Following the recent warning by British Airways chief Willie Walsh, Delta Air Lines CEO Richard Anderson and President Edward H. Bastian issued a warning to all the airline's employees today in a memo.

To: Delta Colleagues Worldwide

From: Richard Anderson and Ed Bastian

Subject: Responding To A Worsening Global Economy

The worsening global economy continues to place additional pressure on the airline industry. In just the few months since we last announced capacity reductions, revenues have weakened, particularly in international markets. Once again, we must move quickly to adjust our capacity and stay in front of demand changes.

This morning at an investor conference in New York, we will announce plans to reduce international capacity an additional 10% beginning in September. These reductions will be targeted to areas where we’ve seen the most revenue weakness – the Atlantic and Pacific networks. Trans-Atlantic capacity this winter will be down 11 – 13% and trans-Pacific down 12 – 14% compared to winter 2008. To achieve these capacity changes, we will exit low performing markets, down-gauge certain routes, adjust frequencies, and move some markets to seasonal service.

We remain focused on our goal to build a diversified, profitable worldwide network. To this end, even as we reduce our Atlantic and Pacific capacity, our Latin America capacity will be up slightly in the fourth quarter, as we take advantage of targeted growth opportunities through new routes and increased frequencies.

These reductions are in addition to the December announcement to reduce systemwide 2009 capacity by 6 - 8% year over year. As a result of the voluntary programs just concluded, nearly 2,100 of our colleagues will be voluntarily leaving over then next several months. While these voluntary reductions met our overall target, there are certain positions and geographic locations where we fell short of achieving the goals of the voluntary programs. With the additional capacity reductions noted above, we again must reassess our staffing needs. As in the past, voluntary programs are always our first consideration to adjust staffing needs.

Our merger provides the silver lining to these turbulent economic times as we begin to see tangible evidence of the benefits of our integration and understand how the merger positions Delta ahead of our competitors. Above all, your focus on executing the Flight Plan and providing superior customer service is our most prized attribute.

We will continue to make decisions that are in the long-term interest of employees, customers, shareholders and the communities we serve. Remaining focused on our 2009 Flight Plan will be key to our success. This will require teamwork from all divisions and departments working toward this common goal. Thank you for the incredible work you do for our customers every day. Together, we are building a stronger Delta.

A Northwest Airlines Boeing 747-400, registration N676NW performing flight NW2 from Manila, Philippines, to Tokyo Narita, Japan, with 408 passengers and 14 crew, was in a holding pattern near Chiba, 40nm south of Narita, about 30 minutes before landing with seatbelt signs turned on, when the airplane encountered severe turbulence and suddenly dropped from its assigned altitude of 15000 feet.

Image courtesy Lin Y.C.

A number of passengers, who had not fastened their seatbelts, were thrown out of their seats and hit the ceiling.

The crew reported about 2-3 injuries via radio, but did not declare emergency. The landing 30 minutes later at 12:19 local (03:19 GMT) was safe.

A total of 43 passengers were injured in the upset and were brought to hospitals. Initially reported two serious injuries turned out less severe. However, Japanese officials reported later, that one passenger received a serious injury (neck fracture).

Report by AVHerald

Delta Air Lines today reported financial results for the quarter and year ended Dec. 31, 2008.

Delta’s 2008 net loss was $503 million, or $1.08 per diluted share. When all charges are added Delta reported a net loss for 2008 of $8.9 billion, or $19.08 per diluted share.

Total revenues for the 4th quarter ending December 31, 2008, stood at $7.768 billion. $6.657 billion from passengers, $285 million from cargo, and $826 million from other sources.

