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Friday November 5, 4:44 PM EST
MIAMI -- Delta Air Lines (DAL), detailing cost cuts as it tries to reverse three years of massive losses, said it would eliminate up to 2,000 aircraft maintenance jobs and up to 3,100 customer service jobs over the next several months.
Suffering from near-record oil prices and ongoing fare wars, the airline industry is mounting another round of cost-cutting. Earlier this week, AMR Corp.'s (AMR) American Airlines, the biggest U.S. airline, announced it may have to make more job cuts, and UAL Corp.'s (UALAQ) United Airlines, the second biggest, Thursday said it wanted to make another round of wage cuts and dump its pension plans to help save cash as it nears two years in bankruptcy.
The Delta job cuts are part of up to 7,000 the company announced would be cut under its new turnaround plan unveiled in September. Delta hopes to save $350 million from the job reductions, as well as by imposing a 10% wage cut and increased health-care and other benefit costs for more than 50,000 U.S. employees.
Other elements of the plan include abandoning Delta's Dallas hub, and restructuring the route system and giant Atlanta hub.
Delta narrowly avoided filing for bankruptcy-court protection last week as high costs and anemic business conditions continue to drain the company. Delta has lost more than $6 billion since 2001 and has been pushing its union pilots and its creditors for relief. The pilots union leadership last week agreed to a tentative deal that, for now, puts off bankruptcy.
Pilots, the only major union group at the third-largest U.S. airline, this week are voting on the concessionary contract that is aimed at saving Delta $1 billion annually. Pilot ratification of the 32.5% pay cut, which is expected when voting ends Nov. 11, would bring Delta's pilots down from their industry- high wages to the middle of the pack among counterparts at other major airlines.
While pilots union and management negotiators spent more than 15 months trying to hammer out a five-year contract, nonunion workers at Delta have had a series of cuts imposed by the company, including a pay freeze, increased benefit cuts, a new scheduling system that amounted to a pay cut, and a switch to a lower- cost, and in some cases lower-benefits, retirement program. The pilot wage cuts would take effect next month and the nonunion workers' cuts in January.
In recent weeks, administrative workers were told they would see 1,500 to 1, 800 job losses. Workers on Thursday and Friday were told details of the latest cuts. Delta officials held conference calls Friday to explain the latest moves.
Delta TechOps, the maintenance department, which has about 10,000 workers around the country, will see between 1,600 to 2,000 jobs cut, Delta officials told workers. The customer service department, which includes some airport workers, will lose 2,900 to 3,100. Delta has offered employees some incentives that would make some of the job cuts voluntary. The company has shed about 16, 000 jobs since 2001.
Under pressure to cut costs, Delta officials have in recent months discussed ways to move some work handled by its massive TechOps operation to outside companies in order to improve efficiency. Company officials often boast of their maintenance operations, which is nonunion and, they say, among the industry's most efficient. It generates some income with in-source work, doing maintenance for other airlines, including Air France and Hawaiian Airlines.
-By Evan Perez, The Wall Street Journal; 305-341-1253
Dow Jones Newswires
11-05-04 1644ET
© 2004 Dow Jones & Company, Inc. All Rights Reserved.
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