Delta posts loss, adds international bag fee
— -- Delta said it estimated the new fee — which other U.S. airlines don't now charge — would raise about $100 million annually. Checking one bag on Delta international flights will still be free.
British Airways charges passengers for checking a second bag on some international routes. But it wasn't known Tuesday whether major U.S. carriers, such as American Airlines and United Airlines, would match Delta's move on international luggage.
Delta said it generated $137 million in revenue last quarter from passenger fees that began last year. Delta and most other U.S. carriers now charge passengers for checking bags on domestic flights, and such "ancillary" income is becoming a larger part of most airlines' revenue pie.
Atlanta-based Delta, which merged with Northwest Airlines in October to become the USA's biggest carrier, also reported a $794 million combined net loss for the first quarter, or 96 cents a share, including $684 million of losses on fuel-hedging deals made when fuel prices were higher. Delta also said it would ground its entire fleet of 14 Boeing 747 freighter jets by year's end because of their age and fuel inefficiency.
In the fourth quarter of this year, Delta also plans to shrink its international flying capacity by 10% year-over-year because of the particularly sharp falloff in demand for international flights. But it provided no details on which destinations or routes would be affected.
"We're on the front lines of the recession," United CEO Glenn Tilton said.
United's first-quarter passenger revenue plummeted nearly 24% year-over-year, while Delta's was down 18%. United's cargo revenue fell 43%, while Delta's fell 44%.
Meanwhile, Tilton said United now generates an average of $14 per passenger in ancillary revenue in fees for checked bags, meals and other costs not included in the airfare.
As of Monday, all United flights on full-size jets were accepting passenger credit cards for these fees, and all domestic United flights on full-size jets were cashless, meaning they accept only credit cards.
Delta shares closed at $8.11, up 19%. United shares closed at $6.63, up 13%.
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