Delta Air Offers Buyouts to Trim Jobs Amid 4% Capacity Cut

[usa1]

Anyone care to share more info on the early retirement offer at Delta? Thanks!

http://www.bloomberg.com/news/2011-05-06/delta-air-to-cut-capacity-4-early-retirement-to-trim-jobs.html?cmpid=yhoo

 

[Bob Owens]

Anyone care to share more info on the early retirement offer at Delta? Thanks!

http://www.bloomberg.com/news/2011-05-06/delta-air-to-cut-capacity-4-early-retirement-to-trim-jobs.html?cmpid=yhoo

The articles says that this is only open to 70% of the workforce, are the mechanics included in the offer?

 

[Kev3188]

The articles says that this is only open to 70% of the workforce, are the mechanics included in the offer?

AFAIK, yes.

 

[Bob Owens]

AFAIK, yes.

Delta must have a lot of young workers with less than 5 years.

The article says;

Workers in the U.S. with 10 years of service whose age and service total at least 55 years are eligible for the retirement offers while employees with five years of service can take a buyout

and;

About 55,000 employees, or 70 percent of the workforce, are eligible for the buyout and retirement program, said Keyra Johnson, a spokeswoman for Delta.

So if your age plus years add up to 55 you are eligible to retire, so a 40 year old with 15 years could retire and a 25 year old with 5 years could take the buyout. 30% of the workers there dont have 5 years?
Do NWA years count?

Delta has previously said it plans to retire 140 aircraft in the next 18 months, including some widebody planes used on international routes.

AA bought TWA in 2001, now all we have left pretty much is the employees. Looks like Deltas may be on the same path.

 

[Kev3188]

All years of service count, regardless of which carrier you started with. I'd have to go back and look, but I think you have to have a minimum of 5 years in to be eligible for either package?

As for 30% of the company having less than 5 years, I honestly don't know. It's certainly possible, I guess.

 

[Bob Owens]

All years of service count, regardless of which carrier you started with. I'd have to go back and look, but I think you have to have a minimum of 5 years in to be eligible for either package?

As for 30% of the company having less than 5 years, I honestly don't know. It's certainly possible, I guess.

I dont know, they have people on recall for over 5 years dont they? My guess is they are offering it to everyone except the pilots and mechanics. Those two groups could easily make up 30% of the workforce.

Reasoning for that is that both these groups require licenses and the rates at which people have sought out these licenses has dropped off dramatically. It takes several years to get the qualifications and that means that once they are gone simply raising wages will not immediately produce more of them. So if they let these workers go and then have the opportunity to expand there will not be anybody there to facilitate that expansion. There's also the issue of normal attrition, if they let these people go early will they be able to maintain current operations? Normally you see some skrinkage after a merger is done (hmmm, didnt mean it that way but the paralells are striking), but up until now it seemed that Delta was holding on to most of the workers it got from the NWA deal (blue pill?).

 

[Kev3188]

Pilots and AMT's are eligible (as are dispatchers, for that matter). Not sure how many from each group they'll allow to go, though...

 

[eolesen]

That's the first shoe....

DL made promises not to cut people as a result of the merger, and they've kept their word... If the buyouts don't cull the herd, I'd expect the other shoe to drop in a couple months.

The 30% could be made up of a couple of different groups...

** Another web forum has a guy claiming it is only for non-contract employees, however ALPA has worked with the company to participate. No word on the other union groups other than what Kev has added.

** Ready reserves, who cost DL nothing to keep around, yet can cut without any impact whatsoever since they're just part timers with no benefits...

** Employees not based in the US. I could see DL having about 2% of its workforce being based in Japan alone (not including crew). Maybe a total of 4-7% for all of their international locations?

It's possible they don't want to offer this in non-operational areas of management, since they've already cut/lost a lot of people there already...

Here's some more information on the offer:

Employees received an email this week about the voluntary buyout programs, which will include some medical benefits.

** The 55-Point Program will be available to those employees with 10 or more years of consecutive service, whose years of service and age add up to at least 55. They'll receive a minimum of 20 weeks pay for 20 years of service and up to 39 weeks for 40 or more years of service.

