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Delta to record charge of up to $3.3 billion for buyouts, early retirements

FILE - In this April 21, 2020, file photo, a lone person works at the Delta airlines check-in desk at McCarran International airport in Las Vegas. Delta Air Lines says it lost $5.7 billion in the second quarter, as the coronavirus pandemic caused air travel to collapse. The company reported financial results on Tuesday, July 14.  A hoped-for travel recovery that began slowly in mid-April has been delayed by a resurgence in infections, especially in the South and West. (AP Photo/John Locher, File)
FILE - In this April 21, 2020, file photo, a lone person works at the Delta airlines check-in desk at McCarran International airport in Las Vegas. Delta Air Lines says it lost $5.7 billion in the second quarter, as the coronavirus pandemic caused air travel to collapse. The company reported financial results on Tuesday, July 14. A hoped-for travel recovery that began slowly in mid-April has been delayed by a resurgence in infections, especially in the South and West. (AP Photo/John Locher, File)

Credit: John Locher

Credit: John Locher

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.

ExploreDelta posts loss, 17,000 employees opt for buyouts, early retirements

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.

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