Delta acquired the freighter fleet as a result of its October merger with Northwest Airlines.
Combined cargo revenue plunged 44 percent, or $146 million, to $185 million in the first quarter of 2009 compared to the year-earlier period, the Atlanta-based airline reported. It also attributed less revenue to a drop in fuel surcharges, as fuel prices moderated, and price-cutting.
The 747-200s are no longer profitable to operate at today's volumes given their age and inefficiency, Delta said.
Northwest used the freighters on the transpacific trade lane. It was the only major U.S. passenger airline to operate a dedicated freighter fleet.
Last year, Northwest Cargo eliminated freighter service to a couple Asian cities and retired an older 747 cargo plane to cope with skyrocketing jet fuel prices. Prior to the merger it already had planned to park its three most fuel-guzzling planes, and spokesman Anthony Black said only seven freighters are active.
The planes will operate through the end of the year, barring a further drop in demand, to honor customer commitments, and give the carrier time to rearrange operations and service into specific markets. The early notice also gives employees time to find jobs elsewhere within the Delta system or make other arrangements, he said.
Delta has no plans to acquire or lease any other type of cargo planes, Black said. It will continue to offer cargo service using passenger aircraft.
'Delta brings an extensive amount of international aircraft when combined with Northwest and provides a significant amount of belly capacity on six continents,' he said.
For example, Delta in the coming months is adding three flights between Narita Airport in Tokyo and Salt Lake City, Atlanta and New York. New service is also scheduled for Sydney, Australia, and destinations in Africa.
Oversize freight, however, requires the upper deck capacity of all-cargo planes.
Overall, Delta said it lost $693 million in the quarter, almost all of it due to miscalculating the direction of oil prices and paying more on futures contracts than current market prices. Another $101 million in special charges for merger expenses and voluntary retirement incentives put the total net loss at $794 million. Excluding $684 million in fuel hedges and special items, Delta broke even.
Delta's operating revenue grew 40 percent to $6.7 billion in the quarter as a result of the additional Northwest sales, but passenger revenue between the two airlines declined 18 percent, or $1.2 billion, as customers traveled less due to the economic crisis.
The airline said it achieved $100 million in cost savings from its merger during the quarter and estimates $500 million in savings for the year.
In response to the difficult business environment, the company also will institute as of July 1 a $50 fee to check a second bag, which is expected to generate $100 million in additional revenue.
It previously announced that it will reduce international capacity by 10 percent to cities where passenger traffic is down, beginning in September.
And it intends to accelerate fleet integration, technology and loyalty programs as much as possible to produce further savings.
Alaska Airlines taps new markets
Alaska Airlines is shifting capacity to markets where it sees higher demand. It is adding daily non-stop flights between Seattle and Houston, and Seattle and Atlanta, beginning Sept. 23 and Oct. 23, respectively.
It is also adding flights between Oakland and Hawaii, but cutting back flights to Mexico.
The moves do not affect Alaska Airlines' plans to shrink capacity by 6 percent this year.
The airline's cargo division does a lot of business shipping fresh seafood from the Pacific Northwest to other parts of the United States.
Atlas makes 1st quarter profit
Atlas Air Worldwide Holdings Inc., parent company of all-cargo airlines Atlas Air and Polar Air Cargo, reported record first quarter income of $23.4 million on revenue of $244.5 million, compared to a net loss of $5.3 million during the first quarter of 2008.
Pre-tax earnings for the three months ended March 31 were $38.5 million versus a loss of $9.8 million a year ago.
Atlas attributed the improved results to the start of a turnkey leasing arrangement for an express delivery firm that began in late 2008. The company is making more profit on its 747-400 freighters hauling cargo on the express carrier's network than it previously did when the planes were operating on scheduled service for multiple customers and assumed direct responsibility for operating costs.
Atlas said it achieved the record earnings despite a 14.3 percent reduction in charter revenue flying cargo for the U.S. military. Flying levels are expected to increase throughout the second quarter of 2009.
Atlas cut costs and excess capacity by retiring aging 747-200s, as most airlines with such aircraft have done.
'While global air freight traffic remains weak, it appears to be showing signs of bottoming. Capacity reductions, particularly the retirement of older-generation freighter aircraft, are accelerating, which will mitigate the impact of reduced demand. Given these reductions, and the delays in the deliveries of newer-generation freighters, any improvement in demand could have an early and meaningful impact on AAWW,' Chief Executive Officer William J. Flynn said.
Results included a $10 million fee for early termination of a contract for two 747-400 freighters operated in the express network beyond the core six aircraft providing the service and a $2.7 million gain on the sale of an aircraft and retired engines, Atlas said.
Ogiermann named TIACA chairman
The International Air Cargo Association has elected as its chairman Ulrich Ogiermann, president and chief executive officer of Cargolux Airlines International.
He replaces Jack Boison, retired vice president of cargo for Continental Airlines, who completed his two-year term as TIACA chairman. Ogiermann recently served as TIACA vice chairman.
Ogiermann said his goal as chairman is to give TIACA a stronger voice on pressing industry topics, develop closer cooperation with other trade organizations to raise the profile of air cargo, and increase the level of dialogue with shippers and freight forwarders about the future of air cargo transportation needs.
TIACA also named Michael Steen, chief marketing officer of Atlas Air Worldwide Holdings, to a two-year term as vice chairman.
