Delta to Drop Money-Losing Memphis as Hub as It Cuts Flights

Delta Air Lines Inc. (DAL) said it will cut 230 jobs and trim flights by more than a third in Memphis, Tennessee, after changes in operations failed to make the hub profitable.

The reliance on inefficient 50-seat jets in Memphis and high jet-fuel prices that make them too expensive to operate were blamed for the decision to scale back operations, two Delta executives told employees today in a memo that was made available by the Atlanta-based airline.

Service at Memphis, already the smallest of Delta’s eight U.S. hub airports, will fall to about 60 flights a day from 96 now, said Anthony Black, a spokesman for the carrier. Memphis flights had been declining in recent years and by this summer will be at half the level of a year ago, Black said.

The job reductions represent about 28 percent of Delta’s total headcount of 830 in Memphis and involve airport customer service and cargo employees there, Black said. Workers can seek transfers or accept retirement or severance packages after the cuts take effect on Sept. 3, Delta said.

Delta has been retiring older 50-seat aircraft in favor of larger 76-seat planes that are more fuel-efficient, have dual-class cabins and allow room for several rows of seats with extra legroom that command premium fares. The carrier still has 300 of the 50-seaters in its fleet and plans to shrink that to about 100 or 125 within two years, Chief Executive Officer Richard Anderson said in January.

Delta acquired the Memphis hub when it bought Northwest Airlines Corp. in 2008 after both carriers went through bankruptcy reorganization. Northwest’s hubs of Minneapolis, Detroit and Memphis have been jokingly called “Snowtown, Motown and No Town” by competitors and news media such as the Memphis Flyer newspaper.

Delta rose 1.6 percent to $18.09 at the close in New York. The shares have gained 52 percent this year, outpacing a 39 percent advance for the Bloomberg U.S. Airlines Index.

To contact the reporters on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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