Delta will raise prices if oil continues to rebound

Delta Airlines to cut back on expensesDelta Airlines to cut back on expenses

Delta Air Lines is trimming expenses as oil prices continue to rise.

The company plans to cut back on new plane purchases and will ax plans to add new flights in the second half of 2016.

Those changes are likely to cause a rise in price for travelers.

The airline said it is trimming its planned capacity growth to below 2% in the second half of this year.

The company will also defer four widebody jets from 2018 to 2019 or 2020.

The company says slowing its growth “allows Delta to address current fuel and revenue headwinds while positioning the company to achieve its long-term goals.”

The company says it is focused on making sure airfares don’t continue to fall. The company says it could be the first major airline to see a fare increase in 2016.

Trimming capacity growth will help the airline achieve those higher airfares, Delta Chief Financial Officer Paul Jacobson said during an investor meeting on Tuesday.

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Delta’s fares were down about 5% in the first quarter compared to a year earlier, according to its earnings report.

While fuel costs are still well below a year prior, they are up more than 60% from last years low point.

With fuel prices low US airlines were in expansion mode as they took advantage of the lower fuel prices.

Expansion has increased capacity which led to lower fares as customers had more options when flying.

The airline first hinted during an investor call in April that it could cut costs and raise fares in 2016.

Written by Jeff Springer

Jeff Springer

Jeff Spring is the Finance & Markets Editor at He's currently spending his days backpacking across Europe. While he may be living outside of the United States, he stays connected to American financial markets and M&A's more than is probably healthy for any single person. His love of a good book and a Bloomberg terminal can't be understated.