Bloomberg News

Delta Pilot Contract Means More Jet Purchases, Union Says

May 21, 2012

Delta Air Lines Inc. (DAL:US) may soon purchase more narrow-body jets when a tentative contract with its pilot union is ratified by a majority of members.

The accord, which includes pay raises of almost 20 percent, would allow many first officers to upgrade to captain while also creating additional openings for new first officers, Tim O’Malley, chairman of the executive council for the Delta chapter of the Air Line Pilots Association, wrote today in a letter to members.

The contract would also allow the Atlanta-based airline to add more 76-seat regional jets, although “this access can only occur if Delta first acquires small narrow-body jets flown by Delta mainline pilots,” while also getting rid of more 50-seat aircraft flown by regional partners, O’Malley said. Pilots prize jobs on main jet fleets because it means better pay and benefits over the long term.

Analysts have speculated that Delta is among the interested buyers of the 88 Boeing Co. (BA:US) 717s that Southwest Airlines Co. (LUV:US) acquired when it purchased AirTran Holdings Inc. last year. Southwest has said repeatedly it would like to get rid of the planes as soon as it can.

The jets have 117 seats and if acquired by Delta would be flown by the carrier’s pilots rather than by regional partners.

“All Arrangements”

“We’re looking at all arrangements and we have taken note that Southwest has indicated a desire to exit the fleet,” Delta President Ed Bastian said at a March 13 conference hosted by JPMorgan Chase & Co. (JPM:US) in response to a question about the carrier’s interest in the Southwest 717s.

O’Malley’s letter didn’t specify what types of planes Delta would buy, although he said it would increase the ratio of domestic flying on Delta’s main jet fleet relative to flying by regional partners by 57 percent over the life of the contract.

The tentative contract will soon be sent to the 10,850 pilots for a ratification vote, and will be finalized if a majority of them approve it. Pilots will get a 4 percent pay raise upon ratification, with an additional 8.5 percent on January 1, then another 3 percent in years 2014 and 2015, O’Malley said in the letter.

The contract would give Delta “productivity gains and additional aircraft flexibility, including an opportunity to accelerate Delta’s domestic fleet restructuring strategy, which will result in a better customer travel experience,” said Gina Laughlin, a spokeswoman for the company, in a telephone interview. She declined to elaborate on what types of planes the company may buy.

Delta rose 4.3 percent to $10.58 at the close in New York. The stock has advanced 31 percent this year.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net


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Companies Mentioned

  • DAL
    (Delta Air Lines Inc)
    • $38.64 USD
    • -0.80
    • -2.07%
  • BA
    (Boeing Co/The)
    • $129.35 USD
    • 0.77
    • 0.6%
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