Delta Air Lines (NYSE:DAL) said on Tuesday it expects to avoid furloughs for all worker groups except pilots, though it warned that employees will work reduced hours through the end of the year.
Airlines expect to cut back operations substantially in October after federal payroll subsidies that were included as part of the CARES Act expire. As part of the agreement to receive payroll support, the industry agreed to no involuntary separations through Sept. 30.
With travel demand still weak due to the coronavirus pandemic, the airlines are expected to shrink substantially in the months to come. American Airlines Group (NASDAQ:AAL) expects to cut up to 40,000 jobs, and Delta has said it could have to reduce its pilot ranks by nearly 2,000.
In a memo to employees on Tuesday, Delta CEO Ed Bastian said the airline is flying about 30% of the passengers it flew a year prior, and is currently burning through about $750 million per month. The industry, he said, is "still in a grim economic situation," and a recovery "will be long and choppy."
Bastian said 20% of workers have accepted voluntary proposals including early retirement packages, lessening the need for furloughs across the company. Delta also intends to reduce work hours by 25% through the rest of the year, and senior management salaries have been reduced by 50%.
Bastian is forgoing his salary through the end of 2020.
That leaves the pilots. In the memo, Bastian said "there still is time to mitigate this potential furlough, and discussions are ongoing with the pilots' union as we look for ways to cost-effectively reduce or eliminate" the need for job losses. But absent some sort of a compromise, the airline intends to make cuts.
United Airlines Holdings (NASDAQ:UAL) last week announced a tentative deal with its pilots to avoid furloughing nearly 3,000 of them. Southwest Airlines (NYSE:LUV) and a number of smaller carriers also have arrangements in place to avoid furloughs.
Delta is still lobbying Washington for an extension of the CARES Act, which would provide added payroll protections and at least delay potential furloughs. "While I'm hopeful that an arrangement on an extension can be reached, the deal on a broader stimulus plan ... looks uncertain," Bastian wrote.
The airline also continues to raise capital, announcing on Monday that it plans to borrow $6.5 billion backed by its frequent-flyer program.