Delta Air Lines plans to offer voluntary separations and early retirements to reduce its workforce after travel plummeted amid the coronavirus pandemic.
Paul Jacobson, chief financial officer of Delta, announced the plan Tuesday during an investor call, saying "We know at the end of the day, Delta is going to be smaller than where we were, for the next few years."
More than 41,000 of Delta’s 90,000 employees have already volunteered to take unpaid leaves of up to a year, and thousands of airline contractors have lost their jobs.
But with passenger counts down more than 90% and expectations that a recovery could take as long as four years, the Atlanta-based airline is looking to permanently cut its payroll.
Delta is restricted from involuntary furloughs of employees until after Sept. 30 because of the terms that came with billions of dollars in stimulus funding from the federal CARES Act. So airlines are looking for other ways to cut labor costs — and they may still lay off workers come Oct 1.
“We hope that most of the headcount changes that we’re going to need are going to be achieved through these voluntary programs,” Jacobson said.
The company wants to stop burning through cash by the end of this year. It has taken on debt to accumulate more than $12 billion in cash by the end of June, when it will be burning $40 million a day.
Jacobson said the airline has "seen a little bit of a bounce off the bottom," but he said it is difficult to draw conclusions from that. Driven by some leisure bookings for June and July, "we've seen some days of positive net sales," he said. But it's yet to be seen whether people actually take those trips, rather than canceling them.
“It will be a long time I think before we start to resolve some of the concerns that people have that led to social distancing,” Jacobson said. The airline is currently capping ticket sales at 60% of seats on a plane to allow it to block middle seats and certain other seats for more space between passengers.
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