Retooling - Competive Market Strategy

2 Airlines to Cut Back Plans for Increases in Capacity

Delta Air Lines and Southwest Airlines will scale back seating-capacity plans for next year on mounting concern over high oil prices and a weakening United States economy. Delta said yesterday that it would cut domestic capacity as much as 5 percent in 2008 and projected that higher fuel costs would wipe out its operating profit this quarter. Southwest, the largest discount carrier, still plans to increase overall capacity in 2008, but it reduced its projected growth for a third time, to a range of 4 to 5 percent.

COMMENT: Southwest is also hurt by higher fuel prices, but far less than competitors, giving the carrier a distinct advantage in an industry where beating the other guy often seems more important than actually doing well.