Delta Airlines to Reduce Costs through Maintenance Outsourcing

Delta Airlines disclosed Tuesday plans to restructure its technical operations unit in a bid to save $240 million over a period of five years.

The troubled airline, negatively impacted by rising fuel costs and tight liquidity, mentioned in a filing with the U.S. Securities and Exchange Commission, that it plans to outsource heavy maintenance on the MD-88 and MD-90 planes from Avborne of Miami, Florida.

The company said that it has also entered into a contract with Air Canada Technical Services, located in Vancouver, Canada, to outsource heavy maintenance on its 757s and 767s.

The outsourcing will enable the company to achieve its earlier announced target of eliminating about 1,600 to 2,000 technical operations jobs. These cuts are part of Delta Airlines´ plans to cut 6,000 to 7,000 positions throughout the company over a period of 18 months.

Delta Airlines said that it would shift some of its operations from its Tampa, Florida, hangar to Atlanta to fill the capacity created when the Atlanta maintenance work is shifted to the two outside suppliers. Delta Airlines´ share price appreciated 4.3 percent to $4.15 in pre-market trading earlier this week.

Delta Airllines´ CEO, Jerry Grinstein, said last week that the airline is likely to escape bankruptcy filing and should be able to meet its 2005 obligations from cash in hand, cash from operations and previously arranged loans.