Delta to trim costs by $2.5 billion, reveal low-cost airline ATLANTA (AP) =97 Delta Air Lines said Friday it would cut costs by $2.5=20 billion over the next three years and that it expects to unveil a new=20 low-fare subsidiary as early as next week. Delta's chief financial officer,= =20 Michele Burns, announced the cost-cutting measure Friday at an industry=20 conference in Key Biscayne, Fla. Airline spokeswoman Peggy Estes later said= =20 details pertaining to the planned airline-within-an-airline would be made=20 public by the end of the month. J.P. Morgan airline analyst Jamie Baker=20 said the low-fare unit would help Delta, the nation's third-largest=20 airline, fend off increasing competition from lower-cost carriers such as=20 AirTran, JetBlue and Southwest. "They will do anything to make the Delta=20 unit more affordable to leisure passengers," Baker said. Baker said he=20 expects the new Delta unit will try to avoid traditionally congested hubs=20 and concentrate on routes between the Northeast and Southeast. Estes would not say what the low-fare division would be named, what type=20 planes it would use or whether pilots would be paid less. The cost cuts=20 announced by Burns come on top of $1 billion in previous cuts, which=20 included plans announced last month to eliminate up to 8,000 jobs. Burns=20 did not specify how the airline would save an additional $2.5 billion,=20 although she said it would try work-at-home programs and would review=20 employee benefits before seeking labor concessions. Other major carriers=20 are also engaged in severe cost-cutting as the industry attempts to counter= =20 the effects of a weak economy, reduced spending by business travelers and=20 the aftermath of the Sept. 11, 2001, attacks. US Airways is restructuring=20 under bankruptcy-court protection and United Airlines is involved in=20 intense negotiations with workers in an effort to win a $1.8 billion loan=20 guarantee from the federal government. Without the government backing,=20 United's chances of avoiding its own bankruptcy court filing are slim,=20 analysts said. Delta has fared better than US Airways and United, but its troubles still=20 run deep. The airline lost $326 million in the third quarter and more than= =20 $900 million since the year began. In 2003, Delta said it will have to=20 spend up to $250 million in cash and take charges of up to $300 million=20 because of its underfunded pensions. Delta chairman Leo F. Mullin has=20 blamed the industry woes on higher airline insurance premiums and=20 government security mandates that will cost the industry $4 billion this=20 year. He said that doesn't include $2.5 billion in lost revenues from=20 passengers who won't fly because of hassles associated with the new=20 security measures. Since Delta started matching AirTran's fares in 2001,=20 AirTran's revenue in flights to and from Atlanta has steadily fallen, Baker= =20 said. But JetBlue and Southwest are still offering the most affordable=20 rates to some destinations. Baker said the new Delta fleet could repair=20 mistakes made by its last low-cost venture, Delta Express. He suggests=20 using a Boeing 757 airplane that could seat 200 people at a time. Delta=20 Express used Boeing 737s, which seated 119. "This reduces Delta's per-seat= =20 costs to a level more closely related to its discount competitors," Baker=20 said. "Simply by having a bigger plane with more seats, an airplane can=20 spread out its costs. Secondly, we would certainly hope the new Delta unit= =20 includes some level of labor savings." The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (chgdev) http://www.chagdev.com/ (Chaguaramas Development Authority) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************