Delta salves cuts with cash, stock

ATLANTA — Delta Air Lines employees got a "thank you" of the direct deposit variety Tuesday.

A day after Delta's formal emergence from bankruptcy, the Atlanta carrier distributed cash awards to its rank-and-file employees as part of a cash-and-stock package the company had announced earlier. The $130 million went to about 39,000 nonunion employees and 1,000 midlevel managers and equaled 8 percent of their 2006 pay.

The average payout: about $3,200, the company said.

Delta also has distributed 14 million new company shares to the same group, equal to a 3.5 percent stake in the company. The airline has also said it plans to give employees pay raises of around 4 percent starting July 1 and profit-sharing checks later in the year.

The payouts are intended as partial compensation for two rounds of pay cuts, benefit reductions and job losses for Delta's nonunion workers since 2004 as the airline struggled to stem heavy losses.

Delta's unionized pilots and dispatchers, its upper-level management and employees at its Comair regional carrier subsidiary are getting separate compensation packages.

Denise Ray, a flight attendant who has worked nearly 30 years at Delta, said she's glad to see the money after the pay cuts and being sidelined five months last year by back surgery.

"It's all good," said Ray, who plans to pay bills with the cash and keep the stock.

"After going through tough times, it's nice to see a turnaround," she said. "I'm just hoping it continues and the stock goes up."

Workers will be able to sell new Delta shares starting Thursday, when the new stock begins trading on the New York Stock Exchange.

But some of Delta's creditors who also received stock commitments Monday have already been selling the so-called "when issued" shares ahead of the opening bell, driving Delta's stock price down at least initially. The company's financial advisers earlier pegged the value of Delta stock at around $25.

Based on Tuesday's closing price for the yet-to-be-issued shares, $19.91, the typical Delta employee's stake is worth roughly $7,000, down from earlier estimates of about $9,500.

Separately, Memphis, Tenn.-based Pinnacle Airlines said it will begin flying 16 regional jets for Delta in December under a 10-year agreement. The CRJ-900 jets have 76 seats. Delta has contracts with several other carriers to provide feeder service and direct flights, including SkyWest, which bought Delta's Atlantic Southeast Airlines subsidiary just before it filed for Chapter 11 in the fall of 2005.

Russell Grantham writes for The Atlanta Journal-Constitution.