Delta plans $2.5B in cuts, new airline

ATLANTA (AP) -- Delta Air Lines said Friday it would cut costs by $2.5 billion over the next three years and that it expects to unveil a new low-fare subsidiary as early as next week.
Delta's chief financial officer, Michele Burns, announced the cost-cutting measure Friday at an industry conference in Key Biscayne, Fla.
Airline spokeswoman Peggy Estes later said details pertaining to the planned airline-within-an-airline would be made public by the end of the month.
J.P. Morgan airline analyst Jamie Baker said the low-fare unit would help Delta, the nation's third-largest airline, fend off increasing competition from lower-cost carriers such as AirTran, JetBlue and Southwest.
"They will do anything to make the Delta unit more affordable to leisure passengers," Baker said.
Baker said he expects the new Delta unit will try to avoid traditionally congested hubs and concentrate on routes between the Northeast and Southeast.
Estes would not say what the low-fare division would be named, what type planes it would use or whether pilots would be paid less.
The cost cuts announced by Burns come on top of $1 billion in previous cuts, which included plans announced last month to eliminate up to 8,000 jobs.
Burns did not specify how the airline would save an additional $2.5 billion, although she said it would try work-at-home programs and would review employee benefits before seeking labor concessions.