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Delta to Send Notices to Pilots About Potential Furloughs

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Delta Air Lines Inc (DAL - Free Report) is planning to notify its pilots about possible furloughs by sending them notices later this week, as demand remains significantly below year-ago levels.

As the airline continues its efforts to address pilot overstaffing, it intends to send notices to 2,558 pilots, in accordance with the Worker Adjustment and Retraining Notification (WARN) Act  to inform them about potential furloughs so that they are better-prepared.

Simultaneously, Delta, carrying a Zacks Rank #3 (Hold), will be offering its employees voluntary options, in order to reduce workforce. In this regard, the airline has reached an agreement with the labor union representing more than 14,000 Delta pilots, for an early-retirement program. Pilots can apply for the program early next month. By Aug 4, employees will come to know whether their requests have been accepted. About 7,900 pilots would be eligible for this early retirement option.

Per the terms of the early-retirement program, pilots would get pay for 58 hours a month, until they reach the age of 65 or for 36 months, whichever is earlier. Employees would also receive health and travel benefits for a limited period of time.

U.S. airlines such as American Airlines (AAL - Free Report) , United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) have offered similar voluntary separation options to their employees in order to reduce staff strength. Each of the stocks carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

We remind investors that 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.

Meanwhile, labor unions representing airline employees are seeking additional financial assistance to protect jobs through March 2021.

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