Delta Air Lines seeking to expand global alliances, talking to other carriers

Delta talking to other carriers about alliances

ATLANTA — Delta Air Lines Inc., still smarting from its failed bid to lure Japan Airlines into a partnership, is talking to other carriers about expanding its global alliances, a senior executive said Tuesday without giving specifics.

President Ed Bastian told investors at the JP Morgan Aviation, Transportation & Defense Conference in New York that Delta still believes it can increase its international presence without JAL in its fold.

“While we were not the victor in the JAL sweepstakes, we are undeterred,” Bastian said.

New York is a key focus for Delta as it seeks to expand domestically and internationally. Delta has a deal with US Airways to swap takeoff and landing slots at LaGuardia Airport, and it is encouraging officials to upgrade the facilities at John F. Kennedy International Airport for its international flights.

Last month, Japan Airlines spurned the world’s biggest carrier and opted to keep its alliance with American Airlines. The Japanese carrier said it will strengthen its partnership with American. The two airlines are seeking government approval to work closer together to coordinate schedules on trans-Pacific flights, share revenue and carry each other’s passengers — all moves that can boost profits.

Separately, the US government said in February that Delta and US Airways can swap takeoff and landing slots at airports in New York and Washington, if they sell some of the slots to protect competition.

The two airlines said that if the order is implemented as proposed, they don’t expect the deal to go forward.

A slot is an interval of time during which an airline can takeoff or land its aircraft at an airport. Slots, especially at peak times of day and in busy corridors like the Northeast, are valuable to airlines.

US Airways agreed in August to transfer 125 operating slot pairs to Delta at LaGuardia Airport in New York. In exchange, Delta agreed to transfer 42 operating slot pairs to US Airways at Reagan National Airport in Washington.

Transportation Department approval requires the airlines to sell 14 pairs of slot interests at National and 20 at LaGuardia.

Also Monday, Delta said it lost $65 million in revenue because of the repeated winter storms in February, which forced it to cancel roughly 7,000 flights.

The airline provided the figures in a regulatory filing ahead of the investor conference in New York.

Other airlines also have reported large revenue hits due to the storms.

Delta, based in Atlanta, said in the filing that its liquidity at the end of March will be slightly lower than it previously expected.

At the same time, it said passenger unit revenue is up 16 percent in March year-over-year and corporate sales trends are improving.

Unit revenue is the average amount of revenue received by an airline per unit of capacity available for sale. Capacity is measured by multiplying the available seats an airline offers times the miles flown.

Delta’s system capacity at the end of the first quarter will be down 4 percent to 5 percent compared to a year ago.

Bastian said Delta’s goal is to reduce its net debt from $17 billion currently to around $10 billion by the end of 2012.

Delta shares rose 27 cents, or 2.2 percent, to close at $12.81.