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Delta Air Lines plans to cut 7,000 - 9,000 jobs

By Ed Brock and Mike Davis

Carolyn Newman has been watching the Delta Air Lines Chapter 11 bankruptcy filing nervously.

As the widow of a Delta employee, Newman collects survivor's benefits. News Thursday of the company's plan to eliminate between 7,000 and 9,000 jobs and to cut salaries on several levels, made one week after the company filed Chapter 11, didn't help her peace of mind.

"I haven't heard anything about the survivor's benefits," said Newman, a resident of McDonough who works for the Clayton County Development Authority. "I hope they won't do anything with that."

Delta CEO Gerald Grinstein announced the job and salary cuts, along with other specifics of the company's restructuring plan by saying the moves are designed to "save Delta in the near term, so that it can compete and win in the long term."

Through the in-court Chapter 11 restructuring, revenue and network productivity improvements such as pursuing more profitable international routes and, through the salary cuts, Grinstein said the company hopes to see $3 billion in annual financial benefits by the end of 2007.

Newman is hoping for the best.

"I hope Delta comes back kicking and screaming because (her husband Wayne Newman) had Delta blood," Newman said.

Grinstein said the pay cuts and job reductions would affect employees throughout the company, including a 25 percent pay cut for Grinstein himself. There will also be a 15 percent reduction for executive officers and a nine percent reduction for supervisory and administrative personnel.

Front-line personnel, excluding those who make less than $25,000 annually, could see a 7 to 10 percent pay reduction.

Delta's pilots are expected to provide $325 million of the annual savings according to Grinstein. However, in a letter to members of the Delta pilots' union, the Air Line Pilots Association, union Chairman John Malone said, "We will not be rushed into the company's timeline if it is not in our collective best interest."

"In a historical perspective, it appears that the Delta pilots are again being asked to carry a disproportionate share of the recovery burden," Malone wrote. "Our team will work doggedly to ensure that the restructuring of Delta is carried equitably by all stakeholders. Speaking as a Delta employee, I hope Delta management can be made to understand that its employees are the key to this company's future success."

Leaders in Henry County's business community took the news of Delta Air Lines' plan to cut as many as 9,000 jobs as sobering, but were hopeful the airline would once again return to a sound financial footing.

"Obviously, when the Delta community hurts, Henry County hurts," said Kay Pippin, the executive director of the Henry County Chamber of Commerce, when she was told of the plan.

Henry County may be home to the largest population of Delta employees in the metro Atlanta area, but firm numbers are hard to come by. Nearby Fayette County is home to a large population of Delta pilots.

Pippin said she's confident Delta will reemerge from bankruptcy a strong and viable standalone carrier.

"The government at the state level and the national level has to do, and will do, everything possible to make sure this outstanding company doesn't go down the tubes," she said.

For the second time in a week, Georgia lawmakers delved Thursday into the financial problems of bankrupt Delta Air Lines, offering a sympathetic ear and looking for ways the state can help.

But the joint House and Senate Transportation Committees reached no conclusion after hearing from one of Delta's top executives, the head of the pilots' association and an economist.

"It may be a little early to tell what we should do, can do, would want to do – with the exception of making sure that we help these ... families out there in Georgia who may be hurting," said Sen. Bill Stephens, R-Canton, chairman of the Senate panel.

Delta's chief financial officer, Ed Bastian, told the committees that about 25 percent of the job losses will come in Georgia but said they will be spread over a period of about 18 months and generally will be based on seniority.

"Thus far, the reception has been somber," he said when asked how Delta workers were reacting to Thursday's news. "But I'll tell you that it's been understood that this is a battle for survival."

Asked how the state could help, Bastian pointed to a measure lawmakers approved this year capping the airline's state fuel taxes at $15 million. Setting the cap even lower and making sure the tax break doesn't expire in two years as it is currently scheduled to do "would certainly be of assistance to Delta," he said.

Bastian added, "We are in a situation where every dollar counts in terms of the survival of this great enterprise."

Along with her own concern for her benefits, Newman said, she also worries for her son-in-law, a Delta international ramp agent.

"He asked me what would Dad say to do," Newman said. "I told him he would say to hang in there."

The Associated Press contributed to this article.