Delta Air Lines is cutting flying to the U.K. by 6 percent in its winter schedule amid economic uncertainty from Brexit and the drop in the British pound.
Atlanta-based Delta said it is facing "persistent headwinds" from geopolitical uncertainty and other factors.
Across Delta's entire flight schedule, the cuts to U.K. service will amount to a pullback of 1 percentage point of growth planned across the airline's system for the fourth quarter of the year, leaving the airline with a 1 percent increase in total flight capacity year-over-year.
In recent years Delta had worked to bolster its presence on trans-Atlantic routes as part of its strategy to be a major player in the global international air travel market, particularly on flights between London and New York -- a key passage for the banking industry's high-spending corporate travelers.
In 2013, to bolster its competitive position in the crucial trans-Atlantic market, Delta acquired a 49 percent stake in Virgin Atlantic Airways and struck a joint venture partnership with the British carrier. The two airlines have also partnered on planning flights to the U.K. from other U.S. cities including Atlanta.
But now, Delta is struggling to stabilize its unit revenues, which have been on the decline. It had been reaping the rewards of low oil prices, but that benefit is waning.
"The reality is that the large year-over-year savings driven by fuel are behind us," Delta CEO Ed Bastian said during an investor conference call on Thursday. He added: "We need to continue to get revenues back on a positive track."
The cuts are focused on leisure travel from the U.K. to the United States. Delta plans to trim flights on off-peak days and downgrade to smaller jets in some leisure markets such as flights from Manchester, and service to Florida, Las Vegas and New York.
Credit: Kelly Yamanouchi
Credit: Kelly Yamanouchi
Along with cuts in U.K. capacity, Delta is also significantly reducing its domestic flying after the summer season, after seeing weakness in revenue from business travel.
Airlines can reduce flying by cutting flights, or through other steps such as using smaller planes or operating fewer days per week. It's possible some routes could be cut.
The announcement of U.K. flight cuts came as Delta reported a profit of more than $1.5 billion for the second quarter of the year, up 4 percent year-over-year.
However, its operating revenue was down 2 percent to about $10.4 billion, including a $65 million hit from foreign currency pressures. Delta's passenger unit revenues were down 4.9 percent as it increased capacity 3.2 percent in the second quarter.
The airline managed to cut operating expense by 3 percent in the quarter, benefiting from fuel prices that were down 28 percent. But it also posted $614 million in losses on its fuel hedges for the quarter, and lost $10 million in operations of its oil refinery.
