Delta will offer voluntary severance packages to roughly 30,000 employees, more than half its 55,000-person workforce, as part of a plan to reduce costs and combat record-high fuel prices.
Edward Bastian, Delta's CFO, said in today's presentation at the JP Morgan Aviation and Transportation Conference in New York that the airline's goal is to eliminate 2,000 frontline, administrative and management jobs through the voluntary program. Pilots won't be included in the severance program.
"We must act quickly and decisively, as speed in execution leads to success," Delta said in a message to employees. "With fuel expected to remain at approximately $100 per barrel for the foreseeable future, we must take action to keep Delta strong."
Delta will offer a severance package for those 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. An early-out program for frontline employees with 10 or more years of service and for administrative and management employees with one or more years of service also will be offered. Delta said about 30,000 employees will be eligible for at least one of the two severance packages.
The number of frontline employees who want to participate in these programs "will not be limited," added Delta.
The airline said it would also reduce domestic capacity by an additional 5% by August because fuel prices and a weakening U.S. economy "have put significant pressure on the profitability of our U.S. network." When the new cuts are combined with capacity reductions already made, Delta said it will end up with a 10% year-over-year domestic reduction in capacity.
The reductions will be made through a combination of decreased utilization and parking 15 to 20 mainline aircraft and 20 to 25 regional jets. Delta said it primarily will thin frequencies and reduce point-to-point routes. As with past schedule reductions, changes will also be focused at off-peak times or in markets where regional jets are not profitable at current fuel prices.
Delta said it would focus on international expansion, as international fares cover high fuel costs better than domestic ones. This summer, more than 40% of Delta's capacity will be dedicated to international flying.