Delta airlines (NYSE: DAL) It proposes a reduction to the pilot’s guaranteed minimum wage in an effort to avoid permits while the airline tries to balance its need to cut with the desire to preserve workplace harmony.
Earlier in the week, Delta reported that second-quarter revenue fell 88.2% year-over-year due to the COVID-19 pandemic, warning that it expects to report third-quarter sales that are down at least 75%. So far, the airline industry has avoided layoffs thanks to government payroll protections, but that assistance expires in late September, and Delta and others have warned that they will have to be cut considerably once it does.
Image source: Delta Air Lines.
In a profit call, CEO Ed Bastian said that more than 17,000 of the airline’s 90,000 employees had signed up for purchases or early retirement, but that the airline will still need further cuts.
“We hope to be able to accomplish the vast majority of the personnel changes we need through these programs, minimizing, if not eliminating, the need for involuntary leave,” Bastian said. “This will require creativity and collaboration in all of our working groups.”
The proposed pay cut is an example of that creativity. In a memo to the Airline Pilots Association, Delta said that if the union agrees to cut the pilots’ guaranteed minimum wage by 15%, permits can be avoided for at least a year.
“Our focus is to spread the work of a smaller airline among all of our pilots to preserve all jobs, which would be unheard of in our industry,” wrote Delta Senior Vice President of Flight Operations John Laughter in the memo, which was first reported. by CNBC.
The union had no immediate response. Labor groups often hate accepting cuts to the minimum wage that can take years to undo, but the proposal in this case could offer benefits for both the airline and pilots.
Delta is trying to cut back while preserving a strong working relationship with its largest union, and keeping its pilots at home would also allow the airline to react quickly if demand returns above company expectations.
For pilots, the global nature of the travel slowdown could make the proposal to preserve jobs acceptable. During a normal recession, pilots who lose their jobs can look for work on other airlines or abroad. But with airlines everywhere cutting jobs, there are few good options for pilots who are suspended right now.
