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Big Regional Jets: Still a No for Delta (DAL) Pilots?

DAL ERJ UAL AAL

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According to a report published on Reuters, the pilots of Atlanta, GA-based airline behemoth Delta Air Lines, Inc. (DAL - Free Report) are unlikely to alter the present rules and fly planes exceeding a certain weight on regional routes. We note that the union Air Line Pilots Association – representing its 13,000 pilots – had inked an “agreement in Principle” with Delta in September this year.

The pilots are currently voting on the contract, with the verdict expected on Dec 1. According to the report, the final version of the deal is expected to contain a “scope clause.” The clause apparently prohibits planes with more than 76 seats and weighing in excess of 86,000 pounds from being flown on regional routes. In the event of the clause being ultimately present in the deal, manufacturers like Embraer SA (ERJ - Free Report) and Mitsubishi Heavy Industries Ltd. could suffer. This is because their latest regional jets weigh more than 86,000 pounds.

Apparently, the clause is designed to favor well-paid pilots of airline heavyweights since the usage of large planes on regional routes could adversely impact their earnings apart from creating bad working conditions. Though acceptance of the deal could be unfavorable for the likes of Embraer, it would undoubtedly be financially rewarding for Delta’s pilots. They are likely to have their pays hiked by 30.2% over four years, according to an Associated Press report.

We note that other airline heavyweights like United Continental (UAL - Free Report) and American Airlines Group (AAL - Free Report) have also entered into pay-related deals with their pilots this year.

Zacks Rank

Delta Air Lines currently carries a Zacks Rank # 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.  

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