Gerald Grinstein, who took over as chief executive of Delta Air Lines in January, says the carrier will cut up to 7,000 jobs over the next 18 months in a restructuring aimed at saving $5 billion in annual costs by 2006, writes David Field in Atlanta.
Grinstein warns that filing for bankruptcy protection is still "a real possibility" in his strongest statement yet on prospects for a court-protected restructuring. Grinstein says the plan, including shutting one of its four hubs - Dallas/Fort Worth - theretirement of up to four aircraft types, and a massive debt restructuring, will continue in or out of Chapter 11 bankruptcy protection.
The immediate crisis stems from the Delta pilots' union. The Air Line Pilots Association, which has yet to agree to $1 billion a year in wage concessions, must address the senior pilot retainment rate, as around 2,000 of Delta's 6,900 pilots are eligible to retire early. Delta hopes to resolve the situation next month, as well as other issues, such as creditors' negotiations. "If all of the pieces don't come together in the near term, we will have to restructure through the courts," says Grinstein. The retirement trend could ground some Boeing 767-300/300ER and 777 operations, he adds.
At its Dallas/Fort Worth hub, flights will fall from 254 a day to 21, but Delta will build up Atlanta Hartsfield, making it "a continuous hub" by lowering hourly operations from about 80 to 66, but increasing daily total flights from 970 to 1,051 by February. By then it will have determined which aircraft types to retire, but Grinstein says that the 737-200, of which it has 52, is the most likely to go. JP Morgan credit analyst Mark Streeter says Delta's 26 Boeing 737-300s, its 16 MD-90s - which have no commonality with its 120 MD-88s - and all 21 of its 767-400ERs, are the "lead extinction candidates".
Source: Flight International
