Delta Air Lines is a major U.S. airline headquartered in Atlanta, Georgia, operating a large domestic and international network that spans North America, South America, Europe, Asia, and the Caribbean. When non-stop flights begin in December 2006 to Dakar, Senegal (from where continuing flights will continue to Johannesburg, South Africa), Delta will be the only U.S. airline to operate flights to Africa.
Delta operates hubs at Atlanta, Cincinnati, New York-JFK, and Salt Lake City. Delta also has large operations in many other cities, including Boston, Fort Lauderdale, Los Angeles, New York-LaGuardia, Orlando, and Washington-Reagan. Delta is also the leading carrier in Florida. Its major international gateways are Atlanta, Cincinnati, and New York-JFK.
In terms of passengers carried (87 million in 2004), Delta is the second-largest airline in the world (behind American Airlines). In terms of total operating revenues, Delta is the fourth-largest airline in the world (behind Air France-KLM, American Airlines, and United Airlines) Effective June 29, 2006, Delta (including its wholly owned subsidiary, Comair, Inc.) will serve 240 domestic cities in all 50 U.S. states (the first airline to achieve this benchmark). The airline also serves Puerto Rico, and the U.S. Virgin Islands, in addition to 45 countries.
The company has its roots in Huff Daland Dusters, which was founded in 1924 in Macon, Georgia by several partners including Collett E. Woolman becoming the world's first aerial crop dusting company. Huff Daland moved to Monroe, Louisiana the following year. In 1928, Huff Daland Dusters was purchased by C.E. Woolman and renamed Delta Air Services after the Mississippi Delta, where its route connected Dallas, Texas to Jackson, Mississippi, via Shreveport, Louisiana and Monroe. By 1934, Delta Air began mail service from Charleston to Fort Worth, including Atlanta, Augusta and other stops in Georgia.
In 1941, Delta moved its headquarters from Monroe to Atlanta, Georgia, to center itself along its new route network that connected Chicago and New Orleans to Florida and Ohio which would later become a Delta hub. In the 1950s, Delta began flights from New Orleans to the Caribbean and Venezuela, becoming the number 2 U.S. carrier in the region after Pan Am and Braniff. On May 1, 1953, Delta merged with Chicago and Southern to expand routes in Midwest. In 1955 Delta introduced the "hub and spoke system" where flights are routed to a central point then sent out to other cities. By the early 1960s, Delta's route network stretched to the West Coast, and Dallas was emerging as its second hub city.
Delta was the launch operator of the DC-8, which began service in 1959, and the Convair CV-880 in 1960. The DC-8's graceful swept-wing design inspired Delta to come up with a new logo which incorporated a new red, white, and blue triangle logo (the "widget"). Just a few years later, Delta became the launch operator of the DC-9. By 1970, Delta was an all jet aircraft airline.
As early as 2004, in an effort to avoid bankruptcy, Delta had announced a restructuring of the company that included job cuts, as well as plans for expansion of Atlanta operations by some 100 new flights, making it a 'super-hub' and requiring the airline to spread its flight schedule more evenly across the day. Further, by mid-2004 the airline had announced it would be closing its fourth busiest hub (Dallas-Fort Worth International Airport), which it did on January 31, 2005. However, 2005 was a year of struggle for the airline, as evidenced by major overhauls in pricing and route systems, as well as financial deals considered by many in the industry and press as desparate.
On January 5, 2005, Delta introduced SimpliFares, a radical transformation of its fare structure, which cut its most expensive fares by as much as 50 percent nationwide and capped one-way domestic fares at $499 in coach class and $599 first class. However, due to continued high fuel costs, the company was forced to raise these fare caps by $100 in July, 2005, to $599 in coach class and $699 in first class. It also launched a system of "same-day confirmed" whereby for $25, a passenger is able to confirm a seat on a different flight instead of standing-by.
Also in 2005, Delta applied to serve a daily non-stop flight from Atlanta to Beijing, China starting in March, 2006, but rights were instead awarded to American Airlines operating from Chicago, and Continental Airlines out of Newark.
On August 15, 2005, in an SEC filing, Delta announced that it had finalized a deal to sell Delta Connection carrier Atlantic Southeast Airlines for $425 million in cash to SkyWest Airlines in an effort to obtain money to avoid bankruptcy. Analysts called the move a desperate one, estimating ASA's worth at around $700-$800 million — a price which SkyWest would not have been willing to pay.
On September 7, 2005, Delta announced that it would cut 26% of its flights at its Cincinnati hub and redeploy aircraft to its hubs in Atlanta and Salt Lake City. The move will ultimately eliminate up to 1,000 jobs in Cincinnati. In addition and in hopes of increasing profit yields, the airline announced further international expansion into Europe and Latin America.
On September 22, 2005, Delta announced the acceleration of restructuring activities, targeting an additional $3 billion per year in cost reductions by 2007. $970 million of this amount will come from debt relief, lease and facility savings, and previously commenced fleet modifications. Non-union workers' salaries will be reduced by a minimum of 9% across the board, with a 15% reduction for executive officers and a 25% pay cut for CEO Gerald Grinstein. Additionally, the company plans to lay off between 7,000 and 9,000 of its 52,000 employees.
As for its route network, Delta plans to alter its structure by reinforcing hub presence in Atlanta, Cincinnati, New York, and Salt Lake City, while at the same time increasing point-to-point routes, reducing domestic capacity by up to 20% while growing more profitable international route capacity up to 25%.
However, on February 24, 2006 Delta, along with Continental Airlines and FedEx, saw future operations to Venezuela severely affected by Venezuelan President Hugo Chavez's decision to restrict flights coming into that South American country from the United States. As of March 23, 2006, U.S. and Venezuelan aviation authorities were able to negotiate a solution to their dispute, likely ensuring that Delta's operations to Venezuela will not be curtailed in the future.
On March 7, 2006, Delta announced expanded service from its prominent hub at New York-JFK. In addition to the expansion of mainline service at the airport, Delta will partner with Mesa Air Group to provide regional flights throughout the northeast under the Delta Connection banner. At the same time the airline announced an expansion to a number of new cities from its Salt Lake City hub like Bellingham, WA and Victoria, British Columbia among others.
Based on all of these new initiatives, Delta projects a return to profitability by late 2007, based on a crude oil price model of $66 per barrel, in contrast to other bankrupt carriers' restructuring modeled on $55 per barrel.