Delta offers employees buyouts, retirement as coronavirus hurts travel demand, while United readies similar plans

KEY POINTS

• Delta offered buyouts and retirement packages in an effort to cut costs.
• United is preparing a similar plan for thousands of employees, excluding pilots.
• Airlines that accepted parts of a $25 billion aid package are prohibited from laying off staff through Sept. 30.

Delta Air Lines passenger planes are seen parked due to flight reductions made to slow the spread of coronavirus disease (COVID-19), at Birmingham-Shuttlesworth International Airport in Birmingham, Alabama, U.S.

Elijah Nouvelage | Reuters

Delta Air Lines offered retirement and buyout packages to employees on Thursday, an effort to cut costs as the coronavirus continues to hammer the airline business.

"While we never dreamed just a few months ago that we would be talking about a smaller Delta – this was expected to be a year of growth, after all – this is the reality we're facing," CEO Ed Bastian said in a note to staff, which was seen by CNBC. "Every voluntary departure helps to protect the jobs of those who most need them."

United Airlines is planning to offer similar voluntary separation packages to thousands of employees, including fleet service workers and flight attendants, as early as Thursday evening, according to people familiar with the matter. The offers won't apply to pilots, one of the people said.

U.S. airlines are prohibited from laying off or cutting the pay rates of any workers through Sept. 30 under the conditions of $25 billion in federal aid they started receiving last month. But carriers are racing to slash costs and are prepping employees for the worst as travel demand remains more than 80% below last year's levels.

Delta's announcement comes a day after American Airlines said it plans to reduce its management and administrative employees by 30%, or about 5,000 people. United also aims to cut this portion of its workforce by 30%. The airlines are urging employees to accept buyouts or early retirements to avoid involuntary cuts.

Delta had about 91,000 employees as of the end of 2019, according to a company filing. The Atlanta-based airline is also planning to offer early retirement to its unionized pilots, with details coming out next week.

Delta employees who take the buyout offer will get four to 20 weeks of severance, a year of paid medical coverage and a year of travel benefits, according to an internal video message, which was also viewed by CNBC. Those who qualify for early retirement would receive up to 26 weeks of severance, two years of medical coverage and a year of travel benefits.