A sectoral break-up of passenger revenue :


Key points for the 4th quarter include:

• Delta’s net loss for the December 2008 quarter was $340 million, or $0.50 per diluted share, excluding special items described below, and the impact of out-of-period fuel hedges. Results include $0.12 per diluted share from the negative non-cash impact of purchase accounting.
• Delta would have reported a $167 million net profit excluding special items in the December 2008 quarter, if fuel had been purchased at market prices.
• Delta’s reported net loss for the December 2008 quarter was $1.4 billion, including an over $900 million charge related to broad-based employee equity awards, and a $91 million loss on out-of-period fuel hedges.
• Delta completed its merger with Northwest on Oct. 29, 2008, creating the world’s largest airline.
• As of December 31, 2008, Delta had $6.1 billion in total liquidity and cash collateral posted with hedge counterparties.

Sectoral comparison of revenues 4th quarter 2007 vs. 2008.


Comparing 4th Quarter 2007 vs. 2008 combined revenues of Northwest and Delta, key points include

• Passenger revenue is down 1% to $6.657 billion due to a capacity decrease of 4%;
• Cargo revenue is down a whopping 24%, to $285 million, primarily due to reductions of Northwest freighter capacity;
• Other revenue is up 17%, to $826 million, thanks to the increases in baggage fees;
• Passenger performance measured in Revenue Passenger Miles or RPKs is down 2.7%;
• Capacity measured in Available Seat Miles or ASKs is down 3.8%;
• Passenger load factor is up 0.8% to 80.6%.
  

Year on Year, 2008 vs. 2007, Delta reports some improved performance.

• Passenger performance measured in Revenue Passenger Miles or RPKs is up 1.1%;
• Capacity measured in Available Seat Miles or ASKs is up 0.4%;
• Passenger load factor is up 0.4% to 82.4%.
  

Merger with Northwest
Delta completed its merger with Northwest during the fourth quarter, creating the world’s largest airline, and expects the merger to generate $500 million in synergies in 2009 and $2 billion in annual run-rate synergies by 2012.

Key points include:

• Delta placed its code on over 90% of Northwest routes, creating thousands of additional connecting opportunities for its customers;
• Delta extended its exclusive co-brand credit card partnership with American Express through 2015, which provided the company over $1 billion in immediate liquidity and is expected to provide an additional $1 billion in contract enhancements over the next two years;
• Delta and Northwest pilots, represented by the Air Line Pilots Association, achieved a single seniority list for the combined group. More than 25 percent of Delta’s total workforce has now resolved seniority integration, including pilots, flight dispatchers, meteorologists, aircraft maintenance technicians and other TechOps employees;
• The National Mediation Board ruled that Delta and Northwest now constitute a single transportation system for representation purposes under the Railway Labor Act. This is an important milestone toward resolving representation issues, which will allow alignment of pay, benefits and work rules for all employees of the new Delta;
• Elite members of both airlines’ loyalty programs gained immediate complimentary upgrade reciprocity;
  
• Delta completed the re-branding of approximately 50 of the airports in which Northwest operates and began a program to paint all Northwest mainline aircraft in the Delta livery by the end of 2010.

