Delta to cancel 60 plane orders with Boeing and Embraer

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Delta Air Lines plans to cancel orders for 60 new planes after company pilots last week voted down a new three-year labor contract, the company’s chief executive said Wednesday.

“Those orders will be canceled,” said Delta chief executive Richard Anderson in response to a question on a conference call on the US carrier’s second-quarter results.

Delta’s move affects 40 Boeing 737-900 planes and 20 Embraer E-190 aircraft worth an estimated $4 billion based on the list price of the planes.

The decision to cancel the jets comes as some financial analysts have warned that plans by airlines to boost seat capacity could push the airline profitability lower.

On Friday, Delta pilots rejected a three-year contract by nearly two-to-one due to unhappiness with a proposed profit-sharing plan.

Delta reported second-quarter earnings of $1.5 billion, up 85.4 percent from the year-ago period in results boosted by a huge drop in fuel costs.

However, Delta also projected that the ratio of revenue to each seat mile flown, a key industry benchmark, would drop 4.5-6.5 percent in the third quarter.

The drop comes as carriers contend with tough pressure on airplane ticket prices due to additional seat capacity.