Delta pilots reach early retirement deal as business continues to suffer

Delta Air Lines passenger planes are parked due to flight reductions made to curb the spread of coronavirus disease (COVID-19), at Birmingham-Shuttlesworth International Airport in Birmingham, Alabama, USA. March 25, 2020.

Elijah Nouvelage | Reuters

Delta Air Lines plans to send notices to warn more than 2,500 pilots next week of possible permits, according to a company memo sent on Friday that was seen by CNBC.

The carrier and union representing the carrier’s more than 14,000 pilots have agreed to an early retirement option, a step toward downsizing as the coronavirus continues to devastate demand for air travel.

“As we have previously communicated, early retirements alone will probably not be sufficient to completely avoid pilot permits,” said the memo from Delta’s senior vice president of flight operations, John Laughter.

He said demand has remained weak despite a recent increase in the number of travelers lately.

“With that in mind and given that we will not know the results of the early departure for a few weeks, we must continue to move forward to address the excess pilot staff,” he said. “In an effort to better prepare our pilots, we will send notices to 2,558 pilots as required by the Worker Adjustment and Retraining Notification Act (the” WARNING Act “) next week to inform them of a possible permit.”

Pilots can apply for the voluntary early retirement program early next month and those accepted will be informed no later than August 4, according to a union memorandum sent to members on Friday that was also reviewed by CNBC. About 7,900 pilots would be eligible for early retirement, Laughter said.

Airlines are struggling to cut their payroll as the pandemic keeps many travelers home, pushing the industry to its first loss in years. Demand has recovered from the lows of more than five decades in April, but remains a fraction of the norm.

“While it is encouraging to see flights return, we expect our overall demand this summer to be only 25 percent of last summer’s revenue, and we are likely to remain at least two years away from a return to normality,” he said. Delta CEO Ed Bastian on a team notes Thursday.

Particularly affected are high-income international flights, which have been greatly reduced by airlines, as a drop in business travel and travel restrictions made many of those routes impossible. Some of the highest-paid pilots fly planes used for those routes.

Pilots who choose early retirement would receive a pay of 58 hours a month until they turn 65 or 36 months, whichever comes first, the union said. The company would also cover up to two years of health insurance premiums and one year of travel benefits.

Delta, the least unionized of the four largest unionized airlines, offered the rest of its employees early retirement and purchases last month. American, Southwest and United have also implemented similar voluntary measures to reduce costs for their staff.

The $ 25 billion terms in government payroll support prohibit airlines from firing or reducing employee pay rates until September 30.

Airline executives have said they want to exhaust voluntary measures before resorting to involuntary layoffs or licenses.

Unions representing stewardesses, pilots, mechanics and other airline employees asked Congress for billions more in aid to protect their jobs until the end of March 2021.