Delta Workers Wonder Where They’ll Land : Airlines: A rent dispute with LAX officials could result in hundreds losing their jobs or being forced to move.
More than 900 Delta Air Lines workers face the prospect that they’ll either have to leave California or quit their jobs because of a lease dispute between Delta and Los Angeles airport officials.
At issue is Delta’s 40-acre city-owned facility on Century Boulevard next to Los Angeles International Airport. Delta, with its lease expiring next March, faces sharply higher rent if it wants to stay on the property.
But the Atlanta-based carrier is suffering major financial problems, and so Delta is mulling whether to move its LAX operations elsewhere--perhaps out of state--if it cannot strike an acceptable rent deal.
That’s left Delta’s work force in limbo.
“We’re freaking out, to tell you the truth,” said Monica Boutte-Peeke, a reservation sales agent, noting that Delta has told its employees to expect a decision soon, perhaps by next week.
“The mood (here) is very somber,” she said. “We will either be out of work or have to move to a state that we do not choose or desire, and give up our friends, relatives and homes in Southern California.”
Delta’s facility, anchored by a four-story office building, mainly houses about 700 reservation and customer service agents, along with about 225 marketing and airplane maintenance personnel.
The carrier pays about $600,000 a year in rent. Although neither side will say what new rent it is proposing, sources familiar with the dispute said Delta faces at least a doubling of its rent.
Ted Stein, president of the city Board of Airport Commissioners, said, “We want Delta to stay” in the area. But he said Mayor Richard J. Riordan’s administration also expects to receive a “fair market” rent, and that separate appraisals of the property by both sides show the rent should be “substantially” higher.
“We are committed to trying to retain the (Delta) jobs, but we’re also committed to establishing a fair market return,” he said.
Delta is saying little about the matter publicly. Spokeswoman Jackie Pate said only that the company is “exploring all options.”
The Delta matter is the latest in a growing list of hassles between the airline industry and Los Angeles officials.
Last December, for instance, the airlines grudgingly agreed to a tripling of their LAX landing fees after the Riordan Administration threatened to deny the carriers operating privileges at the airport.
The Delta dispute also could presage a conflict of interests between city airport authorities and state agencies, which are eager to prevent another major company from taking hundreds of jobs out of California.
The state just waged a successful battle to keep Taco Bell Corp., a unit of PepsiCo Inc., from moving its 1,000-worker headquarters operation from Irvine to Texas.
So far, however, California’s Trade & Commerce Agency--which organizes “red teams” of personnel that try to keep disaffected companies from leaving the state--is keeping a low profile in the Delta case. The agency has been in contact with both sides, but no Delta red team has been formed, a spokesman said.
However, a spokesman for the Economic Development Corp. of Los Angeles County, a nonprofit jobs-promotion group, said the EDC is prepared to help Delta find another site in the region should the airline’s LAX lease be terminated.
Delta’s LAX building mainly houses agents taking reservations by phone--a task that can be handled in virtually any city. Employees say Delta has already offered to transfer some Los Angeles workers to its reservation centers in Boston, Cincinnati and Salt Lake City.
Three months ago, Delta launched a major corporate overhaul to slash $2 billion from its annual operating costs, in part by eliminating up to 15,000 jobs nationwide. Special charges related to that overhaul contributed to a $408-million loss for Delta in its fiscal year ended June 30, which followed the airline’s $1-billion loss the previous year.
Ironically, Delta’s LAX facility and its work force are not included in the airline’s massive restructuring and job cuts. Indeed, the airline said it has spent more than $1 million in recent months to upgrade and expand the building’s communications and computer systems.
Those steps indicate that Delta prefers to stay in Los Angeles and is not using the LAX lease issue as an excuse to exit the state, some of Delta’s workers said.
“It’s not like they’re super healthy and just looking for the best break” in rent, said Barbara Chavanne, a ticket agent who has worked at Delta for 12 years.
Chavanne said she and her husband were recently able to buy a house on the Palos Verdes peninsula because they have two incomes. But if Delta pulls out, she said, transferring to a Delta site outside of California “is something we have to seriously consider.”