Delta Offers Retirement Plans With Recovery Likely to Drag On

(Bloomberg) -- Delta Air Lines Inc. is offering new programs to entice workers to leave the carrier voluntarily as it expects a large scale recovery in coronavirus-devastated travel demand to take as long as three years.

The carrier on Thursday provided details to workers about an enhanced plan for long-term employees nearing retirement age or who have more than 25 years of service, and a separate program that covers other eligible workers. Delta is in talks with its pilots’ union for a similar early retirement plan, Chief Executive Officer Ed Bastian said in a letter to employees.

Delta joined other U.S. carriers in stepping-up efforts to scale back workforces voluntarily and avoid forced layoffs later this year, when a federal prohibition on airline job cuts expires. More than 40,000 Delta workers earlier accepted voluntary unpaid leaves after the coronavirus pandemic and related travel restrictions curtailed travel demand.

“While we never dreamed just a few months ago that we would be talking about a smaller Delta -- this was expected to be a year of growth, after all -- this is the reality we’re facing,” Bastian said. “Every voluntary departure helps to protect the jobs of those who most need them.”

Slow Recovery

Bastian said he couldn’t “emphasize enough how challenging the environment is, and will be for the foreseeable future,” pointing out the bankruptcy filing this week of Latam Airlines Group SA, Delta’s partner in South America. It will be two to three years before demand recovers on a large scale, he said, adding that it’s uncertain how much Delta must shrink operations.

The voluntary-exit programs offered Thursday include cash severance, fully paid health-care coverage and enhanced travel benefits, Delta said. Most retirements would be effective Aug. 1.

American Airlines Group Inc. will cut 30% of management and support staff, or about 5,100 jobs, as it continues to shrink operations and reorganizes its management team. American’s reduction is similar to plans announced earlier this month by United Airlines Holdings Inc. All three carriers have accepted federal aid mandated for payroll support that carried a ban on job cuts or pay-rate reductions through Sept. 30.

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