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Delta CEO Calls Outlook Bleak, Wage Cuts Crucial

June 17, 2004|From Associated Press

The chief executive of Delta Air Lines Inc. gave a bleak outlook Wednesday of the carrier's ability to increase revenue and said that meant getting deep wage cuts from pilots was even more crucial to its survival.

In a speech at an investor conference in New York, CEO Gerald Grinstein said low-fare rival AirTran Airways had for the most part been able to call the shots on ticket prices in many of the markets in which the two competed.

"We have no pricing power and yields are continuing to erode," Grinstein said. "We have to learn to live in the revenue environment that we're in."

That makes getting wage cuts from its pilots "a crucial first step" in Delta's turnaround plan, he said. He reiterated that the Atlanta-based company would consider bankruptcy only as a last resort.

Some analysts believe that Delta, the nation's third-largest airline, has only six to nine more months to get the wage cuts or face bankruptcy protection. The airline has lost more than $3 billion and laid off 16,000 employees in the last three years.

Shares of Delta fell 24 cents to $5.71 on the New York Stock Exchange.

Delta is asking for a 30% wage cut from pilots, who are offering to take a 9% cut and to forgo a 4.5% raise they received in May. Delta's pilots make between $100,000 and $300,000 a year, according to the company.

Grinstein said he hoped Delta's pilots would decide "that it is time to re-engage and get the discussions back on track."

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