Delta to Offer Widespread Buyouts

Fuel Cost, Merger Woes Prompt Move

ATLANTA, March 18 -- Faced with a weak economy, dimmer hopes of a merger with Northwest Airlines and record fuel prices that are eating up profits, Delta Air Lines said Tuesday that it would offer voluntary severance payouts to roughly 30,000 employees -- more than half of its workforce -- and cut U.S. capacity by an extra 5 percent.

Executives at Atlanta-based Delta said in a memo to employees that the airline's goal is to cut 2,000 front-line, administrative and management jobs through the severance program, attrition and other initiatives.

Delta spokeswoman Betsy Talton said the company would accept more job cuts, if more employees than intended take the voluntary severance. Delta had 55,044 full-time employees as of the end of last year.

The severance program primarily affects mainline Delta employees. It will not affect Delta pilots, who have a union contract with the company, or employees at Delta regional carrier Comair.

One part of the program is for employees who are already eligible for retirement or for those whose ages and years of service add up to at least 60, with 10 or more years of service. The other part of the program is an offer for front-line employees -- such as flight attendants and gate and ticket agents -- with 10 or more years of service and for administrative and management employees with one or more years of service.

Besides severance payments, employees who take the offers will be entitled to travel privileges and additional benefits to manage career transitions.

Oil prices recently cracked $111 a barrel, nearly twice what they were a year ago. Delta said that in the past three months, fuel prices have climbed nearly 20 percent, and its 2008 fuel bill is expected to cost $2 billion more than in 2007.

Delta shares rose 55 cents, or 6 percent, to $9.78 in afternoon trading Tuesday. The company's stock price has lost more than half its value since Delta emerged from bankruptcy last April.

The memo from chief executive Richard H.Anderson and President Edward H. Bastian did not mention Delta's talks with Northwest about a merger that would create the world's largest airline.

On Monday, Delta's pilots union said it had told executives it could not agree on seniority issues with its counterpart at Northwest, raising serious doubts about the prospect of a merger.

The disclosure was announced in a letter to Delta pilots from Lee Moak, head of the Delta union.

The letter does not mention Northwest by name but makes reference to another union as the only one that Delta pilots have been talking to. Officials close to the talks have said in recent months that the other company was Northwest.

The letter refers in the past tense to talks with the other carrier, suggesting at least for now that there won't be further talks.

The two carriers don't need a pilot seniority integration deal in advance to move forward with a deal, but Delta executives have said they would not take further steps unless the seniority of their employees is protected.