Depsite a wave of skepticism from industry insiders and crass comments from the competition, struggling carrier Delta says its plan for a major international expansion is already paying dividends. The airline reported just a $27 million loss in April, compared to a loss of $163 million in the same month last year. Delta says this is a result of its aggressive international expansion, which, according to TheStreet.com’s Ted Reed, is just getting started. Reed writes that “the airline’s goal is to do 50 percent of its business overseas within three years,” and he quotes Delta Executive Vice President Glen Hauenstein as saying “[we] will change the way people think [about] how this airline is digging out from a $2 billion loss last year.”
Delta is the USA’s third-largest carrier, and its fate will have major repercussions for air travelers across the country. Things are looking a lot better today than they did just a few months ago, too, when it appeared a pilot strike was imminent and the potential end of the airline in sight. While the airline isn’t out of the woods yet, such doomsday predictions now seem light years away. Earlier this week Delta’s pilots union agreed to $280 million in annual pay cuts, and the bankruptcy court then approved the deal.
That move, along with the carrier’s (so far) successful international expansion, may put Delta ahead of the curve when it emerges from bankruptcy protection next year. (The plan is to be clear of Chapter 11 by mid-2007.) Its major domestic competitors may not have sufficient wide-body planes to compete on international routes in the immediate future.
Personally, I’m rooting for Delta—and not just because most of my frequent flyer miles are stored in its coffers. I love the move toward international expansion, and when all is said and done I love the fact that my miles will be tucked away on an airline that focuses on international travel. (With domestic flights so cheap these days, I think it’s a waste to use miles on most U.S. routes.)
I also genuinely like Delta’s product, and I’m excited to see the innovations developed on Song infused into the rest of its fleet. Of course, Delta still has a long way to go, and it will be a while before we know if the embattled carrier will be a long-term survivor. So for now it’s a game of wait and see—see which international city the airline starts flying to next, that is.
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