Delta Air Lines, which cut its first quarter guidance this week, said that it will reduce its summer capacity. United Air Lines, meanwhile, said it will retire 21 aircraft early.
“We had a bias to fly whatever we could as we head into summer,” Delta President Glen Hauenstein said Tuesday at a JP Morgan investor conference. "We’ve tempered that down to fly what needs to be flown.
“The schedules to the summer are overbuilt,” Hauenstein added. “Expect that to be reduced.”
Hauenstein did not specify the extent of the capacity cuts. Delta’s summer schedule will be out March 22.
The next speaker at the conference, United Airlines CEO Scott Kirby, said his airline will also reduce capacity with the early retirement of 21 aircraft. The carrier will cut in markets where it has high government traffic and in Canadian markets, and it will slash redeye utilization flying.
“From industry level, I expect you will see modest supply changes in the short term,” Kirby said. “By the time we get to August, every analyst will be writing about capacity cuts.”
Kirby added that some of these capacity cuts will come in markets where they would have come anyway. “Where you see people cutting is the places they’ve lost money,” and where they are not the number one carrier, Kirby said. He noted that Chicago and Denver are places where United is number one.
The stock market fell again on Tuesday. Airline shares all fell, with American down 8%, Delta down 7% and United down 2%.
Delta CEO Ed Bastian said bad weather, fear of flying after accidents and weaker sentiment led it to cut its first quarter revenue estimate.
The Southeast United States, including Delta’s Atlanta hub, experienced harsh winter weather in early January, resulting in a revenue loss of about $100 million. Then came the crash of American Airlines Flight 5342 at Washington Reagan National Airport on Jan. 29 and Delta Airlines Flight 4819 in Toronto on Feb. 17.
Referring to the American crash, Bastian said, “The deadliest aircraft incident in almost 25 years caused a lot of shock among our consumers. A whole generation didn’t realize these things could happen.
“We saw a pretty immediate stall in both corporate bookings and consumer confidence in air travel started to wane a little bit,” Bastian said.
Then came economic concerns: “There was something going on with economic sentiment, something going on with consumer confidence,” Bastian said.
“To make matters worse, we were positioned for close-in bookings,” he said. “In February and March, we were behind." Subsequently, he said, Delta reduced fares for close-in seats. “We’re now in a place where in April, we feel like we’re in a pretty good spot,” he said.
However, Bastian said declining oil costs could save Delta $1 billion this year.
Airlines remain “a safe place to invest,” he said. "We are continuing to generate very significant gains on the customer side.”
This story originally appeared on Forbes.
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