2008 Highlights
In addition to completing its merger with Northwest Airlines, other key points in 2008 include:

• Investing throughout the year in its employees through almost $500 million in pension and other retirement program contributions for Delta and Northwest employees, $56 million in combined Shared Reward and Incentive Program payments, pay raises and merger-related equity awards issued in 2008;
• Investing in new technology and process re-engineering, resulting in a reduction of mishandled bags at Delta and Northwest by 20% and 30%, respectively, year-over-year in the December quarter;
• Launching its joint venture with Air France, further strengthening the SkyTeam alliance and filling a key position in Delta’s portfolio by connecting its international gateways in Atlanta and New York to one of the world’s premier business airports at London-Heathrow;
• Receiving antitrust immunity for six-way alliance activities in trans-Atlantic markets for SkyTeam members Air France, Alitalia, CSA Czech Airlines, Delta, KLM Royal Dutch Airlines and Northwest Airlines, enabling the carriers to offer customers more choice in flight schedules, travel times, services and fares;
• Implementing an expanded marketing alliance with Alaska Air Group, allowing the companies to offer customers more departures along the West Coast than any U.S. airline and the enhanced ability to connect passengers to Delta’s growing global route system;
• Continuing its international expansion to unique destinations and announcing new service from Los Angeles to Sydney, Australia to begin in July 2009, making Delta the only U.S. carrier to serve six continents;
• Taking delivery of two new B777-LR aircraft to support Delta’s international expansion and five B737-700 aircraft that allow the addition of service into airports requiring high-performance aircraft such as in Tegucigalpa, Honduras;
• Providing SkyMiles members with more ways to redeem their miles by initiating a “Pay with Miles” program in partnership with American Express, expanding access to Medallion® Marketplace, growing the SkyMiles online auction program, and enhancing the Award Travel search calendar on delta.com;
• Announcing plans to add new flat bed seats on Boeing 767-400 aircraft to offer customers the comfort of a 180-degree full flat bed on every Delta flight between the United States and London’s Heathrow Airport by the summer of 2009;
• Joining with Aircell® to announce that Delta customers traveling throughout the continental United States will experience the convenience of broadband Wi-Fi on board Delta’s domestic fleet of more than 330 mainline aircraft by the summer of 2009;
• Earning the prestigious 2008 Green Cross for Safety Medal from The National Safety Council, which recognizes organizations and their leaders for outstanding achievements in safety and health, community service and responsible citizenship.

2009 Guidance
2009 is going to continue to heap misery on the airline. System capacity is going to further decrease by 6% to 8% with domestic capacity cuts (10% to 12%) exceeding international services (3% to 5%). Passenger revenue is expected to further decline by 4%.

Read the full release of results here.

"Ladies and gentlemen, from the flight deck, ....... we advise you to always keep your seat belt fastened when seated, even when the 'fasten seat beat' sign is switched off"

How many times have we heard this advice during our flights ?

How frequently do we follow this advice ? The road warriors, and frequent fliers will probably say they do, but most of us do not.

Just as most of the 285 passengers of a Northwest Airlines Airbus A330-300, flight NW022 from Tokyo Narita, Japan to Honolulu, Hawaii, USA on January 22, 2009. The aircraft experienced severe turbulence for about 20 seconds while en-route near the Midway Islands.

One flight attendant received serious injuries, three passengers minor injuries. The flight attendant suffered serious head and neck injuries and was delivered to a hospital in Honolulu after the flight crew elected to continue and land safely. Two passengers with injuries, one to the hip, the other with neck and arm injuries, were also delivered to a Honolulu hospital, a third passenger was treated at the airport.

In the din of geese and a water landing, most of us missed this incident, one that occurs with far more frequency than bird strikes, and unlike bird strikes, this is something, we passengers can protect ourselves against.

One of the worst incidences of Clear Air Turbulence occurred on December 28, 1997. A Boeing 747-100 performing United Airlines flight UA826, and flying the same route as NW022, from Tokyo, Narita to Honolulu. Two hours into the flight, at 31,000 feet, the plane received reports of severe clear-air turbulence in the area and the seat belt sign was turned on, but before passengers could fully react, the aircraft suddenly dropped around 100 feet, seriously injuring many passengers and causing damage to the aircraft. The plane turned around and landed safely back in Tokyo, but was not put back in service. One passenger died of her injuries after landing in Tokyo. (Read NTSB press release of the incident).

Do you fasten your seat belt for the duration of the flight ? Share your thoughts via a comment.

Nathan Hurst at The Detroit News has written a good article on how Detroit Metropolitan Airport is fast loosing ground as the United States' gateway to Asia.

The airport is facing a slew of delayed introductions, reduction in frequencies, and in some cases outright cancellations of flights to a variety of Asian cities.

Detroit is the home of the automotive industry, one of the most depressed sectors globally, thanks to a slowing economy. Northwest's acquisition by Delta is only adding to the gloom.

Read the article.

Delta Air Lines plans to commence nonstop flights between Detroit Metro Airport and Rome Leonardo da Vinci-Fiumicino Airport from June 4, 2009 (subject to government approvals), using Delta's subsidiary Northwest.

