Citing sky-high fuel costs, Delta Air Lines said Tuesday that it plans to offer voluntary payouts to 30,000 employees, with the aim of cutting at least 2,000 jobs.
The airline also plans to cut its U.S. capacity by an extra 5 percent. The announcement comes as Delta's prospects of a merger with Northwest Airlines seem dwindling and a weak economy has sent jet-fuel prices soaring.
In a letter to employees, Delta Chief Executive Richard Anderson and President Ed Bastian said that 30,000 people qualify for retirement or an "early-out program," both based on age and years of service. Delta had 55,000 full-time employees at the end of last year.
Delta needs to cut 2,000 jobs to offset fuel costs, according to the memo. The company would honor as many requests for retirement and early buyouts as it receives, Delta spokesman Anthony Black said.
Delta employs about 3,400 people at its Salt Lake City hub, and Black said it had not yet been determined how many employees there would be targeted for the payouts.
"While there are no specific estimates for Salt Lake City, I would say Salt Lake City is a very senior hub, so a large percentage of employees would be eligible," he said.
The employees will leave sometime in the fall, after the summer travel rush, and will be replaced by new employees who will receive less in salary and benefits than senior employees, he said. Pay raises, which had been expected to be announced this month, are also on hold.
In addition to the job cuts, Delta is eliminating 15-20 "mainline," or Delta aircraft, and 20-25 regional contracted jets, Black said. Flights to and from Salt Lake City and Fargo, N.D., Bellingham, Wash., Nashville and El Paso, Texas, will also be cut as part of the cost-savings measures.
Each route was served by SkyWest Airlines, with one flight from Salt Lake daily, seven days a week, Black said.
Prior to Tuesday's announcement, Delta flights from Salt Lake City landed at 106 destinations, and on peak days, there were 336 daily flights from Salt Lake City. After the cutbacks, there will be 105 destinations and 329 peak daily flights.
Of the 2,000 jobs that Delta wants to eliminate, 700 positions will be administrative and management jobs, and 1,300 are "frontline" jobs, such as flight attendants, gate agents, baggage handlers, reservation agents and mechanics. The announcement of the cutbacks boosted Delta's shares, which rose 86 cents, or 9.32 percent, to close at $10.09 Tuesday.
Delta pilots, all members of the Air Line Pilots Association, will not be asked to consider retirement or the early-out program. They are the only Delta employees currently represented by a union.
Eligible Delta employees have from April 15 to May 12 to tell the company if they want to leave.
In that time, employees such as flight attendant Paul Tanner, who lives in Bountiful, will be thinking hard. Tanner has worked for Delta as a flight attendant for 21 years. He says he qualifies for both retirement and early out.
His wife works part time, and he has a daughter who still lives at home. He's only 44 years old, and permanent retirement is out of the question. He would have to begin a second career.
For now, Tanner says he is waiting for more information from the company about how much money and benefits he and his family could receive if he left the company.
"The thing is, I like being a flight attendant," he said. "I like doing it for Delta."
Bruce Church has been a ramp worker for Delta in Salt Lake for 26 years. He, too, would qualify for an early retirement, but does not want to leave and find another job in the current economy.
Church is organizing Delta ramp workers, hoping they will elect to join the International Association of Machinists and Aerospace Workers. For the past 18 months, Church and other organizers have been collecting signatures to request an election.
The payout offer is "a good plan for anyone where Delta is their second job or people who are planning on retiring in the next 12 to 16 months," Church said. "Anyone else, we're counseling our people not to accept it."
Delta's flight attendants, meanwhile, are in the process of organizing an election over whether they should be represented by the Association of Flight Attendants-Communication Workers of America.
The federal government's National Mediation Board is verifying whether the signatures on a petition for an election are legitimate and will schedule an election, said Danny Campbell, a flight attendant with Northwest Airlines who is helping Delta flight attendants organize.
If the flight attendants were unionized similarly to Delta pilots, the company would have to negotiate with the union before encouraging people to retire or leave early, Campbell said.
"Part of the problem for the flight attendants at Delta, if they accept a program like this, is that the program is not legally binding," Campbell said, and Delta management can change the terms after employees agree to leave.
Campbell said that Delta may be trimming employees to prepare for a merger with Northwest. But most analysts believe the merger is off, at least in the near term, because the pilots could not agree on a seniority integration. The cost-saving measures announced Tuesday are part of a plan for Delta to fly solo, the analysts say.
Bastian said Tuesday that he would not be able to provide details on the consolidation discussions. He said the process Delta's board is conducting to review strategic alternatives is "fluid."
Salt Lake County Mayor Peter Corroon and Salt Lake City Mayor Ralph Becker were on the Air Transportation Promotion Alliance, a committee of community and business leaders brainstorming ways to keep the hub at the Salt Lake airport in the case of a Delta merger.
"We're hoping (merger) discussions will get back on track," Corroon said. "We realize, based on fuel prices and downtown in the national economy, they're having tough times."
In the Tuesday memo to Delta employees, the Delta executives said that in the past three months, fuel prices have increased by 20 percent, "and our 2008 fuel bill is now expected to increase by nearly $900 million, compared to our business plan."
Anderson and Bastian wrote that the strategy at Delta is to grow with international flights, which have higher fares and fuel surcharges that are more easily accepted.
"It's never a good sign when we reduce flying," said Salt Lake-based pilot Mike Dunn. "But the company's trying to maximize on the profitable routes and minimize the least profitable routes to offset fuel prices."
E-mail: lhancock@desnews.com