Delta Reduces Ground Employee Pay 25% Through June, Places 17,000 Employees On Voluntary Leave

Delta CEO Ed Bastian sent an internal memo to employees outlining the seriousness of the situation faced by the airline and the steps they’ve taken to date – and informing non-flying personnel that they’ll have their work days refused 20% – 40% through June, resulting “in a 25 percent savings in payroll over the next 90 days.”

Currently 17,000 employees – including 7000 flight attendants – are taking unpaid leave with benefits. This helps scale down the operation by “over 70 percent; parking more than 600 aircraft.”

By “consolidating facilities at airports nationwide” the company can save on contractors, down to cleaning costs for terminals. They’re even “reducing non-essential maintenance” at this time.

The reduction in hours doesn’t apply to hourly reservations staff who need to field customer calls, with high call volumes to cancel bookings, or to some operations teams that are working full steam to “wind down the operation.”

Nonetheless, Bastian remains confident of government subsidies to support the airline. Here’s his memo:

Internal Memorandum 

Date: Tuesday, March 24, 2020 

To: Delta Colleagues Worldwide 

From: Ed Bastian, CEO 

Subject: DELTA PEOPLE ARE MAKING A DIFFERENCE 

As we are all aware, our business today is significantly smaller than it was just a month ago. In April alone Delta has cancelled more than 85,000 upcoming flights. Between the U.S. and Europe, we’re now flying just four flights a day, down from the more than 80 flights we normally operate this time of year. Those flight reductions have been the result of a $10 billion drop in June quarter revenues and customer demand, which I discussed with you last week. 

I am hearing every day from Delta people who want to help. Thank you. Your call to action inspires me. Only through our collective efforts to continue to preserve cash will we tackle this financial challenge. More than 17,000 of you have volunteered to take short-term, unpaid leaves of absence to help us through the next few months. I appreciate those sacrifices and request more consider joining in if it makes sense for you and your families. 

We have taken many difficult steps to help us preserve our cash, including reducing our flight schedule by over 70 percent; parking more than 600 aircraft; consolidating facilities at airports nationwide; closing many of our Delta Sky Clubs; and reducing non-essential maintenance while always adhering to the highest level of flight safety. These are all temporary measures, but provide us significant savings during this difficult period. 

In recent days, we’ve closed a runway in Atlanta and are using it to park aircraft. In New York, we’ve closed the Terminal D headhouse at LaGuardia and Terminal 2 at JFK, while we’re closing Terminal 3 at LAX. 

Given the large proportion of the fleet and schedule that we’ve been forced to pull down, there is substantially less work at present for our people to do. With that in mind, it is our responsibility to protect Delta, and we are taking additional temporary steps to preserve cash to help us through this crisis. 

I’m asking all ground employees, including merit employees, to reduce their schedule to three- and four- day work weeks from April through June. This will result in a 25 percent savings in payroll over the next 90 days. This is a meaningful contribution to the crisis at hand, and I thank you for making these sacrifices to protect Delta. 

Hourly employees in Reservations and Customer Care, along with certain teams in the OCC, will not be impacted in the near term as they work to wind down the operation and manage an unprecedented volume of customer calls. 

Through a combination of over 7,000 voluntary leaves – the most received throughout the company – and reduced block hours, our flight attendants have already achieved significant savings over the next 90 days. Thank you. Not only are you serving our customers in a calm, professional manner in the face of uncertainty, your financial sacrifice is quite meaningful and very much appreciated. 

We met yesterday with the Delta ALPA MEC to discuss how our pilots can take measures similar to other work groups to help Delta preserve its cash. We look forward to their response by Friday. 

And as I’ve previously discussed, salaries of Delta’s officers have been reduced by 50 percent, with a 25 percent cut for managing directors and directors. 

The quick actions we take today to protect Delta will position us to rebound even faster when demand returns and the crisis is abated. And while these decisions are short-term in nature over the next 90 days, they are all painful and have not been made lightly. Together, these actions will help protect Delta jobs for the long term. 

I remain optimistic that the President and Congress will agree on a relief package for our industry, which is vital to our nation’s economy and national security. In the past two days Delta people have sent nearly 150,000 messages to their elected representatives asking for their support, and your voices continue to be our most powerful tool on this critical issue. Thank you. If you haven’t, please click here to register your support for this vital aid, it only takes about a minute to send a message to your elected representatives. 

Customers are still reaching out every day to tell me stories of the great care and service they are receiving from all of you during this challenging time. Here are a few words from a customer named Dale, in just one of the many emails I’ve received: 

“The Delta Medallion folks stand with (you) and the Delta family. We have confidence in the professionals at Delta to see the company through this trying time. We are not going anywhere. We will be here to again get on a Delta plane when the time is right.” 

We will be there, together, to serve Dale and our millions of customers when we get through this. It has never been more important to keep climbing, together. 

