UPDATED: 8:45 p.m. March 18, 2008
Delta to offer severance payouts to 30,000 employees
Company says goal is to cut 2,000 jobs


The Atlanta Journal-Constitution
Published on: 03/18/08

ATLANTA — In a move that soon could be copied by other carriers, Delta Air Lines announced plans to cut 2,000 jobs and ground dozens of jets this year as it struggles with a possible recession and mounting fuel costs.

The planned cuts include 1,300 front-line jobs such as flight attendants and airport agents through early retirement and voluntary severance. The carrier also targeted 700 administrative and management jobs for elimination -- through involuntary reductions if necessary. The planned job cuts total about 4 percent of the 50,000 employees in Delta's mainline operations.

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Delta employees disembark from an employees Delta shuttle Tuesday at the lower curb check in at the South terminal. Delta Air Lines will cut about 2,000 jobs through voluntary measures.
 
JOHN SPINK/AJC
Delta employees make their way out of a building at the world headquarters in this Feb. 2008 photo.
 
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The airline also would delay pay raises scheduled to take effect this summer.

Delta said the job cuts and other measures, announced shortly before an investors conference in New York, are aimed at cutting annual operating costs by $550 million, $150 million more than a previous cost-cutting plan Delta announced in December.

Delta President Ed Bastian emphasized that the airline will do what is needed to offset jet fuel costs now expected to be about $900 million higher than was projected earlier this year.

"We're reducing capacity. We're going to get the costs out of the system," Bastian said in an interview. "Unfortunately, there's a need to reduce the work force by about 2,000 employees."

The moves come amid growing signs of recession and the rising cost of jet fuel -- Delta's biggest expense -- which jumped to an all-time record last week. The spot price of jet fuel rose 6 cents Tuesday to $3.30 a gallon, roughly double its level a year ago. Each penny's rise per gallon boosts Delta's annual fuel bill by about $25 million.

The job cuts are expected to come mostly in the late summer and fall. It's the first time Delta has announced mass job cuts since the Atlanta-based airline entered bankruptcy in the fall of 2005 and said it would eliminate up to 8,000 employees. With Tuesday's announcement, Delta has had five rounds of work force reductions totaling up to 38,000 jobs since the Sept. 11, 2001, terrorist attacks.

Unlike most of those earlier rounds, Delta expects most of the latest cuts to come through voluntary programs, hiring freezes and attrition. About 30,000 of its employees will be eligible for one of the programs, the company said. Delta "will not have any involuntary furloughs of frontline employees," Bastian said.

But if Delta doesn't meet its goal to reduce 700 administrative jobs -- about 10 percent of that employee group -- "there will be involuntary furloughs" among administrative employees, Bastian said.

The company doesn't expect job cuts to affect its pilots.

Delta is the first major airline to announce plans to trim its work force. Travel demand is still relatively strong and the carrier could have a profitable year.

Still, Bastian said, the capacity decreases are needed to offset softening domestic demand and fuel prices tied to crude oil at $100-plus per barrel. "I'm confident at these fuel levels that it's the right plan," he said.

Some Delta employees said they may welcome the voluntary programs, which offer early retirement and several months of severance pay and travel privileges for up to several years, in some cases.

"I'm going to look at it. I think people are waiting for something decent, something that's beneficial to them," said Tim Lenon, 48, a baggage handler with 11 years at the airline. "We have a lot of people with 30 or 40 years' experience."

"It's something to think about," said David Hutchings, a customer service agent at the Atlanta airport. "It could be a good thing."

Employees whose age and years of service add up to 60 will be able to retire with some transitional medical benefits, lifetime travel privileges and one week of severance pay for each year of service, up to 39 weeks. Employees must have up to 10 years of service to be eligible, the company said.

Under the "early out" voluntary severance program, employees will get two weeks of severance pay per year of service, up to 20 weeks. That program, which also includes some temporary medical coverage and travel privileges, is open to frontline employees with at least 10 years of employment at Delta and one year of service for administrative and management employees.

Delta said employees may sign up for the voluntary job reduction programs from April 15 to May 12.

Delta's management "wants to show they're proactive and will not just continue to ride out the storm, but really do something," said Robert Morus, a Delta pilot for more than two decades. "From that standpoint, it will help the stock price."

Indeed, Wall Street reacted favorably to Delta's announcement. Delta's shares rose 9 percent Tuesday to $10.09, and most other airlines' shares rose as well on hints that they may quickly follow Delta's lead. Executives at Continental, United and Northwest all indicated that they are considering shrinking operations.

Calyon Securities analyst Ray Neidl said Delta's action was smart. "It's a necessary move," he said.

Delta said it plans to cut domestic capacity by 10 percent this year -- double its target announced late last year -- and to trim its international growth plans slightly by eliminating certain flights to some destinations and shedding some seasonal routes. Through such measures, Delta said it expects to park up to 20 mainline jets and up to 25 regional jets.

Comair, Delta's regional subsidiary, announced in January that it would trim flight hours up to 15 percent this year and eliminate 14 aircraft as a result of Delta's earlier shrinkage. "We're continuing to assess any additional impact," said Comair spokeswoman Kate Marx.

