Delta Seeks More Savings
July 6, 2004
By Elizabeth Souder
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Delta Air Lines Inc. (DAL) Chief Executive Jerry Grinstein on Tuesday again said that the airline will have to cut costs even deeper than anticipated in order to survive.
In a memo to employees, Grinstein responded to an article in USA Today that stated the airline plans to ask pilots for wage and benefit cuts that amount to $1 billion annually. Grinstein didn't comment on the $1 billion figure, and a Delta spokeswoman declined to comment on the article. The USA Today article didn't name the source of the information.
But Grinstein did say last year's cost-cutting estimates aren't enough, in light of oil prices and heated competition for passengers. The Air Line Pilots Association, which represents Delta pilots, has said Delta management in January asked the pilots for around $850 million in cost cuts.
"It is no secret that our situation grows more urgent with each passing day. As I have said to Delta people in meetings with them around the system and again as recently as last week, it is painfully clear that last year's estimate of the cost savings we will need if Delta is to survive and compete is no longer valid. Instead, the hole has deepened during the intervening months," Grinstein said in the memo.
"That is why we're working overtime on the strategic planning initiatives announced earlier this year and why we are heartened by the recent positive and constructive initiatives from ALPA and Delta's pilots," he said.
After Delta made its $850 million cost-cut offer last pilots in January, the pilots balked, and negotiations stopped. The union plans to offer its own proposal to the company in coming weeks. No talks are formally scheduled yet.
Karen Miller, a spokeswoman for the union, said the pilots haven't received any proposal indicating management wants $1 billion in cost cuts.
- By Elizabeth Souder, Dow Jones Newswires; 201-938-4148; elizabeth.souder@dowjones.com
(END) Dow Jones Newswires
07-06-04 1358ET