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Plunging oil prices to offset Delta sales decline

Plunging oil prices to offset Delta sales decline

Lower fuel costs are offsetting sluggish sales from declining air travel caused by the global slump, a senior executive at Delta Air Lines said Thursday.
Delta President Edward Bastian said global sales for the overall airline industry were likely to fall 10 percent this year from the previous year, but the recent slide in oil prices will deliver $5 billion in savings for Delta.
Revenue could fall as much as 20 percent before wiping out those cost benefits, he said. Oil prices have fallen to about $36 a barrel this week after peaking at nearly $150 in July.
Bastian said Delta's acquisition of Northwest Airlines in October would also help the combined company _ the world's largest airline _ to withstand the global slump.
He and other other company officials denied that projected savings and other benefits from the acquisition may be endangered by the slowdown although flight routes were being adjusted or canceled in response to sliding demand.
"We are well prepared both through our cost structure and merger benefits ... as well as the fuel savings to be able to withstand the challenges and actually come out in a better spot," Bastian told reporters at a Tokyo hotel.
Delta officials said the Atlanta-based airline can hope to reap about $2 billion savings in 2012 from the combination of the two airlines.
"The merger is even more important in the face of the financial circumstances," said Delta Chief Executive Richard Anderson.


Updated : 2021-01-19 02:39 GMT+08:00