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Delta announces new low-fare offshoot

By MIKE COOPER

ATLANTA, Nov. 20 (UPI) -- Delta Air Lines said Wednesday it will launch a new subsidiary next year to compete directly with low-fare airlines that have been eroding the company's market share.

The new wholly owned subsidiary, as yet unnamed, will replace Florida-based Delta Express and initially focus on routes between the northeast and Florida, the company said.

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"Low-fare carriers represent a real threat to Delta -- substantially more than that from other hub-and-spoke competition," Delta Chairman Leo Mullin said.

"Low-fare carriers have been making significant inroads, particularly during this period of extreme financial duress for the industry," he said.

John Selvaggio, an executive at US Airways and Midway Airlines before he joined Delta in 1998, will become president of the new subsidiary.

He said it will operate 36 Boeing 757 jets "with all-coach configurations and 199 seats per aircraft by the end of 2003."

Delta said the new subsidiary would have its own look and separate workforce, offering one-way fares ranging from $79 to $299. All fares will be one-way and non-refundable and won't require a Saturday night stay, the airline said.

"Delta intends, through the actions announced today, to meet the low-fare carriers head on -- first to halt their progress and then to regain competitive share," Mullin said.

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"The goals are an enhanced competitive position for our company and higher profitability."

Delta said that the new airline would initially focus on Boston, New York, Orlando, Fla., and Fort Lauderdale, Fla., before expanding to other destinations.

Delta announced last month it plans to up to 8,000 jobs during the next six months to reduce operating costs. It cut about 10,000 jobs last year and has deferred deliveries of aircraft through 2004.

Delta is the world's second-largest carrier in terms of passengers carried, with 5,781 flights daily to 428 destinations in 77 countries. It reported a third-quarter net loss of $326 million.

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