Delta Halts Low-Fare Carrier’s Expansion

Delta Air Lines Inc. has temporarily stopped the music for its Song low-fare carrier, confirming Thursday that it has delayed expansion plans for the unit until a review of Delta’s operations is completed.

Gerald Grinstein, who took over as chief executive Jan. 1, said two weeks into the job that he and Jack Smith, a former General Motors Corp. chairman who is set to become Delta’s chairman in April, were studying the airline’s businesses and would decide by July whether to “pursue a major strategic shift.”

Primarily a North-South carrier on the Eastern seaboard, Song began flights from Los Angeles to Florida cities Tampa and Orlando in September and a month later added Fort Lauderdale as a destination.

Song was expected to add more cross-country routes out of New York but those plans are now on hold, a spokeswoman said Thursday.

Delta, which has lost $2.07 billion in the last two years, is seeking ways to lower expenses through options such as persuading pilots, the industry’s best paid, to accept salary cuts. Delta doesn’t provide separate results for Song, although it has said the carrier’s costs were lower.

Song, which accounts for about 2% of Delta’s 7,664 daily flights, in April began competing with discounters such as JetBlue Airways Corp. and AirTran Holdings Inc., which have expanded on the East Coast in the last few years. Delta has said it spent $65 million to introduce Song.

Shares of JetBlue and AirTran climbed Thursday on optimism that they’ll benefit if Delta scales back Song. Jamie Baker, a J.P. Morgan Securities Inc. analyst, said investors might be making a “mistake.”

The Wall Street Journal and the New York Times first reported that Grinstein had shelved the Song expansion put in place by his predecessor, Leo Mullin.

Delta shares fell 4 cents to $9.66 on the New York Stock Exchange.

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Times staff writer Jerry Hirsch contributed to this report. Bloomberg News was used in compiling it.