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Delta's cuts to be broad and deep

Thousands of jobs will vanish, routes will shrink and employees' pay will fall. Customers will feel the pain, too.

By STEVE HUETTEL
Published September 23, 2005

Delta Air Lines will eliminate up to 9,000 jobs, cut pay for remaining employees and slash domestic flying as much as 20 percent during its bankruptcy reorganization.

The plan outlined on Thursday includes pain for most everyone with a stake in the nation's third-largest airline.

Customers will have fewer choices of U.S. flights and find themselves squeezed into smaller planes on some routes. Aircraft leasing companies have been forced to take back 40 airplanes and the airline will return at least 80 by the end of next year.

Delta workers take the biggest hit. Between 7,000 and 9,000 jobs - as much as 17 percent of the work force - will be cut by the end of 2007. Most employees who hang on will see their pay reduced between 7 and 10 percent starting Nov. 1.

"Delta will move quickly and decisively to do what is necessary to beat our competitors and meet our financial commitments," chief executive Jerry Grinstein wrote in a memo to employees. "Our transformation will be sweeping and fast-paced; it must be if we are to survive and thrive in a changing environment."

The broad-brush plan didn't identify cities targeted for job cuts or reductions in flights.

Delta is a major player at Tampa International Airport, where it flies about 20 percent of passengers. It ranks No. 2 behind discounter Southwest Airlines but is the leader among business travelers, with first-class cabins, international connections and an airport club.

The first flight reductions from Tampa showed up in a winter schedule released last weekend. Delta cut lightly traveled routes flown by small-jet affiliates to Louisville, Ky.; Greensboro, N.C.; and Columbia, S.C., starting Dec. 1.

Also cut were two of 11 daily flights to the airline's Atlanta hub and one to Cincinnati. Delta's discount brand, Song, added three flights to New York City, airport officials said.

Even small changes make a big difference to frequent business fliers such as Bill Rich of Valrico in Hillsborough County. On Dec. 1, Delta will replace three late night flights from Atlanta to Tampa with a single flight.

That means travelers trying to return to the Tampa Bay area through Delta's major hub after a full work day on the road will be competing for a much smaller number of seats.

"I'm used to getting home late," said Rich, an executive with a pharmaceutical company. "I may fly home from the West Coast on Continental or spend the night there and come home the next day (on Delta)."

It's unlikely Delta will drastically reduce flights in Tampa, which the airline counts among a handful of key, nonhub "focus cities."

But this year, Delta closed a maintenance hangar at Tampa International and moved about 300 highly paid mechanic jobs to Atlanta. The airline employs about 800 workers in Tampa, more than half at a reservations center near the airport.

Delta filed for bankruptcy Sept. 14 after piling up about $10-billion in losses since early 2001. Like other traditional carriers, Delta fell victim to high operating costs and declining fares as discount airlines spread into more markets.

The plan released Thursday is designed to produce $3-billion in annual cost cuts and additional revenue by the end of 2007. That's on top of $5-billion a year the airline's earlier restructuring plan is supposed to achieve when 2006 ends.

"We intend to move from being an unprofitable airline today to being a profitable airline in just over two years," Grinstein wrote employees.

Delta said the new money will come from three areas:

Bankruptcy court savings. That includes $970-million from renegotiating debt and canceling leases on facilities and aircraft.

Revenue and network improvements. About $1.1-billion should come from reducing the number of aircraft types Delta flies, reducing domestic flying 15 to 20 percent and expanding higher-fare international service by 25 percent, the airline says. Delta also plans more "point-to-point" flights between cities without stopping at its hubs.

Reduced employment costs. The job cuts, reductions in pay and benefits and additional productivity will generate $930-million annually, Delta says. Grinstein said he will take a 25 percent pay cut and other managers will take 15 percent cuts.

Delta has cut 17,500 jobs since mid 2001. Last fall, pilots agreed to cut their salaries by one-third and the airline imposed a 10 percent pay cut for nonunion workers.

Pilot Fred Kopec of St. Petersburg figures his compensation is roughly half as much as a year ago, and he lost about half of his pension benefit when Delta froze the plan. Delta is asking pilots for pay cuts of 19.5 percent.

He doesn't think the new plan will work without fare increases that cover the escalating price of fuel.

"Even if I fly the airplane for free, if they don't start charging what we pay for fuel (the plan) won't fly," Kopec says. "Nobody ever shrunk into profitability and survived."

Steve Huettel can be reached at huettel@sptimes.com or 813 226-3384.

[Last modified September 23, 2005, 02:50:29]