Video: Delta offers payouts to 30,000

msnbc.com news services
updated 3/18/2008 2:53:34 PM ET 2008-03-18T18:53:34

Delta Air Lines unveiled plans to cut 2,000 jobs and scale back flights on Tuesday, leading efforts by U.S. carriers to cut costs in the face of soaring fuel prices.

The No. 3 U.S. airline, which has been unable to seal a merger with rival Northwest Airlines, will offer voluntary retirement and buyout packages to 30,000 employees — more than half its work force — and cut domestic capacity by an extra 5 percent this year as part of an overhaul of its business plan.

Separately No. 2 United Airlines said it plans to ground as many as 20 airplanes or 4 percent of its fleet and further cut capacity in 2008 to soften the blow of soaring oil prices that could add $1 billion to its fuel tab over last year.

Executives at Atlanta-based Delta said in a memo to employees that the airline’s goal is to cut frontline, administrative and management jobs through the voluntary program, attrition and other initiatives.

A spokeswoman says that if more than that amount agree to take the voluntary severance, that will be allowed. The severance program primarily affects mainline Delta employees. It will not affect Delta pilots, who have a union contract with the company, or employees at Delta regional carrier Comair, which is based in Erlanger, Ky.

Delta had 55,044 total full-time employees as of the end of last year.

Oil prices recently cracked $111 a barrel, nearly twice what they were a year ago.

United is responding by grounding or getting rid of 15 to 20 older, narrow-body 737s that are less fuel-efficient than others in its 460-plane fleet. It did not immediately specify what domestic flights or routes could be trimmed.

United, like other airlines, has grown more aggressive in passing on higher fuel costs to customers. It raised ticket prices by as much as $50 per round trip last week — an increase matched by other carriers. Airlines are also adding fees for some offerings including, at United, a $25 fee for checking a second bag.

"We are taking a prudent step now by reducing our fleet, taking assets out of the network that don't make sense at these fuel prices, to better position United to be successful in an ever-challenging environment," Chief Financial Officer Jake Brace said. He outlined the changes at a conference for airline industry investors in New York.

United also is looking for other places to cut costs and said it has increased its fuel hedges since January, with 20 percent of its fuel hedged for 2008.

United's management remains interested in consolidation, but the run-up in fuel prices appears to have chilled that talk for now.

The Delta memo from Chief Executive Richard Anderson and President Ed Bastian did not mention the carrier's talks with Northwest Airlines Corp. about a combination that would create the world’s largest airline.

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.

The disclosure was made in a letter from the head of the pilots union at Delta, Lee Moak, to rank-and-file Delta pilots.

The two carriers don’t need a pilot seniority integration deal in advance to move forward with a combination, but Delta executives have said they would not move forward with any combination unless the seniority of their employees was protected.

Associated Press and Reuters contributed to this report.

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