Delta Air Lines raises salaries, than competitors will respond
2022.12.06 07:16
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Delta Air Lines raises salaries, than competitors will respond
Budrigannews.com – In a new four-year contract, Delta Air Lines is promising pilots a 34% cumulative pay increase. This has raised hopes that United Airlines and American Airlines (NASDAQ:) will follow suit.
United and American pilots told Reuters that the Atlanta-based airline has “raised the bar” with a “very strong” proposal, despite the fact that Delta’s offer still needs to be approved by union leaders and then ratified by its pilots.
“This will be the benchmark,” an American pilot said.
In addition, Delta’s offer includes a one-time lump sum payment, reduced health insurance premiums, and enhancements to holiday pay, vacation pay, 401(k) contributions, and work policies.
Over the next four years, its union estimates that the proposed deal will result in cumulative value increases of more than $7.2 billion.
The pilots of both American and United have been promised contracts that are “industry-leading.” Consequently, any proposal that is deemed inferior to Delta’s will probably be rejected.
A pilot at the airline with its headquarters in Chicago stated, “United leadership has said that they want to see what the market is.” That will be the new market if the Delta membership accepts and ratifies this contract.
American Airlines pilots are represented by the Allied Pilots Association, which sent a message to its members on Saturday. The message referred to Delta’s proposed deal as “a significant event” and stated that it would “stimulate other ongoing labor negotiations.”
American pilots rejected a proposed two-year pay increase of 19% that would have cost the Texas-based airline approximately $2 billion. In a similar manner, United pilots turned down a proposal that included enhanced overtime and training pay as well as cumulative wage increases of more than 14.5 percent.
It is a source of concern for some airline executives that substantial pay raises for pilots would increase fixed costs and make it more difficult to repair debt-laden balance sheets.
According to Jefferies analysts, Delta’s offer could result in a 450 basis point increase in non-fuel operating costs in 2023 compared to 2019.
Solid travel request has been permitting carriers including Delta to relieve inflationary tension with higher charges. However, CFRA analyst Colin Scarola believes that because the industry is “so intensely competitive,” Delta will not be able to fully offset wage increases with ticket prices.
Nonetheless, an arrangement with its pilots is supposed to get rid of any staffing vulnerability, making it more straightforward for Delta to design its timetables and use assets. The increased efficiency, according to analysts, may alleviate Delta’s cost pressures.
Pilots’ bargaining power is shown off in this deal as airlines beef up to meet growing travel demand.
For instance, American has hired 2,000 pilots this year and plans to hire an additional 2,000 the following year. Southwest Airlines, on the other hand (NYSE:) aims to hire 1,200 pilots this year and 2,100 the following.
According to Jefferies analysts, the United States needs 10,000 more pilots. This supply-request hole is projected to go on until 2027.
According to pilot and Southwest Airlines Pilots Association president Casey Murray, Delta’s proposed deal will help it compete for a smaller pool of pilots.
Murray stated, “It’s a pilot market right now.” Pilots are free to go wherever they want.”
