Delta to offer buyouts, early retirement package

Jacobson, who last month decided to forgo his own retirement plans in order to lead Delta Air Lines’ Covid-19 response, said the airline is working to “proactively manage its headcount.” Since the start of the Covid-19 pandemic that’s slammed the airline industry, that’s primarily been through unpaid voluntary leave. Jacobson said more than 40,000 of Delta’s 90,000 employees have signed up for that option, which ranges from 30 days to 12 months.

Jacobson said Delta will launch a voluntary separation and early retirement package but did not give a specific date.

“We hope that most of the headcount changes that we’re going to need are going to be achieved through these voluntary programs, and we can do that quickly,” he said.

Here are other highlights from the call:

  • Jacobson said they’re still looking for the proper path through the crisis and figuring out right-size demand. He said recovery might take as long as three years before a “semblance of normal demand.”
  • Delta is taking actions to reduce the cost base by 50% before next month. The airline reduced cash daily burn from $100 million at the end of March to about $50 million presently. They expect daily cash burn to be at $40 million as they exit June.
  • Jacobson said there’s been an uptick in leisure bookings domestically for June and July. “We have to be careful that those actually translate into trips, and don’t just cancel, as we’ve seen people booking travel on the expectation and hope that the environment gets better.” Delta added 100 more flights in June to ensure they have enough seats to respond in markets where demand is improving. However, they’re still adhering to a 60% load cap. Jacobson said they’re being cautious not to over-analyze or over-conclude. “We really can’t afford to have false-starts.”
  • Delta raised over $10 billion in the last 90 days. This buys time to focus on longer- and intermediate-term plans. They’re projecting to have more than $12 billion on hand at the end of June. They have until September to decide on their CARES Act loan funds.
  • When asked about business travel returning, Jacobson said a “sequential series of steps” is likely needed. That starts with people feeling comfortable enough to dine at restaurants and then working their way back into offices. “What we’re trying to do is remove as much uncertainty and anxiety from the actual flight as we can.”
  • On whether Delta could create social distancing by leaning more on wide-body aircrafts: It’s not a scalable solution and won’t provide the stability Delta needs, Jacobson said.
By   – Digital Producer , Atlanta Business Chronicle


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