Delta Air's Revival Plan Preaches Austerity

Updated from 12:26 a.m. EDT

Delta Air Lines (DAL Quote) will cut employees and benefits but give a bigger-than-expected role to Song, its low-cost unit, in a widely anticipated but still unannounced overhaul, TheStreet.com has learned.

In a memo to employees sent Wednesday, Delta CEO Gerald Grinstein said the company will have to eliminate jobs, slash benefits and cut paychecks in order to reduce costs and avoid filing for bankruptcy. The nation's third-largest carrier is asking 6,900 unionized pilots represented by the Air Line Pilots Association for $1 billion in annual wage concessions. The union, whose contract is not amendable until mid-2005, has offered a package worth about $700 million.

"When our plan is successfully implemented, we will be the leaner, simplified, more productive airline we must be in order for us to survive and compete," said Grinstein, in his memo. "Regrettably, one of the consequences will be fewer jobs and additional changes to pay and benefits for all of our employees as we make operational changes to achieve the necessary cost savings." ...