This service will be in addition to Delta’s existing nonstop daily service between Rome and Hartsfield-Jackson Atlanta International Airport and twice daily nonstop from New York’s John F. Kennedy-JFK International Airport.

Northwest will operate the service in cooperation with Northwest’s joint venture partner, KLM Royal Dutch Airlines, using an Airbus A330-300 aircraft with a two class configuration. 34 seats in business class and 264 seats in economy.

The plane is equipped with World Business Class lie-flat seats featuring a privacy canopy, 60 inches of space between seats, and personal laptop computer power, and an on-demand in-flight entertainment with a wide selection of movies, games and on-board shopping in both classes.

NW50 departs Detroit at 19:45 and arrives Rome 11:00 the next day.
NW49 departs Rome at 13:00 and arrive Detroit 17:50 the same day.
(All times local)

To celebrate the new flight between Detroit and Rome, Delta is offering a one-way special fare of $699 from Detroit to Rome (based on a round-trip purchase) for travel through July 3, 2009. For full details and restrictions of this special offer visit the Delta website.

Delta Air Lines is taking another step in aligning and combining its frequent flier program with recently acquired, Northwest Airlines' WorldPerks program: It will let SkyMiles members earn elite status by flying a certain number of segments.

Delta announced elite and reward changes to both the Delta SkyMiles® and Northwest WorldPerks® programs to better align member benefits.

Beginning in 2009, the programs will offer segment qualification, currently a WorldPerks benefit, to allow members to reach elite status by flying a designated number of flight segments on either Delta or Northwest operated flights.

Additionally, SkyMiles and WorldPerks members will continue to earn a minimum of 500 Elite Qualifying Miles and base miles per flight, making Delta the only major airline to maintain this minimum for all customers.

Jeff Robertson, Delta’s vice president of Loyalty Programs said :

“Delta’s merger with Northwest creates a unique opportunity to build the world’s premier loyalty program for our customers, including providing access to more frequent flyer destinations around the world and adding new benefits,”.

“Delta’s 2009 loyalty programs will distinguish themselves from the industry with the return of segment qualification for Delta SkyMiles members, the availability of complimentary upgrades on both airlines for SkyMiles and WorldPerks members, and valuable Elite Threshold Rewards.”

Qualification requirements for Elite status in 2009 will be as follows:

Level	2009 Qualification Requirements
Silver	25,000 Elite Qualifying Miles or 30 Qualification Segments
Gold	50,000 Elite Qualifying Miles or 60 Qualification Segments
Platinum	75,000 Elite Qualifying Miles or 100 Qualification Segments

As usual, elite status enables members to receive additional program benefits, including complimentary upgrades, mileage bonuses, priority boarding and preferred seating.

SkyMiles and WorldPerks elite members now have the ability to receive complimentary upgrades on both airlines.

SkyMiles members will qualify for Medallion® Threshold Rewards when they surpass Platinum Medallion status. As members reach designated thresholds (to be published in early 2009), they will earn additional bonus miles and/or other exclusive benefits or gifts. Northwest WorldPerks members will continue to enjoy similar Elite Extra Perks program benefits when they surpass the Platinum qualification requirements.

In an effort to closely align the two loyalty programs’ benefits, Northwest WorldPerks will introduce three-tiered award availability and SkyMiles and WorldPerks members will have the ability to transfer miles between their respective accounts in early 2009.

Delta plans to merge both programs to create the world’s premier loyalty program in late 2009. More information on these and other SkyMiles benefits is available at delta.com/skymiles. Details on the Northwest WorldPerks program are available at nwa.com/worldperks.

While airlines have seen one of their biggest expenses, fuel, come down in price, they are still struggling to find demand as the world's major economies contract, and tis the season of industry consolidation.

British Airways on Tuesday said it's holding merger talks with Australian national carrier and fellow OneWorld alliance partner, Qantas Airways, in a deal that could combine two of the world's best-known international carriers.

British Airways, in a brief statement, said

In response to recent media speculation, British Airways Plc confirms that it is exploring a potential merger with Qantas Airways Limited via a dual-listed company structure.

