CHICAGO (Reuters) - Delta Air Lines Inc. said on Tuesday it will cut wages by 10 percent and its chief executive will go unpaid for the rest of the year, but it still warned of bankruptcy within weeks unless more cuts are made.þþThe No. 3 U.S. airline said pay cuts for executives and nonunion employees will start Jan. 1, but it repeated that it urgently needed $1 billion in annual cost savings from its 7,400 pilots, its only major unionized group.þþ``Time is running out. If all of these elements are not in place in a matter of weeks, we will have to restructure through the courts,'' the Atlanta-based carrier said in a statement.þþSeparately, Delta pilots on Tuesday ratified an agreement that will allow the carrier to use retired pilots if staffing levels fall dangerously low.þþShares of Delta rose as much as 21 percent before closing up 40 cents, or 13.6 percent, at $3.34 on the New York Stock Exchange.þþDelta also said it would increase employee costs for health-care coverage, reduce maximum vacation time, eliminate a subsidy for retiree medical benefits and offer two voluntary exit packages to employees.þþAs part of its cost-saving measures, Delta said earlier this month it would cut up to 7,000 jobs, or about 10 percent of its work force, over the next 18 months and drop Dallas-Fort Worth as one of its hubs.þþ``We have a small window of opportunity available to us to avoid Chapter 11 that some other carriers do not have,'' Chief Executive Gerald Grinstein said in a memo to employees on Tuesday.þþGrinstein said he had hoped increased productivity, the lack of pay increases since 2000 and the elimination of 16,000 jobs would eliminate the need for additional sacrifices.þþBut Delta is strapped with high costs, weak revenue and rising competition from discount carriers. It said its fuel costs this year will be $680 million more than last year.þþThe changes are part of its plan to save $5 billion a year by 2006. þþMEANINGFUL CUTSþþJoe Schwieterman, transportation expert at DePaul University, called the 10 percent pay reductions ``real and meaningful cuts.''þþ``Grinstein is taking a bold preemptive move to take a potentially explosive issue off the table if the cuts aren't fairly distributed,'' Schwieterman said. ``This will help ease fears that (pilots) are being unfairly singled out.''þþDelta has previously said Grinstein's annual salary is $500,000. Grinstein's predecessor, Leo Mullin, stepped down last year after being sharply criticized for his pay package.þþThe airline has been in concession talks with its pilots since last year and has said it needs them to take pay cuts of about 35 percent. The union has offered a concession package worth between $655 million and $705 million a year, including 23 percent pay cuts.þþIn exchange for use of the retired pilots on a contract basis, Delta has assured the union it will not file notice to cancel the pilots' pension plan before Feb. 1, even if the company files for bankruptcy before that date.þþWaves of Delta pilots recently have taken early retirement, raising concerns that a decline in staffing levels could require the carrier to ground a portion of its fleet.þþJohn Malone, head of Delta's unit of the Air Line Pilots Association, said ratification of the deal on retired pilots allows the union to refocus efforts on an overall agreement as part of the company's restructuring. þþþþ
Source: NY Times