-- Staff writers David Markiewicz and Jim Tharpe contributed to this report.

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Comments

By WSKNWA

May 10, 2008 6:59 PM | Link to this

Hey Shirley

Would you have voted for a contract that would get rid of your job? Or get rid of Seniority?
That's what was before the NWA mechs in 2007.

And as far as ATL goes, it was the most successful repair station for th DC-9 that EVER WAS. No one from MSP trained anyone.
The statistic are still around. More work came out of NWA ATL than any part of any airline ever, or from any scab shop ever.
SO talk about something you are familiar with. Like ex NWA people do. We are trying to warn you. Remember: " I am NOT here to facilitate any merger of Delta to Northwest or ANY other airline" - The PROMISE that came with Andersons arrival.
Current Promise: There will be no major layoffs because of the Delta - NWA merger".
Checks in the mail, Shirley.

By shirley

Mar 28, 2008 8:43 PM | Link to this

Oh yeah "Marta."
What a lie you just told. NW. did not get rid of ahy mechanics. YOU DID it to your selves when the decision was made for the NW Guys from MSP were to come here and train the Atl. Mechanics. You voted your selves right out of a job..Dumb and Stupid decision, and you blame someone else. You know the truth, Dummies....

By Rick

Mar 23, 2008 9:42 PM | Link to this

$3900 per month??
Can anyone at DL please tell me what a ramp agent with 37yrs at age 55 would make in retirement?
Just curious.

By Charles c. Dixon

Mar 23, 2008 7:44 PM | Link to this

What Delta needs to do is lay off some of those double dippers at Delta TOC(technical operation center)

And what is a double dipper? A retired Delta employee drawing a salary from the company.

Example: John Doe draws a pension of 3900.00 per month plus a company salary of 32.00 per hour.

The person that gets laid off is the employee with just the company's salary trying to take care of a family and possibly buying a home. That's the real sad part of this whole thing.

By Possum

Mar 20, 2008 11:05 PM | Link to this

MARTA,
I appreciate your help keeping my family and I safe over the years.
We both agree going with AMFA (in hindsight) was a mistake. You helped build this company and should still be here reaping the rewards (what there are). I still don't have much faith in Swissport.
For years in MEM all we heard from mechanics was that the agents,I.A.M. ramp (knuckledraggers I heard) and gate, were "holding us back" & "holding us down".
I guess part of your wish came true.

By MARTA

Mar 20, 2008 4:33 PM | Link to this

Possum....Yes I did vote for sorry AMFA. Big mistake I made, and many other mechanics. With AMFA and King Richard in command, NWA(SCABAIR)ate AMFA and us Mechanics in no time. From 9000 mechanics aprox. in 2001 to around 900 aprox.in 2008. 800 of them being scabs.

By Possum

Mar 20, 2008 11:09 AM | Link to this

MARTA,
did you vote to go with AMFA?

By MARTA

Mar 19, 2008 5:56 PM | Link to this

FFlyerWorld.....I was with Northwest, refered now as SCABAIR for 23 yrs. They got rid of us Mechanics back in Aug of 2002. I have seen it all from King Richard. If you beleive yourself,I want some of that weed your smoking. Don't fly, ride MARTA its SMARTAR.

By FFlyerWorld

Mar 19, 2008 5:06 PM | Link to this

MARTA,

Are you aware that Anderson at Delta gave up all potential financial windfall in a possible merger with NWA? Perhaps if NWA leadership is as smart ad Delta's - you guys will be offered an early out soon too. Although I doubt NWA management will do that for its people - most likely furloughs and layoffs with very little if any compensation. Let's stop blaming everyone else for the problems that all are faced with in today's economic climate and focus on how we can make this a better place - not only to work, but to live and play!

By MARTA

Mar 19, 2008 4:51 PM | Link to this

History repeats itself. King Richard has done this before. Aircraft maintenance will be gone soon. Delta Aircraft Techs start looking for a new job...NOW. Read the following article, dated in the year 2002. Northwest airlines executives rake it in while workers lose jobs.

The two top executives at Northwest Airlines added a combined $2.5 million to their compensation packages last year, according to the companyıs recent proxy statement. The revelations come at a time when Northwest has announced plans to ax another 4,900 jobs.

CEO Richard Anderson received a $250,000 bonus and President Douglass Steenland got a $200,000 bonus. However, the major portion of their compensation increase was realized through stock options that cannot be immediately sold and originally required the companyıs stock share price to be between $11.50 and $56.28. But the company lowered the minimum target price to $8.30, making it easier for the executives to cash in. NWA stock is presently fluctuating in the $7 per share range.

Anderson saw his total compensation increase last year by 126.3 percent, from $1,238,305 to $2,802,788. Steenlandıs compensation rose by 79.3 percent, from $1,242.545 to $2,228,203.

Northwest union officials bemoaned the fact that the compensation packages make it more difficult to impose concessions on workers. ıItıs going to be extremely difficult for any union to explain to our membership how they can say labor is the problem while they take care of themselves,ı said Bobby DePace, president of District 143 of the International Association of Machinists, which represents ground workers and customer service employees at Northwest.

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