Comair will dispose of as many as 30 regional jets and slash between 600 and 1,000 jobs as part of a plan to cut costs by $70 million a year, the company announced last month.
The Cincinnati-based regional expects to remove 11 Bombardier CRJs from its fleet by next month, as parent company Delta forges ahead with a planned “rightsizing” of its Midwest hub that will see a 26-percent cut in flying, including 249 Comair flights. As a result, some 350 of Comair’s Cincinnati-based employees will likely lose their jobs by year-end. The extent of further cuts will depend on the outcome of Delta’s Chapter 11 restructuring efforts, said a company spokesman.
“Delta’s efforts to achieve an additional $3 billion in annual financial benefits by 2007 include amending Comair’s Delta Connection agreement to reduce the amount of compensation provided for regional airline feed,” said Comair president Fred Buttrell. “As a result, Comair must adjust its costs to match the cost pressures of a restructured airline industry and to create a commercial solution that will ensure Comair emerges from the restructuring process ready to compete and thrive for the long term.”
Of course, bankruptcy gives Delta and Comair virtual carte blanche to void “non-competitive” aircraft leases and mortgages, labor contracts and supplier agreements. Early this year Comair promised to add another 25 seventy-seat CRJ700s or Embraer 170s in return for a pilot pay freeze and other concessions from its flight attendants and mechanics. Now it will ask for much more during new talks aimed at cutting annual costs associated with those groups by $17.3 million, $8.9 million and $1 million, respectively.
Meanwhile, Comair expects to shave $5.2 million in annual costs from its management payroll starting this month by cutting Buttrell’s salary by another 15 percent and instituting cuts of 10 percent for company officers, 9 percent for directors, 7 percent for salaried managers and 4 percent for hourly supervisory/administrative personnel. All company officers–including Buttrell–already took a 10-percent cut earlier this year.
In the end, Comair plans to reduce its dependence on 50-seat jet flying and “position” itself to compete for more opportunities to fly 70-seaters. “We believe that 70-seat flying and, potentially, larger-gauge equipment will be in higher demand as the industry continues to restructure,” said Buttrell. The airline now flies 31 forty-seat CRJ440s, 113 fifty-seat CRJ100s and -200s and 27 seventy-seat CRJ700s.