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Delta Takes $3bn Charge On Buyouts

Published on Jul 16 2020 1:03 PM in General Industry tagged: Delta Air Lines

Delta Takes $3bn Charge On Buyouts

Delta Air Lines has said that it will record charges of up to $3 billion in the current quarter for buyout packages aimed at reducing costs while avoiding involuntary furloughs in the fall.

US airlines are grappling with overstaffing as the coronavirus pandemic crushes air travel demand, but the terms of a $25 billion payroll stimulus package awarded by Congress in March ban them from forcing job reductions before October.

That has spurred a round of voluntary offers from large carriers and warnings that an industry recovery will be slow, forcing them to downsize.

According to labour rules, airlines must give employees 60 days' notice of potential furloughs. Not everyone who receives a notification will be let go.

Main Expense

By encouraging more senior workers to depart, US airlines could trim their labour costs, which are their main expense, during the recovery, giving them more pricing power. Airline union contracts require airlines to furlough junior workers first.

Approximately 17,000 workers at Delta, which had more than 91,000 employees in 2019, opted for buyouts, and over 45,000 are taking varying short-term unpaid leaves.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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