Delta Air to cut Florida flights, JetBlue shares up

Old Feb 24, 06, 2:52 pm
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Delta Air to cut Florida flights, JetBlue shares up

Delta Air to cut Florida flights, JetBlue shares up
Fri Feb 24, 2006 3:37 PM ET

NEW YORK, Feb 24 (Reuters) - Bankrupt Delta Air Lines (DALRQ.PK: Quote, Profile, Research) plans to slash flights on many routes where its Song unit competes with JetBlue Airways Corp. (JBLU.O: Quote, Profile, Research), news that boosted JetBlue shares by over 6 percent on Friday.

The reduced competition on routes between New York City and Florida is likely to mean higher fares for summer travel and higher revenue for JetBlue, which recently posted its first quarterly loss since 2002.

Delta, which filed for bankruptcy protection in September, announced the following month that it planned to fold Song in May, about three years after it began flying. But it had kept rivals guessing about what that would mean for capacity.

The No. 3 U.S. airline did not immediately return a phone call seeking comment on the flight cutbacks, which were first divulged by a Wall Street analyst and confirmed by a JetBlue executive.

JetBlue has made little secret of its struggle to raise ticket prices amid stiff competition from Song and from Continental Airlines Inc. (CAL.N: Quote, Profile, Research), which has also added seats between the New York area and Florida.

The Delta capacity cuts, effective this summer, are of about 13 flights a day, or 25 percent, according to brokerage JP Morgan, which raised its rating on JetBlue shares to "neutral" from "underweight."

JetBlue, which has forecasted a loss for 2006, said the move would give it a boost.

"It's always good to see some rationality taking place," said David Ulmer, vice president of route and schedule planning. "This is certainly less capacity than we would have been assuming, though about what we hoped for."

In addition to the Florida reductions, Delta is slightly reducing flights to Los Angeles and Seattle, he said.

Ulmer said he agreed with JP Morgan analyst Jamie Baker that the Delta change could mean more revenue than forecast starting in May and a full-year profit instead of a loss for JetBlue.

JetBlue shares were up 69 cents, or 6.3 percent, at $11.78 -- a three-week high -- in late afternoon Nasdaq trading.
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