** The Early Out Program will be offered to those who do not qualify for the 55-Point program but would have five or more completed years of consecutive service as of Dec. 31, 2011, even if the participant departs before that date. Severance is two weeks per year of service up to 20 weeks.

 

[Kev3188]

A lot of us have been waiting for the other shoe to drop for awhile now...

Per our company website, pilots are definitely eligible-though again- they haven't said how many people from any given workgroup they're looking for.

Ready Reserves & International employees are ineligible.

 

[usa1]

That's the first shoe....

DL made promises not to cut people as a result of the merger, and they've kept their word... If the buyouts don't cull the herd, I'd expect the other shoe to drop in a couple months.

The 30% could be made up of a couple of different groups...

** Another web forum has a guy claiming it is only for non-contract employees, however ALPA has worked with the company to participate. No word on the other union groups other than what Kev has added.

** Ready reserves, who cost DL nothing to keep around, yet can cut without any impact whatsoever since they're just part timers with no benefits...

** Employees not based in the US. I could see DL having about 2% of its workforce being based in Japan alone (not including crew). Maybe a total of 4-7% for all of their international locations?

It's possible they don't want to offer this in non-operational areas of management, since they've already cut/lost a lot of people there already...

Here's some more information on the offer:

Thanks ... that's a start, hope to get more details. I'll be interested to see what the health-care offer is?

 

[Kev3188]

3 months paid, COBRA thereafter.

 

[RDU Jetblast]

3 months paid, COBRA thereafter.

I don't see the incentive unless you have something as profitable waiting on the outside. the unemployment rate is high. Any frontline employee would be lucky to find a job at half their current pay. I would stick it out if I were older than 40. Go back to college and get a degree and become current in something they might enjoy.

Am I missing something that might make a buyout attractive?

 

[aislehopper]

Am I missing something that might make a buyout attractive?

Another group that may want to go are those who may not be happy with the culture of the combined entity.

 

[Bob Owens]

I don't see the incentive unless you have something as profitable waiting on the outside. the unemployment rate is high. Any frontline employee would be lucky to find a job at half their current pay. I would stick it out if I were older than 40. Go back to college and get a degree and become current in something they might enjoy.

Half their pay? Really? I'm told AA just a hired a few guys who left Delta in JFK, their pay would be more than half and come within a dollar after two years. I would guess that any worker that leaves Delta would have little trouble finding work at another carrier such as JetBlue, AA or several other carriers that have not gone through a merger recently.

 

[WorldTraveler]

I'm not sure what DL's goal is for this round of buyouts but they have had "takes" over 4000 during the past decade.
DL has rarely not been able to meet their goal of headcount reductions which were a given when they announced they were going to reduce flying, which needs to be done esp. over the Atlantic where industry RASMs have been weak.
The sixty point early retirement plan was quite successful and was used several times; they then reduced the requirement to 55 (age plus YOS) and have used it once or twice.
The early out - non-retirement program is good for a lot of people who really can do as well if not better outside of the industry...
the strength of both packages is the travel benefits which are desirable to alot of people and are one of the few essentially no-cost items DL can use to help move people out and replace them when growth resumes with lower cost employees.
Given that there has not been a package on the PMDL side since before the merger, there is probably a built up amount of interest on that side and I would bet that there will be a fair number of interest among PMNW groups too.
DL also has a way of using the packages as a way to tap people on the shoulder who are in areas where DL might have to resort to workforce reductions... ie small station reductions or closures. The impact on int'l is minimal because most of DL's int'l stations (PMDL anyway) are heavily outsourced and foreign laws often provide for better severance packages.
The number of ready reserve employees will also likely make it unnecessary to resort to involuntary layoffs.

From a purely financial point of view, DL has no choice to but to cut headcount in order to keep CASM from rising, something they cannot afford to do, esp. as WN and other low fare carriers increase their presence in traditionally strong DL markets.

At the same, DL will demonstrate that its ability to manage costs during the downturns is far better than the rest of the network carriers and as such will likely come out of this downturn better positioned than its network peers. It has done it before and there is no reason to think it will be any different this time.