Cut, slash, but no fire sale at Delta

Delta set a far-reaching round of cuts to deal with the rising cost of fuel, but its number two executive would not comment on the progress or lack thereof toward a merger. President and chief financial officer Ed Bastian declined to take questions on the announcement by its pilot leader that the union could not agree on steps that would allow the Atlanta-based airline to merge.
The carrier, the plane1.gif nation’s number three, made clear that it saw an immediate crisis that demanded a swift reaction beyond waiting for oil to come down or trying to combine with another carrier. While other major carriers including United and Continental said they too were trimming capacity, Delta’s cutbacks, including job cuts, were more wide reaching.
Delta said Tuesday that it will be “reducing 2008 domestic capacity by an additional 5% by August, resulting in a 10% year-over-year domestic reduction. These reductions will be made through a combination of decreased utilization and parking 15-20 mainline aircraft and 20-25 regional jets. The airline revealed the cuts in a regulatory filing as Bastian addressed an investor conference. Bastian said the mainline aircraft could include Boeing 767-300s now in domestic service, 757s or possibly MD-80s. “We’ve had some strong expressions of interest (from possible buyers). Or we may just park them,” Bastian told the JP Morgan airline and transportation conference.
Delta also said will offer buyouts to as many as 30,000 employees, about half its total workforce, with the goal of cutting 1,300 front-line positions and 700 management or ‘merit’ positions. Bastian said airport-kiosks.gifnone of the personnel cuts would be involuntary. Delta is also freezing wages for the rest of 2008. The job cuts – still something of a novelty at an airline that historically did not trim its workforce – may give impetus to an organizing drive by a national flight attendant union to enlist Delta’s cabin crew.
Painting a picture of a robust international market, Bastian said international passenger growth is “the core, the foundation, the cornerstone” of Delta’s future. “We’re going places where others aren’t,” he said. “It’s truly new white spots [on the map], markets where there is no US competitor.” Delta will take delivery of all aircraft it has scheduled for international service. Its international growth would continue at about a 15% pace with double-digit increases in unit revenues, Bastian said. He said bookings remained strong on international routes and that payment in foreign currency helped offset the dollar’s weakness
Bastian added that even with added cost of fuel, which for Delta would be an additional $2 billion in 2008, it is “not out of the question for Delta to be profitable this year, albeit modestly.”

, , , ,

One Response to Cut, slash, but no fire sale at Delta

  1. Link Building December 2, 2010 at 10:26 am #

    I am extremely impressed with your writing skills and also with the layout on your blog. Is this a paid theme or did you customize it yourself? Either way keep up the nice quality writing, it’s rare to see a nice blog like this one these days.. :)

Leave a Reply