Delta Air Lines (NYSE:DAL) and the union representing its pilots have reached a cost-cutting deal that will prevent 1,900 pilots from being furloughed on Nov. 1.
Airlines have seen revenue fall due to the COVID-19 pandemic. With a turnaround expected to take years, the companies need to find ways to cut costs. The industry avoided layoffs this summer thanks to payroll protection funds provided as part of the CARES Act, but with those funds running out Sept. 30, airlines have laid off tens of thousands in recent weeks.
Delta held off on furloughing pilots while the airline waited to see if further government assistance was forthcoming and to allow time for negotiations with the Air Line Pilots Association (ALPA). A second stimulus package never materialized out of Washington, but ALPA in a message to members Thursday said it has worked out other ways for the airline to cut costs without having to resort to furloughs.
The union said the agreement would reduce minimum guaranteed hours by 5% and give partial pay of 30 hours per month to pilots who had received furlough notices and who won't be needed to fly.
The deal still needs approval from Delta's nearly 13,000 pilots, but other airlines, including United Airlines Holdings, have had success getting similar proposals through.
The agreement is good news both for the pilots who otherwise would be furloughed and for Delta. Although airlines are not expecting traffic to return for more than a year, they are eager to have staff ready to go to take advantage of any unexpected uptick in travel demand.