Delta Connections to Drop 35 Aircraft, Comair Sale Postponed

Even as Delta decided it will not sell Comair until its merger plans are clearer, Delta is cutting its regional fleet by 35, including 14 Bombardier CRJ 200s at Comair, as part of plans to cut domestic capacity by five percent this year. Fuel costs are forcing a move to larger equipment such as the 14 CRJ...

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Even as Delta decided it will not sell Comair until its merger plans are clearer, Delta is cutting its regional fleet by 35, including 14 Bombardier CRJ 200s at Comair, as part of plans to cut domestic capacity by five percent this year. Fuel costs are forcing a move to larger equipment such as the 14 CRJ 900s Comair began flying in September. Comair’s fleet will be 114 by year’s end when the number of 50 seaters will drop to 86 as eight leases expire and six are grounded awaiting changes in fuel prices and/or increasing demand. Comair Spokesperson Kate Modolo said the airline hoped necessary staff cuts can be addressed through attrition, although the airline is also looking at other ways of reducing costs, although they may not forestall layoffs..
In addition to the 35 RJs, Delta is also cutting 10 mainline aircraft from its fleet. While ExpressJet would not comment on the impact of the capacity cutback, SkyWest, which flies for Delta as SkyWest and Atlantic Southeast airlines, said it will amount to between one and two percent of its system revenue in 2008. The Comair actions comes only weeks after Delta’s newly formed service from upstate New York and New England, provided by Big Sky, ceased on January 7. Related Story
The news was transmitted to Comair employees in a letter from newly installed President John Selvaggio, who succeeded Don Bornhorst in October when he moved to head the Delta Connection program for Delta. Selvaggio urged employees to do their “best thinking” to make the airline more efficient. The move drops Cincinnati-Baton Rouge, which will now be connected through Atlanta, as well as flight reductions to Philadelphia, Richmond and Pittsburgh.
Comair also flies Bombardier CRJ 700s and 900s as part of its 130-aircraft fleet. This could mean its ancillary businesses – primarily maintenance and repair – will take on a larger role in the survival of the company. To date, few regionals have delved into the MRO business, and those that have, such as Express Jet and Comair, are trying to make up for a downturn in fortunes wrought by their major partners.
With 6,300 employees, Comair operates 697 flights a day to 88 cities in the United States and Canada. Comair serves Delta’s major hubs in Atlanta (18 daily departures) and Cincinnati (205). The airline also has a concentrated focus in the strategically important Northeast markets of New York’s John F. Kennedy International Airport (59), LaGuardia Airport (42), Washington, D.C.’s National Airport (17) and Boston’s Logan International Airport (34). Related Story www.aviationtoday.com/ran/topstories/15869.html
The spin off of the Delta Connection carrier has been rumored since before Delta emerged from bankruptcy last year and speculation rose as it emerged it would not be long before it put the wholly owned subsidiary on the market. However, late last year Delta began exploring merger possibilities saying consolidation was inevitable. Currently, it is reviewing a possible merger with United or Northwest. Both have major nearby hubs that would threaten Cincinnati in such a merger. The newspaper reported that Delta is also talking to JP Morgan Chase about a Comair sale.
A Delta merger would likely have profound effects in the region, wrote the Cincinnati Enquirer, quoting analysts that any merger would lead to a reduction in Cincinnati’s status as Delta’s second largest hub. Calyon Securities Analyst Ray Neidl told the newspaper Comair was "an afterthought.”
Others pointed to the growing uncertainty politically, indicating Republicans would more readily allow such mergers. However, Neidl said that won’t matter if an economic slump makes consolidation more palatable regardless of party power.