hey.. at least someone's reporting is for the most part accurate...and yes, they are stopping the retirememnt of the old execs...but i still think Gerry and the managers should take a higher percentage cut so that they match the highest paid captain...essentially "eating the same nasty soup" and hating the taste!
it gives the public a better idea of what we're dealing with...
DELTA CUTS DEEP
Domestic flights slashed along with pay, staff
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 09/23/05
One week into bankruptcy court proceedings, Delta Air Lines said it is moving to become a "smaller, more formidable" airline with more international reach but fewer seats in the air over the United States — and with fewer employees.
Delta said Thursday it will shed another 7,000 to 9,000 jobs as part of a new plan to cut $3 billion in annual costs and up to 20 percent of its domestic capacity by the end of 2007. The airline also is imposing pay cuts of 7 to 10 percent on most workers and paring benefits.
"We intend to move from being an unprofitable airline today to a profitable airline in just over two years," Gerald Grinstein, the Atlanta-based airline's chief executive, said in a memo to workers Thursday.
The job cuts will come over the next two years, and up to a quarter could hit Delta's Atlanta headquarters and hub, Delta finance chief Ed Bastian told a state legislative panel Thursday. Delta has about 25,500 employees based in Atlanta and about 52,000 overall, not including subsidiaries.
The announcements follow Delta's retreat last week into Chapter 11 bankruptcy court proceedings, after ongoing losses and sky-high fuel costs eroded its cash reserves. Chapter 11 enables a company to stay in business while renegotiating debts and cutting costs under a judge's supervision.
Grinstein said Delta aims to reverse its four-year, $10 billion losing streak by boosting revenues and slashing costs to bring them in line with discounters like AirTran Airways, as well as with old-line rivals that have already restructured in Chapter 11.
As the plan plays out, experts say, customers and competitors will see a smaller Delta domestically, with fewer seats to Florida and at its Cincinnati hub. Delta will achieve such cuts mainly by switching to smaller planes rather than eliminating destinations.
Meanwhile, it will boost flying to Europe, Latin America and the Caribbean, where there is less discount competition. Delta has one of the smallest international networks of the major carriers, but it hopes to get about a third of its revenues from overseas, up from 20 percent now.
Employees will see smaller paychecks and more expensive benefits, along with fewer colleagues. Some airport and other jobs may be outsourced to contractors, industry experts say.
"Our transformation plan will be sweeping and fast-paced; it must be if we are to survive and thrive in a changing environment as a strong company in control of its own destiny," Grinstein told workers.
He said the airline also must move "quickly and aggressively" to meet the financial targets and conditions of $2.05 billion in so-called debtor-in-possession financing Delta arranged to sustain its operations in Chapter 11.
The moves mark the fourth wave of austerity moves since the Sept. 11, 2001, terrorist hijackings took an industry downturn into a nose dive, especially for older airlines with high cost structures. Delta has previously shed about 23,000 jobs through attrition, early exit offers and layoffs. Late last year it negotiated pay cuts of about one-third with pilots and imposed 10 percent cuts on other workers.
Flight attendant Lisa Hunt, a nearly 20-year Delta veteran who lives in Fayetteville, said she's cutting household expenses but hopes to keep working for years. "I really love my job," she said. "It's not what it used to be, but it's still a great job to have."
Executives say prior turnaround moves were undercut by this year's dramatic increase in jet fuel prices, which are up about 90 percent.
"As distasteful as it is, it's clearly years overdue," aviation consultant Robert Mann said of the new plan.
JPMorgan analyst Jamie Baker said AirTran Airways, Delta's Atlanta rival, will benefit because Delta is cutting domestic capacity, including a 20 percent capacity cut on key Atlanta-to-Florida routes.
Of the $3 billion cost-cut target, about a third will come from pay and job cuts; a third from debt reduction and concessions from aircraft lessors and other players in Chapter 11 proceedings; and a third from changes in Delta's network. The cuts will be on top of $5 billion in annual cuts targeted in previous turnaround moves.
Delta said it will cut more than 80 jets from its current fleet by the end of 2006, reducing aircraft types from 11 to seven. Fewer aircraft types reduce training and maintenance costs.
Pay cuts for most "front-line" employees will range from 10 percent for senior flight attendants to 7 percent for mechanics, Delta said. The airline said the pay cuts, which take effect Nov. 1, won't affect employees making less than $25,000 a year.
Grinstein's pay will be cut 25 percent, while other top executives will take 15 percent cuts, Delta said.
Delta has already requested talks with its unionized pilots over new pay cuts. The airline said it wants $325 million in total annual savings from pilots, while cuts among other workers will save $605 million. Pilots are being asked for roughly 20 percent wage cuts, plus other concessions.
Delta also said it will freeze pension benefits at year's end. That means workers won't lose accrued benefits but won't build any more. The pilots' plan was frozen as part of last year's pay-cut deal, and it was replaced with a 401(k)-style plan.
Delta hasn't said if it will try to terminate its underfunded pension plans while in Chapter 11, which would save it billions in makeup payments and shift responsibility for retiree payments to the federal Pension Benefit Guaranty Corp. The airline has, however, indicated it will stop so-called supplemental pension payments to its best-paid retirees such as pilots and executives.
In Thursday's announcement, Delta also said it plans to cut benefits costs in other areas, such as raising employees' share for health benefits; cutting vacation, holiday and sick leave days; and charging employees and retirees $50 a year to keep their flight privileges.
The airline plans to enhance its profit-sharing program to enable "all Delta employees to share in future success from the first dollar of profitability." Under a previous program, employees didn't get profit sharing until pretax profits hit about $500 million.
