Number "Depends" On Fleet Cuts
By Aero-News Senior Correspondent Kevin R.C. "Hognose"
O'Brien
Comair, in an attempt to reduce
costs mandated by debt-soaked and bankrupt parent Delta, is going
to cut up to 650 jobs and 30 Regional Jets by December, 2005.
This is in addition to 350 layoffs announced last month, which
were primarily at Comair's Cincinnati (Covington, KY) hub. Delta
says that Delta and/or Comair would still operate to all current
destinations till the end of the year, but made no commitment for
the new year. While all destinations may still be serviced, both
lines will cut the number of flights sharply.
The pay cuts for those not laid off will begin when the layoffs
take effect, in December, although senior executives will find
their pay packets thinner already in November.
Comair is not only cutting personnel, but also its fleet. The
current fleet contains 174 jets; Comair will dispose of at least
11, and possibly as many as 30. The more planes can be gotten rid
of, the fewer jobs will need to be eliminated; the fewer planes
disposed of, the more Comair will have to cut people to get to the
$70 million in cuts Delta's initial reorganization plan demands.
The plan wants $3 billion in cuts Delta-wide; $70 million is just
Comair's share.
Comair's intention is to dispose of 50-seat aircraft and retain
70-seat aircraft. "We believe that 70-seat flying and, potentially,
larger gauge equipment will be in higher demand," Comair President
Fred Buttrell said. (Buttrell, a Delta executive, took over Comair
after the Christmas 2004 fiasco, where Comair's two-decade-old
scheduling system failed and grounded the airline for days).
As a proportion, Comair is cutting up to 14-percent of its
workforce (22-percent if the cuts announced last month are
included), if all cuts are completed; and from 6.3-percent to
17.2-percent of its aircraft. Industry analysts did not consider
the line lavishly overstaffed or overequipped, but note that while
it was profitable before Delta bought and began managing it in
2000, it hasn't been since.
The company is hoping that some voluntary departures, too, will
allow end strength reduction by attrition, rather than by layoff.
"Our goal is to handle as much of the transition as possible
through voluntary means," Buttrell said. This is not only for
humane reasons: layoffs are more costly.
Comair has tentatively divided it's cut requirements into $30
million from unionized workers, which will require negotiations
with the unions; and $40 million from non-union workers (salaried
managers and exempt personnel) and airplane disposals.
Senior management is also chipping in. The President is taking a
15-percent and corporate officers a 10-percent reduction, on top of
10-percent they have already taken earlier in 2005, for a total of
25-percent and 20-percent. Directors, whose pay was previously
frozen, find the freeze ends with a cut, in their case by
9-percent.
Of the $30 million in union-worker payroll reductions, Comair
pilots are being asked to take the biggest hit, $17.3 million. The
pilots have already been under a pay freeze since June. Flight
attendants, who have already been split into two pay scales based
on date of hire, are being asked to give up $8.9 million, and
mechanics $1 million. This are relatively proportional hits, as
Comair employs relatively few mechanics, preferring to outsource
mechanical work to repair stations.
The unions have no official statement for the press or public
until they have spoken to the company.
Comair's planes and crews are
provided to Delta on a lease basis and Delta sells the tickets as
"Delta Connection" flights. The much lower pay scale for Comair
employees has made operating Comair flights much more economical
than Delta's own.
Low-cost and regional airlines seemed immune to the
mismanagement and fiscal woes that have driven many of the majors
onto the rocks of bankruptcy. But Comair joins Mesaba (a regional
feeder for bankrupt Northwest) in the sort of doom spiral that has
characterized their respective parent airlines, and low-cost
Independence Air this month is cutting 600 of 3400 workers, and 120
of 350 daily departures (including all of its flights to West Coast
destinations), in an attempt to stave off bankruptcy.
All airlines have been squeezed by price wars and unanticipated
Jet A fuel costs. The most fiscally unsound airlines, such as Delta
(which has been technically insolvent for years), became so
indebted that they were unable to hedge against the possibility of
rising fuel costs. Delta, for example, owes a staggering $26
billion, and doesn't have much in the way of tangible assets;
everything's leased.
The coming negotiations with Comair's unions will certainly be
tense, but the unions are in a weak position; if they don't
cooperate, they understand, cuts could total 100-percent.