The discussions between British Airways and Iberia are continuing.

There is no guarantee that any transaction will be forthcoming and a further announcement will be made in due course, if appropriate.

British Airways shares shot up 12.1% in London. Qantas shares ended 4.3% lower in Sydney.
Iberia shares added 5.3% in Madrid.

British Airway possessed a 25% stake in the early 1990s which it sold in 2004. The British Airways talks with Iberia have languished because of Iberia's concerns about the U.K. airline's pension liabilities.

British Airways has been a very busy airline lately. In addition to the Qantas and Iberia negotiations, it is seeking antitrust immunity, from U.S. and European regulators, on its proposed partnership with American Airlines for which it is seeking. A proposal vehemently opposed by arch rival Virgin Atlantic.

Virgin has a presence in Australia in the form of low cost carrier, Virgin Blue. It will be interesting to see how the rivalry will carry over down under.

Like in the United States, Australia limits foreign ownership of domestic carriers. But the BBC was reporting that that may change:

It [the merger statement] follows indications from the Australian government earlier in the day that it may be prepared to relax the rules on foreign ownership.

Under current Australian law, Qantas must be at least 51% Australian-owned.

Any individual foreign airline can only own up to 25% of it and only a total of 35% may be owned by foreign airlines.

Transport Minister Anthony Albanese proposed earlier on Tuesday that the rules be changed so that while 51% must still be Australian-owned, the remaining 49% may be owned by a single foreign airline.

The Australian government recently released a key industry blueprint that would cap foreign ownership at 49% in a bid to keep Singapore Airlines out of the lucrative U.S-to-Australia route.

The possible BA-Qantas link-up occurs as the industry consolidates. Delta has recently merged with Northwest, and on Monday, Ryanair Holdings launched a fresh offer for fellow Irish carrier Aer Lingus, which was rejected by the Aer Lingus board.

The Air France-KLM combine have shown the aviation industry how to combine functions while maintaining separate brands.

Customers can expect ‘business as usual’ with no immediate changes in operations

Delta Air Lines, Inc. (NYSE: DAL) announced, it and Northwest Airlines, Inc. merged, creating a premier global airline with service to nearly all of the world’s major travel markets.

The new airline, called Delta and headquartered in Atlanta, will begin its first day as a combined company with a commitment to delivering excellent service to customers in 66 countries and more than 375 worldwide cities – more than any other airline; with a dedicated base of approximately 75,000 worldwide employees; and with a best-in-class cost structure and strong liquidity balance that better positions the company to adapt to the weakening global economy.

“The airline industry faces a very difficult economic environment around the world and this merger gives Delta increased flexibility to adapt to the economic challenges ahead,” said Delta CEO Richard Anderson. “With much of the work to bring our airlines together well under way, the new Delta will be at the front of the pack in achieving the benefits of consolidation and is well positioned to navigate the tough waters ahead in a difficult economy.”

With the completion of the merger, Northwest Airlines is now a wholly owned subsidiary of Delta. Customers should continue to check-in and do business directly with the airline operating their flight just as they did before the merger. Delta will continue operation of the airlines’ separate Web sites, www.delta.com and www.nwa.com, as well as the two airlines’ reservations systems and loyalty programs.

The companies will be integrated through a thoughtful process with customer benefits rolled out over the next 12-24 months, including:

• The addition of Delta’s code to nearly all of the Northwest system by the end of 2008, creating thousands of additional connecting opportunities.
• Immediate complimentary upgrade reciprocity for elite members of both airlines’ loyalty programs, with airport lounge reciprocity continuing as usual.
• The launch of a fully consolidated worldwide flight schedule in advance of summer 2009;
• The introduction of elements of Delta’s brand throughout the Northwest system beginning in spring 2009, including Delta’s popular Richard Tyler designer uniforms, Delta’s livery, “signature cocktails,” enhanced in-flight entertainment and other onboard amenities.
• The consolidation of the Delta and Northwest loyalty programs, ultimately including the ability to combine miles from SkyMiles and WorldPerks accounts at a one-to-one ratio.
• The full integration of Delta and Northwest Web sites, kiosks, and customer-facing technology to ensure a consistent worldwide travel experience.

