Delta Air Lines plans to have a smaller workforce starting in August through early retirements and buyouts.
The airline has cut 85% of its flights and more than 41,000 of the company's 90,000 employees volunteered for temporary unpaid leave. But air travel is still down about 88% due to the impact of the coronavirus.
Delta CEO Ed Bastian told employees in a memo this week: "It will likely be two to three years before we see demand recovery on a large scale."
Atlanta-based Delta is offering cash severance and limited benefits to employees who agree to leave the company.
The amount of severance varies and depends on years of service, up to six months’ pay. The company is also offering healthcare coverage for one year for those who take an “early out” package and two years for those who take early retirement, as well as flight benefits for both.
Employees can sign up starting June 10 through July 13, with most departures expected to take effect Aug. 1.
Bastian wrote that Delta will have to be a smaller airline with fewer people, adding that "furloughs are a last resort, and it is our top priority to avoid them if at all possible."
As a condition of accepting federal airline stimulus funding through the CARES Act, Delta is barred from involuntary furloughs through Sept. 30. But many industry observers expect airlines will need to scale back their work forces considerably, and may take steps to do so starting in October if necessary.
“The only thing we can be sure of today is that the more people choose to depart voluntarily, the greater our chances for avoiding furloughs this fall,” Bastian wrote in the employee memo.
The company is also in discussions with its pilots union on an early retirement program for pilots.
Bastian wrote that “we simply don’t know” how small Delta will need to become.
Bastian noted that Latin American carrier LATAM, which Delta owns a 20% stake in, filed for bankruptcy protection this week. He said Delta remains committed to its partnership with LATAM, with which it signed a joint venture agreement earlier this month.
Some work previously handled by contractors has been brought back in house to be handled by Delta employees. Flight attendants are assembling snack kits for passengers. Delta employees are also handling new tasks like cleaning security checkpoint bins at Hartsfield-Jackson and sanitizing aircraft cabins.