Already rushing toward making itself over as a global airline, Delta Air Lines has even bigger plans to embrace lucrative international flying, the carrier's chief financial officer said Monday.
A year ago, 20 percent of the bankrupt airline's revenue came from foreign routes. Delta has said that figure has moved to 35 percent, with a goal of 40 percent. But in an interview in Deer Valley, Ed Bastian said Delta is aiming at 50 percent within five years.
"We will be a growing, global competitor, with the right balance between international and domestic. Delta will become relevant again," Bastian said before delivering his first major speech in Utah about Delta's plan to restructure and emerge from Chapter 11 by the middle of next year.
Bastian, who is based at Delta's headquarters in Atlanta, spoke at an aviation industry conference at the Deer Valley resort outside Park City.
In his conference remarks, Bastian said Delta has taken big steps to close the revenue gulf that existed between the airline and the rest of the industry when the carrier filed for bankruptcy in September 2004. At the time, Delta's revenues were a "flat-out unacceptable" 85 percent of the industry average, he said.
He said the gap, equal to about $2 billion a year, was so huge that had it not existed, Delta would not have been forced to seek bankruptcy protection, even though it was faced with record jet fuel prices and competition from low-cost airlines.
Since then, Delta has narrowed the gap to 93 percent of the industry average and expects to eliminate it altogether by the end of 2007, Bastian said.
Much of the increase in revenue has come from a shift toward more profitable global flying. Since last fall, Delta has added 50 flights to more than 20 international cities. Delta has also opened 30 new routes from its fast-growing hub at Salt Lake City International Airport, including service to several business and resort destinations in Mexico.
How the hub will figure in Delta's international push is still unclear. Earlier this month, Utah airport and government officials came away disappointed from a meeting in Atlanta, where they hoped to persuade the airline to launch its first direct flight from Salt Lake to Europe next summer. The soonest the new flight could begin is in 2008. Working against the airport are uncertainties about demand for service, both in Utah and Europe.
"Salt Lake is a strong location. We have announced several new routes (in the last year). If there is regional demand (for service to London or Paris), we will certainly agree to provide it," if the flights will make money, Bastian said.
Despite repeated declarations that Delta will lift itself from bankruptcy next spring, Bastian said a lot of uncertainties still lie ahead, many of which the company cannot control.
"I wouldn't use the word confident. I'm cautiously optimistic. Our lawyers and others say our timetable is extremely aggressive," he said.
Still ahead are more negotiations with the Pension Benefit Guaranty Corp., the government's pension insurance agency, which must take over Delta's pilot pension program.
Delta also must resolve pay disputes with pilots and flight attendants at its Comair subsidiary. On Monday, Comair said it will impose wage cuts and work-rule changes on the regional airline's flight attendants beginning Nov. 15. The flight attendants have threatened to strike if the concessions are enforced.
Like Delta, Comair is trying to emerge from bankruptcy. The Cincinnati-based carrier, which mainly serves cities in the eastern United States, had earlier reached an agreement with its pilots and mechanics. But those deals were contingent on getting concessions from the attendants.
Labor costs were a big factor behind Delta's announcement in August that it was seeking proposals to replace a portion of the jet service being provided by Comair and other regional carriers. Delta is asking for bids to operate up to 143 jets for its Delta Connection service.
Comair has submitted bids alongside several other airlines, possibly including St. George-based SkyWest Inc. Bastian said Delta will announce the winners in about 30 days.
Bastian wouldn't say what might happen to Comair if it is not selected, but noted that if it is passed over, the airline would lose airplanes and jobs. He declined to say what the losses would mean, but noted that it would be "pretty hard to sell [Comair] if they don't have business."
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