Tough decisions may have to be made, but Delta Air Lines is committed to doing whatever necessary to achieve the remaining $1 billion of...
COLLEGE PARK, Ga. — Tough decisions may have to be made, but Delta Air Lines is committed to doing whatever necessary to achieve the remaining $1 billion of its targeted cost cuts, Chief Executive Gerald Grinstein said yesterday.
“There is no area that will be safe from scrutiny,” Grinstein told shareholders at the struggling carrier’s annual meeting.
Grinstein said the nation’s third-largest airline is on target to achieve a total of $5 billion in annual cost savings by the end of 2006, though he did not specify what beyond its previous initiatives it will do to reach that goal.
The Atlanta-based company’s meeting included a passionate speech from the head of its pilots union about the sacrifices pilots made to save the company last fall from bankruptcy, a threat Delta again faces just seven months later.
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More than 100 pilots with Delta subsidiary Atlantic Southeast Airlines (ASA) picketed outside the convention center where the meeting was held. They are unhappy about the failure to get a new contract with Delta.
At issue in the ASA negotiations with Delta are schedule, wages and retirement benefits. ASA pilot Tom Zerbarini said before the meeting that Delta has been dragging its feet during two years of negotiations. He said the two sides’ next session is Monday.
In previous weeks, several analysts have suggested Delta might be ripe for a bankruptcy filing by this fall based on the high price of fuel and worrisome comments by the airline in a recent regulatory filing. Just last week, Delta’s stock fell to its lowest point in at least 32 years, but it has rebounded since then.
In a research note Wednesday, J.P. Morgan Chase airline analyst Jamie Baker said the probability of a Chapter 11 filing by Delta in 2006 remains high, though he thinks a filing this year is not as likely.
Filing for Chapter 11 protection does not necessarily spell disaster for airlines. United Airlines and US Airways have been in bankruptcy for several years now, and they are still flying. Even their frequent-flier programs remain intact.
John Malone, chairman of the Delta pilots union’s executive committee, told shareholders that pilots have done their part and now it’s Delta’s turn to step up and show results. The pilots agreed to a 32.5 percent pay cut last fall as part of a $1 billion concessions package.
“The coming months will determine whether our investment was a prudent one,” Malone said.
Malone said Delta pilots’ pensions are in peril.
“We will hope for the best and prepare for the worst while taking heart that we have done more than our share,” Malone said.