ClipperDelta

DL announced an "accelerated" Transformation Plan today, designed to save an additional $3 billion in costs:
- approx. $1 billion to come from CH.11 debt relief, lease rejections
- approx. $1 billion to come from wage/benefits cuts
- approx. $1 billion to come from revenue/network productivity improvements

Other highlights:
- already rejected 40 leased mainline a/c not currently in service
- will reject another 80+ leased mainline a/c by end of 2006
- $325million pay cuts for pilots; $605 million for rest of employees
- Grinstein gets a 25% pay reduction; Officers get 15% reduction
- Elimination of 7,000 - 9,000 jobs by end of 2007
- Non-union frontline employees get cuts of 7-10% except those earning less than $25,000 annually
- reduce domestic network by 15-20%
- increase international flying by 25%

Here's the full text:

http://biz.yahoo.com/pz/050922/86482.html

jimrpa

What does it mean to "reject leased aircraft"? Is this the same as breaking the lease and returning the aircraft to the owner?

GUWonder

Yes.

Owen

Guys, I've been around Flyertalk for a while and I'm as cynical as anyone else. Maybe more so.

I'll tell you what I see. I see a guy 70 yrs old who wants to save an airline and as many employees as he can and frankly, even I can't see any way to make a case for this guy doing anything to feather his own bed.

I also see a wage/benefits cut total that is less than I expected, which suggests he wants to try to cut rather than erase the pension issue. The shareholders are already screwed and he knows it. Now he's out to do what he can for the passengers and the employees that remain after the pain.

I'll tell you something else I see. I see a guy who has decided he's not going to pay lawyers for 2-3 yrs while they siphon off ticket revenue doing bankruptcy court motions. He wants it fixed, he wants it fixed now and he's going to do what it takes to make it happen.

And then he's going to retire and die knowing he did the best he could for the airline.

Well, folks, I like this. I like this a lot. I'm going to fly Delta whenever I can to help him. This is a CEO committed to his company and not his own checkbook.

PIONEER

MSNBC just said that the work force cuts are 16% of all DL employees, or one out of six. Above all else, I certainly hate to see this continue to happen to the many Delta people I've gotten to know over the past 2 decades. We can only hope that this puts Delta on a sound financial footing that enables them to be around not only for those of us with a couple million miles in the "bank" but most important for the remaining employees.

veliger

I was wondering if anyone knew which planes Delta is rejecting leases on?

NWsilverflyer

Also, CNN said that they are cutting their aircraft types from 11 to 7; what is leaving the fleet?

Spiff

I wish it meant no more CRJs, but we all know that's not going to happen.

Ocn Vw 1K

Not only is it not going to happen, but having watched a similar strategy play out at UA (bkcy + shift down of domestic to ramp up Int'l), it'd be likely to assume greater DL use of CRJs to run the domestic sked.

ConnFlyer

You might be surprised. Notice this line from the press release:

Reductions to the regional jet fleet at Delta Connection carrier Comair are under evaluation and are expected to be determined soon.

Over the next few years, I think you will actually see fewer CRJ's (particularly the 50 seat kind). However, you will see more E170's and possibly E190s.

ClipperDelta

I think so too as I heard that the new proposed contract with the pilots includes a new "100 seater" pay scale which would make the E190 a possibility at mainline.

veliger

Definitely these three are gone:

767-200
737-200
737-300

The fourth one is tough, I'm guessing either the 777, 767-300 or MD-90

They need the 767-300's and 777 for their increased international flying. BUT, I figure they have to keep the MD-90 because it has significantly better fuel burn than the MD-88. I'd say the 777 is the most likely of the three to go, due to the very small number (8) they have on hand.

SEA_Tigger

Well ATL-NRT is their only transpacific destination, so they could get rid of the 777s, sell NRT to UA or NW (since a 763ER probably can't make ATL-NRT with the necessary pax and cargo load), and then use NW and SkyTeam to get you across the Pacific.

ConnFlyer

The fourth type you are missing is the 733G (glass cockpit). DL has two variants of the 733...which are two different fleet types.

DL has said they will have seven fleet types by the end of '06. Those are:

MD88/MD90/738/757/763/764/777

ClipperDelta

Except that NRT-ATL is a winner for DL with loads averaging 85-90% year round (which frankly amazes me) in addition to a consistently well-filled J cabin (and not from free tickets or upgrades).

Besides, with the amount of expanded international flying, they need the 777s around. The 777s are relatively fuel-efficient and are all owned, not leased.