Delta Air Lines disclosed that it expects to record a $2.7 billion to $3.3 billion charge for buyouts and early retirements of thousands of employees, which will cut the company’s workforce by about 20%.
The company expects to pay about $500 million to $600 million of the charge in cash this quarter to employees who take buyouts and early retirements.
Delta announced Tuesday that more than 17,000 employees had signed up for buyouts and early retirements, as the company reported a $5.7 billion loss for the quarter.
Under the programs, the airline is offering employees cash severance depending on years of service, up to six months of pay. It is also offering health care coverage for one year for those who take an “early out” buyout package, and two years for those who take early retirement, as well as flight benefits for both. Most of the departures will take effect Aug. 1.
Atlanta-based Delta disclosed the size of the expected charges in a Wednesday filing with the U.S. Securities and Exchange Commission for its second quarter financial results. The figures are an estimate, since the process is ongoing, including the time period for pilots to sign up for early retirements.
The company hopes the voluntary departures will reduce the need for involuntary furloughs or layoffs.
“I'm optimistic if we do have a furlough, it's going to be relatively minimal numbers."
- Delta CEO Ed Bastian
As a condition of accepting billions in federal relief funding through the CARES Act, Delta agreed to not furlough employees involuntarily until after Sept. 30.