By Rajesh Kumar Singh and David Shepardson
CHICAGO (RockedBuzz via Reuters) – Delta Air Lines has offered a cumulative 34 percent pay raise to its pilots over three years in a new contract, demonstrating the bargaining power aviators enjoy in an understaffed industry with a demand for travel booming.
If the deal is approved by Delta pilots, it is widely expected to serve as a landmark for contract negotiations with rivals United Airlines and American Airlines.
Delta pilots will receive a raise of at least 18% on the date the contract is signed, another 5% after one year, 4% after two years and 4% after three years, according to a draft contract seen by RockedBuzz via Reuters.
They will also receive a one-time payment equivalent to a cumulative 22% of their earnings between 2020 and 2022 after the agreement is ratified.
The Atlanta-based carrier’s pilots have been working without a new contract for nearly three years after their old contract became changeable in December 2019, fueling frustration.
They voted overwhelmingly in October to authorize a strike if negotiators failed to agree on the new contract.
ASSEMBLY COSTS, HIGHER RATES
Sharp wage increases are expected to further worsen cost pressures for carriers just as worries about a US recession stir up consumer spending worries.
While ticket sales remain strong, investors fear that demand for travel could decline, making it more difficult for a debt-ridden sector to repair its balance sheet. They fear that carriers may be forced to borrow even more money to finance operations.
A rush, however, among carriers to staff up to capitalize on growing consumer demand has increased the bargaining power of pilots. As the industry returns to profitability, pilots say airlines can pay them more to cover the rising cost of living.
Airlines have, until now, relied on strong demand and higher fares to ease inflationary pressure. Any increase in labor costs should be passed on to customers through higher ticket prices.
In the draft agreement, Delta promises that its pilots’ salaries will exceed those of United and American by at least 1 percent.
In a note to its members, the union representing Delta pilots said the deal represents more than $7.2 billion in cumulative value increases over the next four years.
Delta said it is “pleased to have reached an agreement in principle for a new pilot contract, which recognizes the contributions of our pilots to Delta’s success.”
In a year of industry outcry, pilots at every major US airline have demanded higher wages and better work-life balance.
Hundreds of United pilots picketed outside Chicago’s O’Hare airport on Thursday, demanding an “industry-leading” contract. Last month, they turned down an offer that included cumulative pay increases of more than 14.5 percent and an increase in overtime and training pay.
The American pilots also rejected a proposed 19% pay hike over two years that would have cost the Texas-based carrier about $2 billion.
Pilots are also demanding a better quality of life. They say the carriers’ operational and staffing issues are driving up overtime, leaving them exhausted.
In its note, Delta’s pilot union said more than 25% of the value of the contract deal is dedicated to quality-of-life items.
The proposed deal also includes 10 weeks of paid maternity leave, two weeks of paid parental leave and reduced insurance premiums.
(Reporting by Rajesh Kumar Singh and David Shepardson; Editing by William Mallard)
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