Edward Bastian

Atlanta-based Delta Air Lines Inc.’s president and CFO said that continued international growth will help shield the company from rising jet fuel costs and an uncertain domestic economy at an aviation and transportation conference in New York March 18.

Edward Bastian told an audience of industry professionals hosted by JPMorgan Chase & Co. that Delta will not back down from opening planned international routes despite economic challenges.

“We are going to be growing (international capacity) at roughly a 15 percent pace and expect to see double-digit unit revenue gains,” he said. 

Delta’s strategy involves establishing routes to emerging economies not being served by other U.S.-based carriers.

“We're moving into economies that have a better growth prospect than we're seeing domestically,” Mr. Bastian said.  In keeping with this strategy, over the past five years the company’s international capacity has grown more than 77 percent, while domestic capacity is down 22 percent, he added.

The airline launched a flight from New York’s John F. Kennedy International Airport to Tel Aviv, Israel, March 10 and is to open a route to Amman, Jordan, June 3.  Flights to Cairo, Egypt, and Cape Town, South Africa, will open in June.  Flights from New York to Lagos, Nigeria, and Nairobi, Kenya, originally scheduled to open in June, have been postponed until December, according to a press release.

Mr. Bastian also said that a joint venture with Paris-based Air France-KLM is to increase Delta’s trans-Atlantic capacity.  As a member of international airline partnership group SkyTeam, Air France already jointly schedules flights with Delta, but he said that the new partnership includes a profit-sharing agreement.

“What we haven’t had is a true sharing of economic interest … with all the growth we've been pushing internationally, our partners in Paris haven't been thrilled,” he said. “By 2010, the full trans-Atlantic will be profit-shared … we'll have joint incentives to sell” seats on both airlines.

An open skies agreement between the U.S. and the European Union signed last year goes into effect March 30, opening up London’s Heathrow Airport to serve as the center of Delta and Air France’s joint venture.  The opening of an Atlanta-Heathrow flight March 29 is to kick-start the partnership, which will provide a challenge to locally based British Airways.

Mr. Bastian praised Delta’s employees for implementing this international strategy, adding that while international routes create sustainable advantages for Delta the shift in strategy alone will not be enough to combat rising overhead.

To further cut costs he announced that Delta is offering 30,000 of its employees severance packages in the hope that 2,000 of them will voluntarily leave the company.  If enough do not take the severance packages, members of the administration staff will be involuntarily laid off.

Susan Elliott, a senior manager of regional media relations at Delta, told GlobalAtlanta that the airline is to open routes from Atlanta to Shanghai, China, March 30 and to Stockholm, Sweden, June 3.