© Reuters. FILE PHOTO: A Delta Airlines jet comes in for a landing in front of the Empire State Building and the Manhattan skyline after flights were grounded earlier during an FAA system outage at the airport in Laguardia, in New York, New York, United States, on January 11, 2023 .R
By Rajesh Kumar Singh
CHICAGO (Reuters) – Delta Air Lines (NYSE:) pilots have ratified a new contract that includes more than $7 billion in cumulative salary and benefit increases over four years and is expected to largely serve as a benchmark for negotiations contracts with competing carriers.
The Air Line Pilots Association (ALPA), which represents Delta pilots, said Wednesday that 78% of the carrier’s pilots voted in favor of the contract.
American Airlines (NASDAQ:) and United Airlines have both promised an “industry-leading” contract to their pilots. As a result, their pilots say any proposal considered inferior to Delta’s is unlikely to have any takers.
“Delta has raised the bar,” said Dennis Tajer, spokesman for the American Pilots Union. “Fixing a pilot’s work-life balance and the scheduling practices they fly in are the main issues with compensation.”
Delta’s new contract provides a 34% cumulative salary increase, a one-time lump sum payment, reduced health insurance premiums, and improvements to paid time off, vacation, company 401(k) contributions, and benefits. work rules.
It will cover 15,000 Delta pilots and take effect Thursday, ALPA said.
United drivers have held information pickets to express their frustration over delays in contract negotiations. The American pilots, who received their last pay raise in 2019, also protested for a new contract.
Ratification of Delta’s deal is expected to put more pressure on the two carriers to conclude their contract negotiations.
American called the deal “good” news for its pilots, adding that it hoped to reach an agreement on a new contract “quickly”. But he also said the Delta contract had “profoundly” changed the economics of the entire airline industry.
United declined to comment.
Some airline executives worry that big pay rises for pilots will inflate fixed costs and make it harder to repair debt-laden balance sheets.
Delta forecast a hit to first-quarter earnings as the pilot deal is expected to increase operating costs.
“WAR FOR TALENT”
The new contract showcases the bargaining power pilots enjoy as carriers race to meet travel demand.
Delta, United, American and Southwest Airlines (NYSE:) are expected to hire about 8,000 pilots this year.
Jefferies analysts estimate that the United States is short of 10,000 pilots. This gap between supply and demand is expected to last until 2027.
Airlines are “in the war for talent,” said Ben Friedrich, a professor at Northwestern (NASDAQ:) University Kellogg (NYSE:) School of Management. “It’s hard for other airlines to retain their pilots unless they follow suit and raise wages to the same extent.”