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Delta (DAL) Pilots Accept Pay Cuts to Escape Furloughs

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Per a CNBC report, Delta Air Lines (DAL - Free Report) pilots have agreed to pay cuts to avoid furloughs until 2022. The carrier is making consistent efforts to reduce costs as it grapples with coronavirus-induced weak air-travel demand.

As per the deal, the carrier can cut pilots’ guaranteed hours by as much 5%. Additionally, more than 1,700 pilots will get partial pay of 30 hours a month even without having to fly. These pilots would have otherwise been furloughed at the end of the month without a deal. The Air Line Pilots Association, representing nearly 13,000 Delta pilots, said that the deal was favored by 74% of the voters.

CNBC reported that Delta has so far been able to avoid involuntary furloughs thanks to a large number of employees having accepted buyouts and voluntary leaves of absence. This is unlike its peers American Airlines (AAL - Free Report) and United Airlines (UAL - Free Report) . Together both these airlines have furloughed 30,000 employees following the expiration of the federal aid on Sep 30, 2020.

Separately, Delta’s chief of operations, John Laughter gave a heads up that the spike in coronavirus cases is affecting the airline’s bookings for the holiday season.

Shares of Delta have declined more than 29% so far this year primarily due to the coronavirus-led travel demand woes on its operations. Due to tepid travel demand, passenger revenues have plunged 68% in the first nine months of 2020. Revenues are likely to remain under pressure unless coronavirus concerns fade.


 

Delta, United Airlines and American Airlines each carry a Zacks Rank #4 (Sell).

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