Page last updated at 17:17 GMT, Tuesday, 18 March 2008

Delta to cut jobs as costs surge

Delta Air Lines planes
Delta's business plan was based on oil costing $90 a barrel

Delta Air Lines has said it hopes to cut at least 2,000 jobs through a voluntary redundancy programme as it battles high fuel prices.

An estimated 30,000 non-pilot staff - about half of the firm's employees- will be eligible for the payout.

The third largest US carrier also said it would cut 5% of its domestic services by August.

Delta said that its fuel costs had risen 20% over the past three months as oil prices hit record levels.

The firm wants to cut 1,300 rank and file jobs and 700 administrative and management posts.

There has been intense speculation that the firm was on the brink of a merger with rival Northwest Airlines, but analysts believe that this is now unlikely to happen in the near-term because of obstacles from pilots' unions.

Airlines worldwide are suffering as a consumer slowdown in the US and Europe makes it more difficult to increase ticket prices at the same time as their fuel costs head higher on the surging oil price.

Fuel costs

"Our 2008 fuel bill is now expected to increase by nearly $900m (450m) compared to our business plan and more than $2bn over 2007."

The company's existing budget for jet fuel is based on oil costing $90 a barrel.

Oil prices, which influence the cost of fuel, have remained strongly above $100 in recent weeks and Delta expects them to stay at this level.

The cooling US economy is also putting pressure on the business, it said in a filing with the Securities and Exchange Commission.

The airline said it would not cut back on its international schedule, "where fares more readily cover higher fuel costs", pledging to expand its international routes by 15% this year.


SEE ALSO
US airline deal talk intensifies
11 Feb 08 |  Business
Delta loss as fuel prices surge
23 Jan 08 |  Business
US airline payout angers workers
07 Dec 07 |  Business
Northwest emerges from bankruptcy
18 May 07 |  Business
Delta sees quarterly losses widen
14 Feb 07 |  Business

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