Delta Eyes 2,000 Job Cuts Via Early Retirement

January 15, 2009

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Delta Air Lines, which took over rival Northwest Airlines last year, said it expects about 2,000 staff to opt for early retirement as it aims to trim capacity by up to 8 percent this year.

The latest move by the world's biggest airline highlights a trend among major airlines fighting for profits as global economic recession weighs on passengers' travel budgets.

In December, Delta, which has about 75,000 staff worldwide, said it would offer employees severance packages, but it didn't say how many jobs it aimed to cut.

"We are expecting a number of around 2,000 because the capacity reduction is going to be around 6 to 8 percent," Delta CEO Richard Anderson told reporters on the sidelines of a media briefing in Tokyo.

"We will know more towards the end of this month, because we gave employees a wide window so that they can make the right decision."

In March 2008, Delta announced 2,000 job cuts and offered voluntary severance packages. More than 4,000 workers took advantage of the packages.

Prior to the merger, Northwest trimmed its staff by about 2,000 workers.

Major airlines, battered by sagging travel demand and losses on fuel hedging costs, have been working to bolster their profitability by cutting capacity and finding new revenue streams. Capacity reductions affect the number of seats for sale and are achieved by cutting flights or replacing large planes with smaller ones.

Japan Airlines plans to cut about 10 percent of its total work force by end of March while Singapore Airlines is reportedly planning to ask its cargo pilots to take unpaid leave as the carriers face tough operating conditions.

Atlanta-based Delta said last month its domestic capacity would fall 8 percent to 10 percent in 2009, and international capacity would fall 3 percent to 5 percent as travel demand wanes. System-wide, that would mean a reduction of 6 to 8 percent.

Anderson told reporters on Thursday Delta expects a 10 percent decline in industry revenue this year as the economic slowdown hits travel demand, taking revenue to where it was after the September 11 attacks in 2001.

"But remember, the fuel price is dramatically lower," he said, adding that the carrier expects to save USD$5 billion this year from the drop in oil prices since last summer.

"We expect an enormous benefit from lower fuel prices," said Anderson, adding that would help the carrier achieve profitability in 2009.

US crude oil was trading around USD$37 a barrel in New York on Wednesday, down from an all-time high above USD$147 in July last year.