From todays Cincinnati Enquirer:
Delta Air Lines could be cutting jobs as well as flights in the coming weeks — even if the federal government comes through with an aid package for the nation's air carriers.
Delta chairman and chief executive officer Leo Mullin said it was too soon to discuss numbers. The company also has made no decisions aside from the immediate 20 percent cut in capacity announced Sunday, he said. The move was prompted by a huge drop in demand for air travel following last week's terrorist attacks.
But in a telephone interview from company headquarters in Atlanta, Mr. Mullin said Delta is developing contingency plans over the next three to five days to handle whatever happens.
"It is quite possible," Mr. Mullin said about layoffs. "But we've truly not estimated what aid we might receive or what the impact will be."
Atlanta-based Delta, the nation's No. 3 carrier, operates its second-largest hub at Cincinnati/Northern Kentucky International Airport. In conjunction with its Erlanger-based regional subsidiary Comair, Delta employs more than 8,000 locally, making it Northern Kentucky's largest employer.
Confirmation of potential layoffs came amid one of the worst days financially for airlines in history — which analysts had predicted, given the role airlines played in last week's attacks.
The industry lost $12.4 billion in value in Monday's training, with the Amex airline stock index hitting an all-time low since it began in 1996.
Carriers everywhere were cutting routes, capacity and jobs while threatening even more cutbacks.
"There's no telling where this will land if the airlines can't convince people that it's safe to fly," said San Francisco-based Richard Henderson, airline analyst for Pershing, a division of Credit Suisse First Boston.
Shutdown was costly
Prior to the attacks, the nation's airlines were struggling because of lower demand for business travel and higher fuel and labor costs, with some estimates calling for combined losses of $2.3 billion. The airlines may have lost a total of $500 million or more just from last week's two-day shutdown of the system alone.
And many are wondering if some of the weaker carriers can make it through this crisis.
Delta stock dropped 44.6 percent, closing at $20.64. Mr. Mullin said Monday the company was operating about 82 percent of its flights, but that they were only about 40 percent full.
"Delta is in perhaps the best financial situation of all the carriers," Mr. Mullin said. "But having said that, this particular situation is so large and the consequences are so great, no airline is immune.
"Were the industry to have no help whatsoever, we would be sure to have cutbacks in operations and the implied cutbacks with employees as well."
He would not say if potential layoffs would extend to Comair, which Monday was operating 100 percent of its 664 flights.
But Jamie Baker, regional airline analyst with UBS Warburg, said that it would be logical to assume that any capacity and job cuts would trickle down to the smaller carriers.
Comair spokeswoman Meghan Glynn said it would defer to Delta on capacity and job decisions, adding that the company's planes were only about 35 percent full Monday.
Must act soon
Mr. Mullin has been one of the most vocal airline executives in the effort to get some sort of aid from Congress. Monday, he said the Air Transport Association, the airlines' main lobbying group, would be asking for a package worth a total of $24 billion. Such an aid package would include loan guarantees, tax breaks and direct grants.
Mr. Mullin said he is "very involved" in the effort, which will include meetings with U.S. Transportation Secretary Norman Mineta and White House officials this week.
"If we don't act soon, I'm afraid that it will be even more difficult to resuscitate this key industry in the future," said Sen. John McCain, R-Ariz., ranking Republican on the Senate Commerce Committee.
Mr. Mullin said that he supports the idea of federalizing airport security, essentially taking it out of the hands of the airlines, and endorsed the idea of armed air marshals on flights.
"We need to give the highest degree of assurance to the public that high levels of security are being provided," Mr. Mullin said.
"Law enforcement in this country is highly respected, and we need to have the federal government take over all screening. It would be appropriate for them to take over the function anyway, because these are the kinds of threats they are now charged with alleviating."
But he hopes that the airline can return to practices such as electronic, off-site check-ins and ticket kiosks that have been banned for security reasons.
"We had made a lot of effort in relation to the customer to make it as convenient as possible to move through the entire traveling experience," Mr. Mullin said. "We recognize that these security measures are a significant step backward. ... We fully support it now, but we hope there are some things that can be eliminated later."
The Associated Press contributed to this report.
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