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Delta cutting flights and jobs

Move will affect some 700 employees in the S.L. area

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Delta Air Lines said Wednesday it will reduce its scheduled flights by about 15 percent starting Nov. 1 as a result of reduced customer demand following the Sept. 11 terrorist bombings in New York City and Washington, D.C.

It also will cut some 13,000 of its 82,000 employees through a program of voluntary leaves, early retirement incentives and involuntary furloughs.

In a telephone press conference, Leo Mullin, chairman and chief executive officer of Atlanta-based Delta, said the ratio of flight employee cuts will be proportional throughout its system and will include management and pilots as well as staff. "It has to have an element of shared sacrifice," he said.

That means some 700 of Delta's 4,700 employees working in the Salt Lake area can expect to be leaving the company between Nov. 1 and Dec. 31, including about 100 of its 754 pilots based here.

Delta recently signed a new contract with its pilots that disallows furloughs, but Mullin said the contract included an "extraordinary circumstances" clause that was put in for just such a situation.

"Anyone would see that the clause would pertain to this situation," he said, adding that the pilots union has no argument with it. He added the hope that the pilot reductions would be temporary.

Delta's announcement comes on the heels of previous cuts by the nation's other major carriers totaling some 80,000 jobs. Dallas-based Southwest Airlines is now the only major airline that has not yet cut jobs following the terrorist attacks.

Last week, St. George-based SkyWest Airlines, which depends on its status as a DeltaConnection regional carrier for much of its revenue, said it would not lay off any of its employees. Spokesman David Clark said Wednesday the company had not changed that position despite Delta's announcement.

"As of today we still don't have any job cuts planned, but we are watching the situation on a day-to-day basis," Clark said. "We'll have to tighten our belts and operations. There will be some changes in our (flight) schedule, but I don't yet have details on city routes or fares. I can say that SkyWest has not been affected as badly as the major carriers."

Delta said it has lost about $1 billion since the terrorist attacks, due to the airline industry being shut down for two days and reduced customer demand after flights resumed. Delta will get about $600 million from the $5 billion in immediate cash relief for the airline industry approved by Congress last week, but Mullin said in the conference call that will only allow the company to meet its immediate obligations.

"It is compensation just for losses in September, so all of us are looking beyond September. We will have substantial revenue declines going well into next year, and we'll have to deal with that ourselves," he said.

The work force reductions will come from a variety of early retirements and voluntary and involuntary layoff and furlough programs, with the involuntary layoffs "among the most generous in the industry" in terms of benefits and with most of them carrying return options when the company gets back to profitability.

The number of involuntary job reductions will not be determined for several weeks, but all cuts should be done by the end of the year.

"These difficult steps are absolutely essential if we are to rebuild our airline and resume our leadership position at the head of an industry that is vitally important to our nation," Mullin said.

Other cost-cutting measures also will be taken, including elimination of incentive compensation for executives. Mullin said he will also forgo his salary for the remainder of the year. Even with all of the planned reductions, he said Delta will continue to have negative cash flow, but at a reduced rate.

Delta plans to freeze all hiring, eliminate discretionary spending, cut capital spending, reshape its network to meet lower anticipated demand, defer a pay increase in its technical operations division and explore various other options such as reducing food service and "entertainment options" on flights. It also is talking to Boeing about "slowing down" acquisition of airplanes already on order.

Asked about his views on a variety of new security measures being discussed to make airline travel safer from terrorist hijackers, Mullin said everything was on the table, including allowing pilots to carry firearms.

"Two weeks ago, I would has said, 'No guns in the cockpit.' But in light of the magnitude of what's happened, I'm in favor of anything that helps protect the cockpit."

Mullin is also in favor of sky marshals on airliners, noting that he sat next to a plainclothes sky marshal on a recent flight to Washington, D.C., and was impressed with the "professionalism and capabilities" of the officer.

"There aren't enough of them yet to put a sky marshal on every flight, but they're out there right now."

He said Delta and the other airlines are also in favor of federalizing the entire security apparatus at airports, saying airlines have "no particular skills" in security.

"We really need the link to the federal government," he said.

The stock market reacted positively to Delta's announcement, with the company's shares rising 2.53 percent to $25.14 in Wednesday afternoon trading on the New York Stock Exchange. Over the past 52 weeks, its shares have traded from a low of $20 to a high of $53.

Delta is the largest employer in metro Atlanta with 32,000 workers.

It also has large work forces at its other hubs — Cincinnati, Dallas-Fort Worth and Salt Lake City. The airline also has extensive operations in Orlando, Fla., New York and Los Angeles.

E-mail: max@desnews.com