Pexels photo 1

Delta airlines ready to cut number of UK flights as Virgin buys big

Tuesday, July 19, 2016

plane in the sky
UK: Delta airlines has announced that, in the wake of the UK’s decision to leave the EU, it will reduce the number of flights it operates.
The announcement is an example of foreign companies withdrawing or reducing their investment following uncertainty after the result of the referendum was announced.
The result has led to the devaluation of the pound and the expectation that demand for transatlantic flights will drastically reduce over the coming months.
The news is in contrast to Virgin Atlantic’s deal to purchase 12 Airbus A350-1000 in a deal worth £3.4 billion.
Delta Airlines owns 49% percent of Virgin and highlights the difference in attitudes towards the UK from the two companies. Delta purchased their share in Virgin with the view to expanding its operations to and from the UK, those plans seemingly will be shelved until at least there is a stable relationship between the UK and the EU.
The new jets will be powered by Rolls-Royce engines with 8 being owned directly by the airline and the rest being used on a lease basis.
Virgin expects the remainder of the year to return positive results, as their customers tend to book early. The true test for them will come within the next year.
Virgin Atlantic had been expected to sign off on a deal to buy 6 Airbus A380s, but that has now been put on the back burner and is widely expected to be scrapped.
The EU referendum is a blow for both airlines and in particular for Delta. The Atlanta  airline had been keen on growing their UK business but in wake of the referendum they face a painful cut of 6% of their services between the US and the UK.
Delta released its latest earnings that show a 2.25 percent drop in second-quarter profits. This is not the only driver. The Pound falling against the Dollar has prevented Brits from making the trip to the states and the fear of European terror attacks is causing concern among American tourists, when thinking about travelling to the UK and Europe.