Delta Air Lines is seeking to reduce the guaranteed minimum pay for its pilots, a proposal an airline executive said Friday could avoid furloughs for a year as the threat of job cuts looms and a quick recovery in air travel becomes increasingly remote because of new coronavirus cases.
More than 60,000 airline employees across several carriers have been warned this month that their jobs are at risk, including more than 2,500 of Delta's more than 14,000 pilots, when the terms of billions of dollars in federal payroll support expire Oct. 1.
Delta and other airlines are urging employees to take early retirements, buyouts and other forms of leave to slash costs as financial losses pile up. More than 1,700 pilots have signed up for early retirements, according to a memo from John Laughter, Delta's senior vice president of flight operations, which was reviewed by CNBC.
Delta pilots have until July 19 to apply for the early retirement packages.
The Atlanta-based carrier is proposing that the pilots' union agree to lower their minimum guaranteed pay by 15%, according to the memo.
"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," Laughter wrote. "But we cannot do it only with voluntary options such as [voluntary early out programs] and paid leaves. This has been shown at our competitors with WARN notices being issued even with paid leaves being offered."
Delta this week said it is halving the number additional flights planned next month to 500 a day after a recovery in travel demand eased as coronavirus cases spiked and states like New York ordered arriving travelers to quarantine.
The Delta pilots' union, however, wants the airline to first offer partially paid leaves of absence. Air Line Pilots Association spokesman Christopher Riggins said the union is "not in a position to even consider" Delta's proposal outlined Friday. "Every other airline in the United States has been using voluntary, partially paid leaves."
He also bristled at the Delta email to pilots.
"Unfortunately, when the Company chooses to negotiate in public directly with our pilots, it is discouraging as it impedes the process," he said in a statement.
Furloughing pilots is a gamble for airlines, which don't want to have a shortfall if there is a recovery in travel demand. Pilot cuts can mean costly and time-consuming training later on.
Delta CEO Ed Bastian this week said more than 17,000 of the airline's roughly 90,000 employees have signed up for buyouts or early retirement programs, and thousands more have signed up for temporary leaves.
He warned that the airline is "unfortunately still overstaffed in some areas of the business."
"But we're committed to exhausting every option possible and harnessing our creativity before we consider involuntary separations," he said in a staff memo Thursday. "We're investigating every staffing opportunity, including temporarily shifting people between divisions, insourcing work previously done by contractors, and continuing our work hour reductions as needed to share the work across the company."
About 24% of Southwest Airlines' more than 9,700 pilots have taken either partially paid time off or early retirement, their union said late Friday. Southwest declined to comment ahead of its quarterly results scheduled for next Thursday.
"We're exhaling today a little bit," Jon Weaks, president of the Southwest Airlines Pilots Association, told CNBC. "I'm not nearly as concerned about furloughs as before I saw the total. That's with the caveat that things don't get worse."
