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Delta Proposes Pilot Pay Cuts to Avoid Furloughs for a Year
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Per a CNBC report, Delta Air Lines, Inc. (DAL - Free Report) has proposed a 15% cut to pilots’ minimum pays in order to avoid furloughs for a year.
With air travel demand way below year-ago levels amid coronavirus concerns, the airline is focusing on cost cuts which require rightsizing its network to align with the current demand scenario. To this end, Delta sent potential furlough notices to more than 2,500 pilots. According to a memo from John Laughter, Delta’s senior vice president of flight operations, more than 1,700 pilots have volunteered to take up early retirements. In total, more than 17,000 of Delta’s approximate 90,000 employees have opted for buyouts or early retirement options, besides thousands of others signing up for temporary leaves, per CEO Ed Bastian. However, the airline is “still overstaffed in some areas of the business.”
Before considering involuntary separations to address this overstaffing, Delta, carrying a Zacks Rank #4 (Sell), plans to first exhaust other possible options. Notably, U.S. airlines, including Delta, which have received government payroll support under the CARES Act, are prohibited from laying off or reducing salaries of employees through Sep 30. Airlines have been hinting at the need to resort to involuntary layoffs post Sep 30, given the slump in travel demand as coronavirus concerns continue. United Airlines (UAL - Free Report) , carrying a Zacks Rank #3 (Hold), sent notices to approximately 36,000 U.S.-based employees about possible furloughs that may take place on or after Oct 1.
The already weak demand situation has been worsened by the spike in coronavirus cases in some parts of the United States and new quarantine rules. Delta, which had previously planned to add 1000 flights a day in August considering the modest improvement in demand that followed with easing travel restrictions, now expects to add only 500 flights a day next month as the uptick in travel demand faded with the surge in COVID-19 cases.
As for the pay cut proposal put forward by Delta, the pilots’ union wants the carrier to first offer partially paid leaves of absence. The Air Line Pilots Association spokesman Christopher Riggins stated that it is “not in a position to even consider” the proposal.
Meanwhile, on the pay cut proposal, Laughter stated, “Our approach is to spread the work of a smaller airline among all our pilots to preserve all jobs – that would be unheard of in our history.” He further added, “But we cannot do it only with voluntary options such as [voluntary early out programs] and paid leaves.”
Both stocks have an impressive earnings history. While Martin Midstream Partners surpassed the Zacks Consensus Estimate in three (miss in one) of the last four quarters, StealthGas beat earnings estimates in each of the preceding four quarters.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time. See 8 breakthrough stocks now>>
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Delta Proposes Pilot Pay Cuts to Avoid Furloughs for a Year
Per a CNBC report, Delta Air Lines, Inc. (DAL - Free Report) has proposed a 15% cut to pilots’ minimum pays in order to avoid furloughs for a year.
With air travel demand way below year-ago levels amid coronavirus concerns, the airline is focusing on cost cuts which require rightsizing its network to align with the current demand scenario. To this end, Delta sent potential furlough notices to more than 2,500 pilots. According to a memo from John Laughter, Delta’s senior vice president of flight operations, more than 1,700 pilots have volunteered to take up early retirements. In total, more than 17,000 of Delta’s approximate 90,000 employees have opted for buyouts or early retirement options, besides thousands of others signing up for temporary leaves, per CEO Ed Bastian. However, the airline is “still overstaffed in some areas of the business.”
Before considering involuntary separations to address this overstaffing, Delta, carrying a Zacks Rank #4 (Sell), plans to first exhaust other possible options. Notably, U.S. airlines, including Delta, which have received government payroll support under the CARES Act, are prohibited from laying off or reducing salaries of employees through Sep 30. Airlines have been hinting at the need to resort to involuntary layoffs post Sep 30, given the slump in travel demand as coronavirus concerns continue. United Airlines (UAL - Free Report) , carrying a Zacks Rank #3 (Hold), sent notices to approximately 36,000 U.S.-based employees about possible furloughs that may take place on or after Oct 1.
Delta Air Lines, Inc. Price
Delta Air Lines, Inc. price | Delta Air Lines, Inc. Quote
The already weak demand situation has been worsened by the spike in coronavirus cases in some parts of the United States and new quarantine rules. Delta, which had previously planned to add 1000 flights a day in August considering the modest improvement in demand that followed with easing travel restrictions, now expects to add only 500 flights a day next month as the uptick in travel demand faded with the surge in COVID-19 cases.
As for the pay cut proposal put forward by Delta, the pilots’ union wants the carrier to first offer partially paid leaves of absence. The Air Line Pilots Association spokesman Christopher Riggins stated that it is “not in a position to even consider” the proposal.
Meanwhile, on the pay cut proposal, Laughter stated, “Our approach is to spread the work of a smaller airline among all our pilots to preserve all jobs – that would be unheard of in our history.” He further added, “But we cannot do it only with voluntary options such as [voluntary early out programs] and paid leaves.”
Key Picks
Some better-ranked stocks in the broader Transportation sector are Martin Midstream Partners L.P. (MMLP - Free Report) and StealthGas, Inc. (GASS - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Both stocks have an impressive earnings history. While Martin Midstream Partners surpassed the Zacks Consensus Estimate in three (miss in one) of the last four quarters, StealthGas beat earnings estimates in each of the preceding four quarters.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>