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Delta Will Cut Up to 9,000 Jobs

Posted on: Friday, 23 September 2005, 21:00 CDT

ATLANTA -- Delta Air Lines said Thursday it will cut up to 9,000 jobs, or 17 percent of the work force at its flagship service, and reduce pay and make changes to its route network to focus more on international flying as it moves swiftly to restructure its costs in bankruptcy.

Officials at Piedmont Triad International Airport havent heard anything about Delta jobs there, but the airline will be cutting an unknown number of flights from PTI at the end of the year, said Mickie Elmore, director of development for the airport.

We dont see it having a direct effect on the airport, he said. We naturally hate to see those flights go away, but we understand.

Delta flies about 31 daily trips in and out of PTI and, despite the bankruptcy, still plans to take more space in the airport, Elmore said.

More detailed talks between airport officials and the airline should take place within the next two weeks, said Henry Isaacson, chairman of the Piedmont Triad Airport Authority.

We wanted to give them a little chance to catch their breath, he said.

The corporate changes are part of the airlines effort to achieve an additional $3 billion in annual cost savings by the end of 2007. Thats on top of $5 billion in annual savings Delta had previously said it wanted to achieve by the end of 2006.

The companys chief executive, Gerald Grinstein, will take a 25 percent pay cut and all other executives will take a 15 percent pay cut.

The 7,000 to 9,000 job cuts will come from the 52,000 people employed at Deltas flagship airline and not at any of its affiliated airlines, spokeswoman Chris Kelly said. The job cuts are on top of roughly 24,000 that Delta has said it would shed since 2001, when the terrorist attacks sent the major airlines into a tailspin most of them have never recovered from.

Delta and its subsidiaries listed in regulatory filings 65,300 employees as of June 30, but that figure included recently sold feeder carrier Atlantic Southeast Airlines. Delta on Thursday revised the figure to 52,000 employees.

The new cuts come eight days after Delta filed for bankruptcy protection in New York. No. 4 U.S. carrier Northwest Airlines filed for Chapter 11 later the same day. On Wednesday, Northwest said it will lay off 1,400 flight attendants by January.

The only thing that surprised me is that they did it so quickly, Ray Neidl, an airline analyst with Calyon Securities in New York, said of the changes. It shows that theyre determined to turn this airline around.

Deltas Grinstein said the plan announced Thursday is designed to save Delta in the near term, so that it can compete and win in the long term. He said the effort will protect Delta from the threats posed by its competitors and make the company profitable in just over two years.

Among the plans highlights :

- Delta intends to realize $970 million in annual financial benefits in the bankruptcy case through savings such as debt relief, lease and facility savings and fleet modifications. The company has already rejected leases on 40 mainline aircraft, which it was not operating at the time of its Chapter 11 filing, and plans to reduce the size of its mainline operating fleet by an additional 80-plus aircraft by the end of 2006.

- Ongoing improvements to Deltas route network are intended to provide $1.1 billion in annual benefits. The effort includes reducing domestic mainline capacity by 15 percent to 20 percent. It also will increase international capacity by 25 percent in 2006 to pursue more profitable routes.

- Roughly $930 million in annual financial benefits are intended to be realized through reduced employment costs, employee productivity improvements and overhead reductions. This total represents annual savings of $325 million from Delta pilots and $605 million from the nonpilot work force, including management. The pilot reductions would have to be agreed to by the pilot union or imposed on the union in bankruptcy court.

Staff writer Michelle Jarboe contributed to this report.

Source: Greensboro News Record

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