Delta cuts seats and delay aircraft deliveries

Airline has defered deliver of four A350s and reduced seats for winter period

Delta Air Lines Inc on Monday said it will fly fewer seats this winter than it had planned and defer the 2018 delivery of four large aircraft, as extra flights by rivals threaten to depress its ticket prices.

Delta, the second-largest USA airline by traffic, will scrap 1 percentage point of its planned growth in the fourth quarter so flight capacity rises by less than two per cent in the second half of 2016, according to a regulatory filing.

The move will help Delta reach its goal of reversing the decline of a closely watched financial measure - passenger revenue divided by its plane seats and mileage - before the end of the year. USA airline stocks have fallen in recent months as the companies continued forecasting that the measure, unit revenue, will plummet thanks to higher capacity and lower fares.

The airline also said it will keep its longer-term expansion in check by deferring the delivery of four wide-body A350 aircraft from Airbus Group SE to 2019 or later, from 2018. Delta has 25 A350-900s on order, aimed at replacing its biggest plane, the Boeing Co 747.

Shares of Delta rose more than 3.3 per cent after the news.

Delta said ticket revenue from corporate travelers has fallen four per cent this year, although corporate passenger volumes are up two per cent. It said its trans-Pacific capacity will be down 15 per cent and its trans-Atlantic capacity will be flat in the winter compared to two years ago.

Separately, Delta said it would increase its annual dividend to investors by 50 per cent to 81 cents per share.

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