Remember all those heated threads we had a few months ago about DALPA pay demands and how excessive they were? Well, those birds are coming home to roost, big time. The awards added half a billion dollars onto Delta's overheads per annum - money that they could certainly do with today. One of the results of the 11th September events will be a massive restructuring of pay and conditions - expect to see the Scope conditions go out of the window, permanently; and expect too to see massive pay cuts all round, at least at the $100k+ levels. That will apply to management, as well.
Wednesday September 26, 11:07 am Eastern Time
SOURCE: Delta Air Lines, Inc.
Delta Announces Employee and Network Programs
ATLANTA, Sept. 26 /PRNewswire/ -- Delta Air Lines (NYSE: DAL - news) today said that due to dramatically lower
demand for air travel following the September 11 terrorist attacks on the United States and resulting
unprecedented financial losses, the company must cut its costs, including employee costs. As a result, Delta will
reduce staffing by up to 13,000 jobs across all major work groups over the next few months, with a significant
number of these reductions expected to come through voluntary programs.
Demand for air travel since September 11 has dropped precipitously. As a result, Delta will reduce capacity by 15%
effective November 1, 2001. The new schedule will be in effect indefinitely due to the uncertainty of future
demand for travel.
``Prior to September 11, any discussion that questioned our airline's capacity for financial survival would have
been unthinkable,'' said Leo F. Mullin, Delta chairman and CEO. ``But on that tragic day, war was declared on the
United States of America using aviation as the instrument of destruction. As a result, the operational and financial
outlook for airlines has changed precipitously and drastic measures are required if we are to avoid becoming the
first economic casualty of the war.
``While Congress last week approved a package of financial aid for the industry, the cash assistance portion was
calculated based on the financial consequences to the airlines associated only with the events of September 11
extending through the end of the year. Demand -- and hence revenue -- is depressed and operating costs are
getting higher. As a result, Delta is experiencing negative cash flow. We must take steps unprecedented in our
company's history if we are to slow that rate and ensure Delta's safe passage until a more stable economic
environment returns to the aviation industry.
``Delta's people are Delta Air Lines. One of the most painful aspects of these cost reductions is that people
whose efforts and abilities we value highly must leave our company at least for a time. It is gratifying for us all
that the work we have done together over the last few years to build a solid financial base and to maintain an
open partnership with our employees allow us, unlike other airlines, the flexibility to offer Delta employees a choice
of six voluntary programs. We have included return options in many of the programs, and we look forward to the
opportunity to work together again once we begin to grow and prosper.
``These difficult steps are absolutely essential if we are to rebuild our airline and resume our leadership position at
the head of an industry that is vitally important to our nation.''
Delta has instituted a broad-based recovery plan that includes freezing all hiring, eliminating discretionary
spending, cutting capital expenditures, reshaping the network to meet anticipated demand and reducing employee
costs. A scheduled pay increase in Technical Operations has been deferred. New product and service concepts
are under review such as reducing food service, entertainment options and other items on many flights, with a
focus on providing those things customers value most. Announcements on specific service changes will be made
Delta has developed six voluntary job reduction programs available to non- union Delta employees in the United
States and Puerto Rico. These programs are not available to company directors or officers. Delta subsidiaries will
develop their own programs. The programs are:
One-year Voluntary Leave Time. This program is available for active and some inactive employees with a least one
year of company service. It includes company-paid medical, dental and basic life insurance for the duration of the
leave and a continuation of the same travel privileges as active employees. The company can recall published
scale employees people in this program with 14 days notice. Employees have 90 days after the leave expires to
secure a Delta job.
Two-Year Voluntary Leave Time
Three-Year Voluntary Leave Time
Five-Year Voluntary Leave Time
These programs are available to active and some inactive employees with at least one year of company service.
Medical, basic life insurance under Delta's benefit plans may be purchased during the leave period. Modified travel
privileges will be available. Employees will have 90 days after the expiration of the leave to secure an open Delta
Other details are available to employees
* Voluntary severance. This program is open to active and regular full-
time and part-time U.S. employees with at least one year of service.
Benefits include two weeks of pay per year of service with a minimum of
four weeks and a maximum of 20 weeks pay. Health insurance COBRA
premiums and life insurance premiums are waived for six months.
Modified travel privileges are included. Outplacement services will be
provided. There are no recall rights.
* PensionPLUS, a special early retirement program. This program is open
to Delta people age 52 or older with at least 10 years of service. All
the details of this program will be mailed to eligible employees.
Delta employees are being made aware of these programs today. The number of involuntary job reductions will not
be determined for several weeks until the acceptance rate for the voluntary programs is known. Involuntary
programs will include severance pay, recall rights for published scale employees, modified travel privileges,
outplacement services and other benefits.
``We hope that a significant portion of the employee reductions will be met through these voluntary programs,''
Mullin said. ``Programs for involuntary job reductions, while a last resort, will meet or exceed the most generous in
the airline industry.''
With the November 1 schedule, Delta will reduce its capacity by 15% as measured by available seat miles from the
level of service provided before September 11, 2001. In making these schedule changes, the company took into
consideration current and anticipated demand for air travel, the comparative revenue potential among routes, and
the ability to accommodate Delta customers conveniently on other Delta flights. Delta Connection carriers will
adjust their schedules in line with Delta's and also have implemented cost-saving initiatives.
As part of these reductions, Delta will suspend 50% of its Delta Express capacity to major destinations in Florida
because of a dramatic reduction in leisure travel. Leisure passengers to these destinations will be able to fly on
Delta mainline flights to Florida through connections in Delta's strong hub structure. In addition, Delta will replace
mainline service between Atlanta and both Allentown/Bethlehem/Easton, Penn. and Harrisburg, Penn., with Delta
Connection carriers' service. Delta now will offer only Delta Connection service at Reno, Nev. Other schedule
changes will focus on reducing flights from major Delta cities, including its hub in Atlanta.
In international markets, Delta also will suspend through March 15, 2002, flights from John F. Kennedy airport in
New York to Tokyo, Tel Aviv, Munich, Dublin, Shannon, Cairo, Dubai, Zurich and Brussels, while service to
Stockholm will be suspended indefinitely. Also at JFK, Delta will suspend service to Aruba until December 1. From
Atlanta, Delta will suspend service to Turks & Caicos through March 15. Previously announced Delta service from
Atlanta to Montego Bay, Jamaica, and Los Cabos, Mexico, will not begin as planned. Delta also will suspend a
number of additional flights that were to be offered only during the winter season or on weekends.
``We intend to maintain the highest level of flight service to our customers as we possibly can in this current
demand environment,'' Mullin said. ``As demand comes back, we will look to re-instate service to these cities
where that can be done profitably.''
Delta is adjusting its short-term fleet plan in line with its schedule reductions. The current fleet plan provides for
accelerated retirement of various aircraft, temporary grounding of aircraft and possible delay of new aircraft
deliveries. Current plans call for up to 60 aircraft being grounded at any given time. Delta will continually review
that strategy based on demand and operational needs.
SOURCE: Delta Air Lines, Inc.