annerj

News just breaking now.

MillardDJr

To more then half their work force - yet only cut capacity by 5%?

who need a co-pilot anyway?

LessO2

Looks like that merger is happening.

LegalTender

ATLANTA (AP) -- Delta Air Lines says it will offer voluntary
severance payouts to roughly 30,000 employees -- more than half its
workforce -- and cut domestic capacity by an extra 5 percent this
year as part of an overhaul of its business plan to deal with
soaring fuel prices.
Executives at Atlanta-based Delta said in a memo to employees
Tuesday that the airline's goal is to cut 2,000 frontline,
administrative and management jobs through the voluntary program,
attrition and other initiatives.
A spokeswoman says that if more than that amount agree to take
the voluntary severance, that will be allowed. The severance
program primarily affects mainline Delta employees.
Delta had 55,044 total full-time equivalent employees as of the
end of last year.

ClipperDelta

Up to 30,000 employees are eligible but they are really looking to reduce headcount by about 2,000 employees in total.

Also:
- parking 15-20 mainline jets
- parking 20-25 RJs
- defer $200m in CapEx for 2008 (from $1.5b to $1.3b) - deferral of 3 CRJ900s, potential aircraft sales, ground/technology projects
- target productivity savings of $550m this year instead of original target of $400m
- continue with international growth and delivery of new aircraft (737-700, 772LR, 757-200ETOPS etc.)

Liquidity at end of year was $3.8 billion; target year-end liquidity of $3.7 billion

Fuel hedging situation:

Q1 2008: 27% at $2.76
Q2 2008: 41% at $2.71
Q3 2008: 26% at $2.67
Q4 2008: 11% at $2.67
2009: 9% at $2.57
2010: 5% at $2.69
FYI, jet fuel on the spot market was going for $3.34 last Friday when oil was at $111/barrel.
Bankruptcy exit plan was predicated on $90/barrel jet fuel price.

hazelrah

Hey Clipper, I always said Delta was a weak player and needed the strength of NW, it's routes and cash. Now that the merger is off looks like desparate Delta times.

Boston_Bulldog

cutting corners doesn't mean the merger is off yet.... in fact actually wise to make room FOR the merger...

i'm sure its going to happen BEFORE year-end....

DL Platinum

Get ready for fun ride! Make sure you know where the exits are, and keep in mind they may be behind you!

Jaimito Cartero

I'd guess it's going to be a weak package, or otherwise all 30,000 workers would take it.

Air Brian

That seems like quite the shot gun approach. Generally strategic cost reductions are a bit more defined. What are the details of the severance, I wonder...?

ClipperDelta

HA! you think NW is going to do any better with $110/barrel oil? About the only thing I would agree that DL needs of NW is the Pacific routes (and maybe some Upper Midwest monopoly markets to allow DL to achieve its RASM growth to over 100% of industry average faster). DL has $3.8 billion of unrestricted liquidity (NW has about $3 billion). Both DL and NW have about the lowest Mainline non-fuel CASM costs (2007 both were at 6.80cents stage length adjusted - LCC was at 6.81, AMR at 7.77, CAL at 8.01, and UA at 8.22.

UnofficialDLHelper

Check out page 10 of the pdf (8-K filed 3/18/08):

http://phx.corporate-ir.net/phoenix....481&p=irol-sec

ClipperDelta

They looked at the demographics of the non-pilot employees and many people may not be in a position to take an early out. For example, many people in their 50s will not find new jobs easily and cannot qualify for Medicare or Social Security yet...

rylan

I wonder how much they can keep cutting domestic capacity and still be competitive in certain regions.

rylan

Hmm... I hope some of the reduced/defered CAPEX doesn't mean they will be putting off AVOD and cabin upgrades to aircraft.