ATLANTA – Delta Air Lines, faced with a weak economy, dimmer hopes of a combination with Northwest Airlines and record fuel prices that are eating up profits, said Tuesday it will offer voluntary severance payouts to roughly 30,000 employees – more than half its work force – and cut U.S. capacity by an extra 5 percent.
Executives at Atlanta-based Delta said in a memo to employees that the airline’s goal is to cut 2,000 front-line, administrative and management jobs through the severance program, attrition and other initiatives.
Delta spokeswoman Betsy Talton said the company would accept more job cuts, if more employees than its goal take the voluntary severance. The severance program primarily affects mainline Delta employees. It will not affect Delta pilots, who have a union contract with the company, and employees at Delta regional carrier Comair, which is based in Erlanger, Ky.
One part of the program is for employees who are already eligible for retirement or for those whose age and years of service add up to at least 60, with 10 or more years of service. The other part of the program is an “early-out” offer for frontline employees – such as flight attendants and gate and ticket agents – with 10 or more years of service and for administrative and management employees with one or more years of service.
Besides severance payments, employees who take the offers also will be entitled to travel privileges and additional benefits to manage career transitions.
Delta had 55,044 total full-time employees as of the end of last year. Delta, since 2001, had previously announced it would cut up to 33,000 jobs.
Oil prices recently cracked $111 a barrel, nearly twice what they were a year ago. Delta said that in the past three months, fuel prices have climbed nearly 20 percent and its 2008 fuel bill is now expected to increase by more than $2 billion over 2007.
The memo from Chief Executive Richard Anderson and President Ed Bastian did not mention Delta’s talks with Northwest Airlines Corp. about a combination that would create the world’s largest airline. Bastian also spoke to investors Tuesday at a conference in New York.
The airline said that this summer more than 40 percent of its capacity will be dedicated to international flying, where it can get better premiums on ticket prices. Delta plans to increase international capacity by more than 15 percent this year.
At the same time, it expects to reduce domestic capacity by 10 percent by August. On Monday, Delta’s pilots union said it had told company executives it can’t agree on seniority issues with its counterpart at Northwest, raising serious doubts about the prospect of a combination of the two companies.