Delta to Restructure Technical Operations

Delta to Restructure Technical Operations

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ATLANTA (AP) -- Delta Air Lines Inc., the nation's third biggest carrier, said Tuesday it will restructure its technical operations division in a move to save $240 million over five years.

The airline, which has been trying to cut costs, said in a filing with the Securities and Exchange Commission that it plans to hire two suppliers for heavy maintenance work, resulting in a 34 percent cost reduction. Delta said Miami-based Avborne will work on its MD-88 and MD-90 fleet types while Vancouver-based Air Canada Technical Services will work on the 757 and 767 fleets.

Atlanta-based Delta said it will be responsible for monitoring proper execution of its maintenance program by the vendors.

The moves announced Tuesday will result in the elimination of 1,600 to 2,000 Delta jobs in the technical operations. Those cuts are part of Delta's plans announced in September to cut 6,000 to 7,000 positions throughout the company over 18 months.

Last week, chief executive Gerald Grinstein told investors at a conference in New York that Delta will have to further cut costs to deal with increases in fuel prices because raising ticket fares alone will not do the job.

Grinstein said he believes Delta can avoid a bankruptcy filing, though he indicated that it hasn't ruled out such an option.

The job cuts announced last September were on top of 16,000 jobs it slashed since 2001. In October, Delta won $1 billion in concessions from its pilots.

The concessions helped Delta avoid a bankruptcy filing last fall. But the specter of bankruptcy rose again on March 10 when Delta warned that it will post another substantial loss this year.

Current cost cuts apparently have not been enough to sustain the airline because of rising fuel prices. Grinstein said that because of the fuel increases, Delta expects to take a $900 million to $1 billion hit, perhaps even more.

In Tuesday's SEC filing, Delta said it will shift some of its operations from its Tampa, Fla., hangar to Atlanta to fill capacity created when the Atlanta maintenance work is shifted to the two outside suppliers.

In a memo to Delta's technical operations employees, Tony Charaf, the division's senior vice president, said, "We must review our options to survive, to make certain we are doing what we can to keep this airline going."

Delta shares rose 5 cents to $4.03 in morning trading Tuesday on the New York Stock Exchange.

(Copyright 2005 by The Associated Press. All Rights Reserved.)

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