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Well, that didn’t take long. This morning I wrote that American Airlines was seeking to release 30% of its workforce and per an internal memo obtained by 1TP it appears that 30% is the magic number for Delta as well.
Typically, Delta is the first airline to make a decision and subsequently American and United follow suit. But in a sequence unfamiliar to many, United Airlines was first out the gate, informing employees of their plan to decrease the number of staff on October 1. American followed with their announcement and now Delta has shed light on their plans.
A MESSAGE FROM THE CEO
Before we dive into the options for current employees, let’s start with the words from Delta’s CEO Ed Bastian, as he explains the airlines decision.
In a memo to all employees, Bastian says:
“It will likely be two to three years before we see demand recovery on a large scale. During that time, Delta will have to be a smaller airline as we adjust to reduced demand and the need for distancing and safety during travel. A smaller Delta unfortunately means fewer people will be required.”
The airline is restoring some of the routes after much of its schedule was decimated by COVID-19 and the lack of passenger demand. Unfortunately, the second-quarter schedule is still approximately 85% smaller year-over-year so those words are accurate.
THE TWO AVAILABLE “PACKAGES”
Delta plans to offer two voluntary packages to current employees.
One is an enhanced retirement package for long-term employees who are nearing retirement age or have more than 25 years of service. The other is a voluntary opt-out package that covers most of Delta’s eligible employees.
It’s worth noting that pilots are unionized and so the details for their “packages” will come at a later time.
Similar to other airlines, Delta is making both packages more attractive than being let go when the restrictions of the CARES Act are removed in the Fall but the package details are as follows:
Enhanced Retirement Package:
Pay: Delta will offer a lump sum cash severance payment (amount based on completed years of consecutive service as of Dec. 31, 2020, and weekly pay rate as of April 1, 2020).
Medical: Delta will pay medical, dental and vision premiums up to 24 months. Additionally, participants will receive a Retiree Medical Account of at least $100,000 that can be used to reimburse eligible healthcare expenses in retirement.
Travel: Participants receive 1 full year of active travel priority after separation. If participants have at least 10 consecutive years of service and combined age and service equaling 55 points as of 31 December 2020, they qualify for standard retiree pass travel privileges.
Additional Bonus: Participants receive eight (8) positive space passes in total to be shared among their PPR members. These passes are round trip and have no expiration date. You can use them to fly anywhere Delta flies. Similar to Delta Spirit Passes and Delta Difference Passes, these passes are available for upgrades on a standby basis.
Voluntary Opt-Out Package (most Delta employees)
Pay: Delta will offer a lump sum cash severance payment (amount based on completed years of consecutive service as of Dec. 31, 2020, and weekly pay rate as of April 1, 2020).
Medical: Delta will pay medical, dental and vision premiums up to 12 months.
Travel: Participants receive 1 full year of active travel priority after separation. If participants have at least 10 consecutive years of service and combined age and service equaling 55 points as of 31 December 2020, they qualify for standard retiree pass travel privileges.
Additional Bonus: Participants receive two (2) Delta Departure positive space passes. These passes are round trip and have no expiration date. You can use them to fly anywhere Delta flies. Similar to Delta Spirit Passes and Delta Difference Passes, these passes are available for upgrades on a standby basis.
FINAL STAMP
The option to select a package will open on June 10 for eligible employees.
The airline industry is facing an uphill battle and I wouldn’t be surprised to see more challenging decisions being made in the future including but not limited to decreasing the amount of staff.
What do you make of this development?
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