Analyst: Delta Layoffs To Give Other Employees Raises
Partly because of lower fuel prices, Atlanta-based Delta Air Lines had more than $2 billion in profits during the first half of this year.
But it announced its plans to lay off management and salaried workers, even though it’s seeing record profits.
It will host its third-quarter earnings call Wednesday, and analysts will be looking to see how optimistic the company is.
Seth Kaplan, managing partner at Airline Weekly, said the layoffs will be puzzling since Delta is doing really well.
“Delta, having been so successful, knows that its rank and file workers want a piece of the action, and so it proactively told them, ‘Hey, we’re going to give you very big raises.’” Kaplan said. “But it has to pay for those raises, and one of the ways is by trimming its management ranks.”
And Kaplan said, because U.S. airlines are adding more flights and seats, tickets are cheap and not bringing in as much money. And there’s also less demand from Europe and Asia.
“Certainly you can imagine management employees saying: ‘Are you kidding? This airline’s earning billions of dollars and you’re laying us off?’” Kaplan said. “But Delta knows that even though it’s had this massive tailwind of falling fuel costs, at some point, it’s going to level off.”
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