Here's the full article. Seems that the prior posters left out that ASA/CMR had the biggest gains in traffic and capacity.
Delta says more cuts ahead
Dollar figure not specific
By KIRSTEN TAGAMI
The Atlanta Journal-Constitution
Published on: 07/06/04
Delta Air Lines must cut costs even more than anticipated, Chief Executive Gerald Grinstein says.
In a memo to employees Tuesday, Grinstein mentioned — but did not confirm — a published report saying Delta will ask for $1 billion a year in concessions when negotiations with pilots resume in the next few weeks. That would be a little more than 11 percent more in cost savings than past proposals sought.
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Though he didn't give a number, Grinstein said it is "painfully clear that last year's estimate of the cost savings we will need if Delta is to survive and compete is no longer valid."
Previously, Delta had asked its 7,200 pilots — the highest-paid in the industry — for a 30 percent pay cut and work rule changes that would cut total pilot costs by almost $900 million annually. The pilots have offered about one-third of that, although they recently agreed to resume talks and make a fresh proposal this summer.
A Delta spokesman would not confirm the $1 billion figure, reported Tuesday in USA Today and attributed to an unnamed source.
"We have not publicly shared any potential numbers pertaining to how much a reduction in pilot costs will be needed going forward," said the spokesman, John Kennedy.
A separate memo from a flight operations executive sought to squelch any idea that management planted the USA Today report. "[Grinstein] has been steadfast in his efforts to keep all negotiations where they belong — at the negotiating table; thus, we will not introduce any new proposals through the media," Dean Bloom, director of flight operations, said in a message to pilot managers.
Grinstein's brief memo reiterated one six days ago, in which he noted that "financial pressure on Delta grows more urgent with each passing day." Grinstein said the company already has been able to wring out almost $1.8 billion in costs.
"But costs continue to outpace revenues, with no improvement in sight," Grinstein said. "It's obvious we need to do more and we need to do it quickly."
A spokeswoman for the pilots union said pilots are working on a "comprehensive proposal" to present within the next few weeks. Any pilot cuts must be part of an overall restructuring, said Karen Miller of the Air Line Pilots Association.
Negotiations originally were to resume in late August but have been moved up, said Robert Mann of R.W. Mann & Co., an aviation consulting firm.
"It shows a realization on the part of the pilots group that this is an issue that needs to be addressed sooner rather than later," Mann said.
One factor putting extra pressure on Delta pilots, he added, is that United Airlines is expected to ask for even more cuts from its pilots after it was denied a federal loan guarantee. United won $1.1 billion in concessions from its pilots last year.
Delta has said all along that it would ask for deeper cuts from the pilots if nothing can be worked out before talks on a new contract start, said Philip Baggaley, an analyst at Standard & Poor's. If Delta goes into bankruptcy, the cuts would be greater still, he said.
"They're saying, 'Let's talk now because it's only going to get worse, not better,' " he said.
Also on Tuesday, Delta said June traffic rose 16.6 percent from the same month a year ago, offsetting a 14.6 percent capacity increase as the airline added more flights. Delta filled an unusually high 81.9 percent of its seats in the month, up 1.4 points.
The strongest traffic and capacity gains were at subsidiaries Comair and Atlantic Southeast Airlines, as well as on international routes.
Delta and several other big airlines are filling planes this summer, but the growing clout of discount airlines forces all carriers to hold down fares. For bigger airlines, the lower average fares don't cover costs.
— Staff writer Robert Luke contributed to this article.
