Thu, Sep 09, 2004
Move Should Save $5 Billion By 2006
Delta Airlines CEO Gerald Grinstein
tipped his hand Wednesday, announcing the company will lay off as
many as 7,000 workers in hopes of saving $5 billion within the next
two years.
"As we are today we cannot compete effectively and succeed
long-term in the marketplace," Grinstein said in a webcast on
Wednesday.
Grinstein (right) called bankruptcy
"a real possibility," saying Delta will eliminate most flights at
its hub in Dallas, while beefing up service to Atlanta, Cincinnati
and Salt Lake City. Song, Delta's low-cost subsidiary, would
increase its fleet by about a third.
The airline is also cutting down on the types of aircraft it
flies. Grinstein told the webcast he's retiring four of the 12
aircraft types now in service. Workers will have to pay for a
bigger share of their health care.
"He's made the very tough decisions," said airline management
professor Darryl Jenkins at Embry-Riddle Aeronautical University in
Daytona Beach (FL). His comments came in an interview with
Bloomberg. "Now that the plan is on the table everything will move
faster" in contract talks with pilots.
Delta pilots have been very reluctant to jump on the contract
concessions bandwagon. Where the airline has asked for 30-percent
pay cuts, the pilots have offered no more than nine-percent.
Grinstein says Delta needs to get $1 billion/year concessions out
of its pilots. The union says Grinstein is trying to "gouge" its
members.
"If all the pieces don't come together in the near term, we will
have to restructure through the courts," Grinstein said in a
prepared statement.
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