Delta Airlines 2014 Annual Report Download - page 32

Pacific Strategy . As part of the Pacific strategy, we are realigning our Pacific fleet by removing less efficient B-747-400 aircraft and replacing
them with smaller gauge widebody aircraft we are redeploying from the transatlantic. The smaller gauge aircraft will help better match capacity with
demand in the Pacific and are expected to improve margin. Additionally, as noted above, we will be taking delivery of A350-900 aircraft beginning in
2017, which, when coupled with deliveries of A330-300 aircraft that we will receive over the next several years, will result in a 15-20% reduction in
seats per departure and generate a significant improvement in operating cost per seat.
We have also made a significant investment in developing Seattle as a hub and international gateway, which will provide for convenient access to
and from the Pacific. We expect to leverage our domestic network to feed traffic into Seattle and increase peak daily departures to 120 in 2015. As a
result, Seattle will allow us to offer one-stop service to 95% of our West Coast to Asia traffic flows.
Maintaining Cost Performance
As part of our ongoing efforts to maintain cost performance, we continue to be focused on keeping the rate of CASM-Ex growth at less than 2%
annually. Fleet restructuring is an important component of our cost initiatives and is focused on lowering unit costs while enhancing the customer
experience. We are restructuring our domestic fleet by replacing a significant portion of our 50-seat regional flying with more efficient and customer
preferred CRJ-900 and B-717-200 aircraft and replacing older, less cost effective B-757-200 aircraft with B-737-
900ER aircraft. During the year ended
December 31, 2014, we took delivery of 26 CRJ-900, 39 B-717-200 and 19 B-737-900ER aircraft. We are retiring a significant portion of the 50-seat
regional fleet that we lease as part of the fleet restructuring activities. We expect to continue to recognize restructuring charges, representing the
remaining obligations under the leases, as we retire the leased aircraft. Although many factors could change over the period of the 50-seat fleet
restructuring, we currently estimate that future charges will be between $50 million to $150 million. As a result of restructuring the fleet, we expect to
benefit from improved operational and fuel efficiency, customer service and reduced future maintenance cost that we will experience over the life of
the new aircraft.
SkyMiles Program
During the March 2014 quarter, we announced changes to the SkyMiles program. Effective January 1, 2015, the SkyMiles program was modified
from a model in which customers earn redeemable mileage credits based on distance traveled to a model based on ticket price. Customers earn
between five and 11 miles per dollar spent based on their SkyMiles status, and will continue to earn up to an additional two miles per dollar when
using their Delta SkyMiles Credit Card, for a total of up to 13 miles per dollar. The modified program will better reward customers who spend more
with Delta and give them improved mileage-earning opportunities. The SkyMiles program includes a new award redemption structure that improves
award seat availability at the lowest point redemption levels, offers one-way awards at half the price of round-
trip, provides new miles plus cash award
options, as well as makes significant improvements to delta.com and Delta reservations award shopping tools.
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