Pilots Contract Only Part Of Delta's Woes

You would think now that pilots at Delta Air Lines have agreed to a 14-percent pay cut, and the judge overseeing Delta's bankruptcy has okayed it as well (albeit over the objections of the federal Pension Board Guaranty Corporation) the Atlanta-based airline should be flying high, right? Worst troubles behind it and all that.

Wrong.

In a memo to Delta's employees Wednesday, Delta's chief financial officer Ed Bastian reminded employees that even though the airline has cut a billion dollars so far in its annual operating costs... it needs to cut another $2 billion in order to survive and thrive. That's right, kids, we're only one-third out of the woods.

"We have a long way to go before reaching our goal as a strong, profitable company," Bastian wrote.

The Cincinnati Enquirer reports Bastian told employees that Delta has lost $14.5 billion dollars in the past five-and-a-half years.

Now, Delta is cutting $400 million a year in aircraft costs, and another $200 million in management costs. Experts figure the next to go will be the pilots' pensions -- and the PBGC agreed, which is why they protested to the court.

As part of Delta's ongoing quest to emerge from bankruptcy, the airline's terminal leases will also be renegotiated... and then there's the issue of what to do with Delta subsidiary Comair. The company is also cutting costs there, but it's a negotiated process... and the more Delta negotiates, the less it saves.

"The less they get in savings, the more danger they face coming out of bankruptcy," said Ray Neidl, an analyst with Calyon Securities in New York.

Which might mean that light at the end of the tunnel of Delta's struggle to emerge from bankruptcy... may very well may have been another train.

FMI: www.delta.com