Delta has already invested significant resources to ensure a seamless transition for customers, including receiving clearance from the Federal Aviation Administration (FAA) of the airline’s plan to achieve a Single Operating Certificate over the next 14-16 months; adding extra staffing and technology at check-in counters and kiosks to provide added customer assistance beginning today; and posting complete merger information at www.delta.com and www.nwa.com to provide customers added assistance.

Employees share in success of combined company with equity stake, platform for future growth

As a result of the merger, employees will share in the success of the new company through an expanded ownership share in the combined company. In the coming days, Delta will distribute an equity stake to substantially all U.S.-based employees with international employees participating through cash payments in lieu of stock.

"Ensuring our employees are able to share in the benefits of the merger from the beginning is a prime example of the Delta Difference," Anderson said. "By sharing ownership with Delta’s people, we are not only recognizing the critical role employees will play in successfully integrating two customer-focused companies, we are also making good on a longstanding commitment that our employees will share in the success of the company."

Delta also has completed other key steps to ensure that employees benefit from the merger and are protected as the two companies’ workforces are combined. Specifically, Delta:

• Completed an unprecedented agreement with the Delta and Northwest units of the Air Line Pilots Association, Intl. (ALPA) on a joint contract that unifies both pilot groups under one pilot working agreement effective tomorrow. Additionally, the two pilot groups have agreed to a collaborative process that will achieve a combined seniority list;
• Committed that no frontline employees will be involuntarily furloughed as a result of the merger and that no hubs will be closed; and
• Implemented a seniority protection policy that ensures that frontline employees of both airlines will be provided seniority protection through a fair-and-equitable process.

Financial footing strengthened, providing increased flexibility to adapt to challenging global economic conditions

The closing of the Delta-Northwest merger brings together two of the industry’s most financially secure airlines to produce a best-in-class cost structure and an industry-leading balance sheet. The transaction is expected to generate $2 billion or more in annual revenue and cost synergies from more effective aircraft utilization, a more comprehensive and diversified route system, and cost synergies from reduced overhead and improved operational efficiency. The company expects to incur one-time cash costs not exceeding $600 million to integrate the two airlines.

As approved by both companies’ stockholders earlier this year, Northwest stockholders will receive 1.25 Delta shares for each Northwest share they own. Based on Delta’s closing stock price on Oct. 29, 2008, this exchange ratio is the equivalent of $9.99 per Northwest common share.

“In today’s economic climate, this merger makes even more sense because we can capture $2 billion in annual synergies and build the foundation for profitable growth through improved revenues, a best-in-class cost structure and a strong liquidity position,” said Edward Bastian, Delta’s president and chief financial officer, and the new CEO and president of NWA. “As we have proven, this is a different type of merger for the industry thanks to the complementary nature of the two airlines and the caliber of the people who will make this the most successful merger in airline history,” Bastian continued.

Delta closed the merger after receiving notice from the United States Department of Justice (DOJ) that it would not challenge the merger after reviewing its competitive impact. Earlier this year, the merger also received clearance from the European Commission.

Delta today also announced the members of its new Board of Directors, effective immediately. Delta Chairman of the Board Daniel Carp remains chairman while Northwest Chairman Roy Bostock becomes vice chairman. Other directors will include seven from Delta’s Board – Richard Anderson, John S. Brinzo, Eugene I. Davis, David R. Goode, Paula Rosput Reynolds, Kenneth C. Rogers, and Kenneth B. Woodrow, and four from Northwest’s Board – John M. Engler, Mickey P. Foret, Rodney E. Slater and former Northwest CEO Douglas Steenland. Delta had previously announced the structure of its new Board during the merger announcement last spring.

With its acquisition of Northwest Airlines, Delta Air Lines is now the world’s largest airline, and also becomes the only US airline offering a full global network.