Many people have asked how our leadership team across the system is holding up. Given the stress of the current environment, I’m as proud of them as I am of all of you. We are standing tall and united, and understand the responsibility that we have to protect the future of our business and the company we love. 

This is a defining moment for Delta and our industry, and I assure you our team is up to the challenge. Thank you for everything you are doing for each other and our customers and communities. Please continue to stay healthy and safe, both at work and in your personal lives. 

I’m most impressed by the airline’s ability to secure 17,000 voluntary furloughs, without even agreeing with the pilots union on an offer to that group yet. Pilots, as at American, will no doubt get the best deal both because the airline will need pilots once they’re flying again (they’re in shortest supply and least replaceable) and because when they are flying unhappy pilots can do the most to damage an airline.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. @Gary – don’t say nice things about those glorified bus drivers. They’re just trying to cling on to any sense of relevancy til engineers with actual brains wipe their jobs off the map with self-flying planes. Those pigs were “disappointed” in a $17k/month offer to sit at home with the wives they’ve cheated on; meanwhile other airline staff actually step up to help an airline.

  2. Slight twist to the truth and a bit misleading. And Cap’n Bo is a little jealous of those pilots. Too funny. What a loser.

  3. I don’t think DL — or AA, or the other airlines — are particularly worried about “unhappy” pilots at this point. It’s just a math problem. Senior pilots, like the ones AA has made a generous offer to, are VERY expensive. Like over 200K a year expensive, just in salaries. At the same time, these folks aren’t so keen to keep flying in coronaworld, if that’s even still possible in this world of closed borders and no travellers. So it can be a win-win to offer your most senior pilots a nice retirement offer.

  4. Pilots will get the best deal because they are the only major workgroup at Delta working under a collective bargaining agreement. CBA’s give pilots leverage with which to negotiate changes rather than having amended policies and work rules arbitrarily imposed upon them.

  5. Delta Management has been indulging in (somewhat) dishonest statements to employees and the public. Up until Tuesday they were bending-over backwards to say there would not be pay cuts. Now there is this:

    “I’m asking all ground employees, including merit employees, to reduce their schedule to three- and four- day work weeks from April through June. This will result in a 25 percent savings in payroll over the next 90 days. This is a meaningful contribution to the crisis at hand, and I thank you for making these sacrifices to protect Delta.”

    So they aren’t cutting pay, but they’re cutting pay? This is a stealth pay-cut, particularly for the thousands of merit (Delta speak for salaried) employees who labor tirelessly, acting as glue that holds the operation together, and making nowhere near what some of the pilots or flight attendants do.

    Delta employees understand cuts must be made – management should just be honest and say salaries must cut by 25% for 3 months and not go through a bunch of administrative measures to obtain that objective.

  6. Lmao@suz why would someone want to explain how they got hold of internal memo so they can get that person fired. Obviously it must of been an delta employee i am sure it wasn’t hard.

    Highly doubt that most of those people really volunteered to take leave.

  7. I’d say Capn Bo is about right. Most pilots are arrogant dirtbags. And since F/As think they’re first responders, they’re not too far behind the pilots.

  8. Good article til the last sentence – cheap shot from someone purported to be a “World’s Top Travel Expert”…and, what in tarnation is the bug up Capn Bo’s (et al) butt!?

  9. Hey Cap’n Bo! Remember that time [removed – gl]. Sorry about that. I’ll do better next week!

  10. @757-300:

    Provisions under the new legislation require that airlines not engage in any involuntary layoffs/furloughs AND not reduce rates of pay for any employees until September 30, 2020. The idea was that if they “kept employees whole,” they could continue contributing to the economy while the airlines got a six-month reprieve from low load factors, ramping back up to near-full capacity again by October. Unfortunately, the Administration nor Congress thought about the fact that airlines won’t need to be fully staffed while flying reduced schedules, so – to preserve cash – they are sidestepping the “rate of pay” issue by instead cutting hours per pay period. It’s not consistent with the spirit of the legislation, but it’s legally within the framework. Of course now those same employees will be tightening their belts and NOT contributing to the economy, and whatever stimulus money they receive will likely go into savings for the potential furloughs/layoffs that DO come around on October 1st when the economy is in the tank and no one is traveling.

  11. Heard Delta is not filing Partial UI for the employees whose hours are being cut as required by law per GDOL. And are telling employees they have to file themselves which will delay and will take time to verify.

  12. @Sosai X: Correct and Agree.

    @Alvin: Delta is making is not making it easy for employees who’ve had their hours reduced. They do not plan to send any notification / letter officially notifying of hours reduction (could be used with land lords or creditors for example) and they have not been encouraging the reduced hour workforce to apply for unemployment insurance. Furthermore the focus of most of their unemployment efforts has been on Georgia.

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