Gerald Grinstein, Delta Air Lines' ( DAL) CEO, won't be taking home a paycheck for the rest of the year. The struggling airline's boss told employees Tuesday that he would not be taking his salary for the rest of the year, as part of an announcement outlining management's contribution to Delta's plan to cut labor costs. As of Jan. 1, 2005, all executives, supervisory, administrative and front-line employees will take an across-the-board pay cut of 10% and be forced to pay more for health care. "In distressed times like these, when everyone must sacrifice, it is especially important that leadership participates, and they have," Grinstein said in a statement to employees. "It is also necessary for me to lead the way. I have declined my salary and will not be paid for the rest of the year." Also, the company has started up an early retirement program for staffers, to cut back on involuntary layoffs. As part of the airline's restructuring plan, Delta Solution, the company said it will lay off as many as 7,000 employees, en route to cutting costs by $2.7 billion by 2006. In another move, Delta dodged a bullet that could have sent the company into bankruptcy court this week. On Tuesday, Delta's pilots officially ratified an agreement allowing the airline to employ newly retired pilots to keep operations running smoothly and prevent potential service disruptions that could have forced the carrier to file for Chapter 11 bankruptcy protection. In exchange for letting the carrier recall retirees, the union has written assurance from management that it won't try to terminate the pilots' pension plan before Feb. 1, 2005. In an optimistic sign for future negotiations, 90% of Delta's pilots voted in favor of the agreement. "The major goals of this agreement were to attain some protections for the Delta Pilots Retirement Plan and the operation of the airline," said John Malone, chairman of Delta's pilot union. "With the membership ratification process now complete, we can refocus our efforts on reaching an agreement as part of an overall restructuring of Delta."
In reaction to the measures, shares of Delta -- which plunged to a new 52-week-low of $2.78 yesterday, rose 51 cents to $3.45. The early retirement issue was a sideshow in Delta's road to recovery. The airline is seeking $1 billion in wage concessions from pilots. Two months ago, the union put a $700 million package on the table, but with oil prices high and revenue weak, time is running out for Delta. The union said negotiations with the company will continue this week.