidiaries.
American Airlines parent AMR Corp. is now reviewing options for its American Eagle commuter unit, where jets of 50 or fewer seats made up about 77 percent of Eagle’s fleet as of July 10, according to the carrier’s website.
Jets of that size are falling out of favor because of operating costs and demand for larger, more-comfortable planes to ferry passengers to hub airports, James Corridore, a Standard & Poor’s equity analyst in New York, said in a June interview.
The Associated Press reported Comair’s cuts earlier today.
To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.
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