Delta Air Lines to Cut 7,000 Jobs

ATLANTA – Delta Air Lines Inc. (DAL) will cut up to 7,000 jobs, or 10 percent of its overall work force, cut wages and pull back at its Dallas-Fort Worth Airport (search) hub as part of a sweeping restructuring plan that could still leave it vulnerable to needing to file for bankruptcy, company CEO Gerald Grinstein (search) said Wednesday.

The job cuts will come over the next 18 months, he said.

Delta will no longer use the Dallas-Fort Worth Airport as one of its four hubs, Grinstein said during a meeting with 300 of the company's middle managers. Instead, Delta will expand its hubs in Cincinnati and Salt Lake City with redeployed aircraft from Dallas-Fort Worth.

There will be a 15 percent reduction in administrative overhead costs, including management cuts. A reduction in wages will announced by the end of the month, and employees will be expected to pay larger contributions for health insurance.

Grinstein did not specify which jobs would be cut, but did say some management posts would be included.

Despite all of these measures, Grinstein said "bankruptcy is a real possibly."

"We're working hard and fast to avoid it," Grinstein said. But if the pilot early retirement issue is not resolved before the end of the month or if all of the pieces don't come together in the near term, we will have to restructure through the courts."

Delta Air Lines (search), the nation's third-largest carrier, has been warning investors for months that it may have to file bankruptcy if it didn't get deep wage cuts from its pilots. Management said on July 30 it needed a minimum of $1 billion in concessions from pilots to survive. Pilots had previously offered up to $705 million, then accused the company of acting in bad faith when it asked for much more.

Delta has lost more than $5 billion and reduced its work force by 16,000 in the last three years.

The changes announced Wednesday are part of Delta's goal to save more than $5 billion by 2006.

As of June 30, Delta and its subsidiaries had 70,300 full-time employees and 842 total aircraft, regulatory filings show. Delta also has several regional carriers, including Atlantic Southeast Airlines and Comair, and a low-fare carrier, Song.

In addition to the Dallas-Fort Worth hub targeted in the cuts, Delta has hubs in Atlanta, Cincinnati and Salt Lake City. Delta also is a major U.S. carrier to Europe.

Last week, rival American Airlines and its regional affiliate said they would add 70 flights from Dallas-Fort Worth airport by summer 2005. American, the largest U.S. carrier and a unit of AMR Corp. (AMR), said it would increase frequency of flights from DFW to 31 other airports in the United States and Mexico.

"This is our home and Dallas-Fort Worth Airport is a key to the long-term success of our company in an extremely difficult industry environment," said Gerard J. Arpey, chairman and chief executive of both American and parent AMR.