Delta service subsidiary to close

Minneapolis-based Regional Elite Airline Services, a subsidiary of Delta Air Lines that provides support to regional carriers, is closing its doors next week.

About 4,000 employees, including nearly 650 at Minneapolis-St. Paul International Airport, are affected by the closing, which will take place on Nov. 13.

In the Twin Cities about 540 of those workers have taken jobs with Delta Global Services, another subsidiary of the Atlanta-based airline, Delta spokeswoman Kristin Baur said Monday. Some have opted for retirement and some are still weighing their options, Baur said.

Of the jobs affected by the closing of Regional Elite, the vast majority -- 518 -- are in customer service, which includes ticket agents and ramp workers.

Calls to Regional Elite were not returned Monday.

In a letter to the Minnesota Department of Employment and Economic Development, as required by federal law when more than 50 layoffs are pending, Regional Elite said its work has been awarded to another contractor at the airport.

"Consequently, the entire Regional Elite station in Minneapolis-St. Paul International Airport will permanently close and all employees in that station will be separated," Regional Elite director of people Jannie Guzick said in the company's letter to the state.

Delta has been on a cost-cutting drive for some time and in October announced that it plans to reduce costs by $1 billion by retiring older, less efficient aircraft and trimming capacity, which has already been noticeable in the Twin Cities market.

In a memo to employees announcing Regional Elite's demise, Senior Vice President Don Stephens said: "As we've seen more mainline aircraft showing up in regional stations, traditional aviation service providers have gained a presence in regional markets."

Baur said Delta determined that owning two ground service operators "is not efficient as Delta continues to lower non-fuel costs throughout the business."

Stephens said Regional Elite's cost structure "kept us from effectively competing with other aviation service providers."

"With very limited opportunities to maintain or grow our business, we will not be a viable company moving forward," Stephens said.

Stephens said that most Regional Elite employees in the Minneapolis-St. Paul and Detroit hubs are expected to be hired by Delta Global Services since the scope of service at issue "is the same as we currently provide."

Baur said benefits at Delta Global Services "are comparable" to those offered by other service providers.