Delta Air Lines Inc. pilots approved a new contract that will provide at least 34% in cumulative pay hikes over four years, making them the first aviators at a major US carrier to finalize a post-pandemic deal.
(Bloomberg) — Delta Air Lines Inc. pilots approved a new contract that will provide at least 34% in cumulative pay hikes over four years, making them the first aviators at a major US carrier to finalize a post-pandemic deal.
The agreement was endorsed by 78% of those casting ballots, the Air Line Pilots Association said in a statement Wednesday. A separate agreement involving international job protections was also approved.
The contract, set to take effect Thursday, is the richest ever negotiated by a mainline US carrier, with $7.2 billion in improved pay, benefits and quality-of-life improvements over its term, the union said. It’s expected to set a standard for ongoing negotiations at Delta’s largest rivals.
Labor relations across the industry have been particularly tense, with unions seeking increases in compensation and more flexible work schedules as carriers continue to benefit from the strong rebound in travel demand. Pilots have frequently picketed at airports and outside of company meetings this year and tentative contracts have been rejected by at other airlines.
The latest deal follows a four-year contract approved in December 2016 that gave Delta pilots 30% in cumulative raises.
“This is a paradigm shift from the way we traditionally negotiate contracts,” Darren Hartmann, chairman of the ALPA unit at Delta, told members in a letter Wednesday about the new contract. “We made substantive gains without any concessions.”
The company said in a separate statement that the agreement ensures its pilots “will continue leading the industry in total compensation.”
Delta’s shares were little changed at 1 p.m. in New York.
Labor costs vie with fuel as airlines’ two largest expenses, and most US carriers are already facing higher operating costs coming out of the pandemic. A pilot shortage across the industry has helped push up compensation in new contracts or extensions at smaller carriers like Alaska Airlines and JetBlue Airways Corp.
United Airlines Holdings Inc. pilots overwhelmingly rejected a new labor agreement on Nov. 1, and union leaders at American Airlines Group Inc. the next day voted down a proposed accord that would have raised pay 19% over two years. Pilots at Southwest Airlines Co. and FedEx Corp.’s FedEx Express are set to conduct strike authorization votes, though they wouldn’t be allowed to walk off the job until going through a lengthy process overseen by the National Mediation Board.
“Delta’s pilot agreement profoundly changes the economics for the entire industry and that’s great news for American’s pilots,” American Airlines said in a statement.
‘Tremendous’ Pressure
United declined to comment, and Southwest didn’t immediately respond to a request. The new contract positions Delta “to be the go-to airline” for pilots, the Southwest Airlines Pilots Association said in a statement, and “puts a tremendous amount of pressure” on Dallas-based Southwest to reach its own agreement soon.
The Delta accord provides for an 18% pay increase retroactive to Jan. 1, followed by a 5% hike after one year and then 4% after each of the next two years. It also includes a one-time payment after ratification and a provision to ensure Delta pay exceeds that in any contract reached for American or United pilots by at least 1% for its term.
Raises could exceed the 34% total because of specific increases designed to align rates for pilots flying some Airbus SE and Boeing Co. aircraft, the union said.
Delta already has included costs tied to expected new labor agreements in its 2023 financial guidance, the carrier said on a January conference call.
(Updates with airline comment in 11th paragraph, union comment in 12th paragraph)
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