Delta Pilots Seek New Contract as Earnings Reach $465/Hour

Negotiation Kickoff

Pilots at Delta Air Lines have officially begun discussions for a new contract. Their union is eager to expedite the process to seize the opportunity at hand.

On Monday, they unveiled their initial proposal, highlighting critical priorities such as job scope, salary, vacation time, holidays, hotel accommodations during disruptions, personal travel preferences, and increased flexibility in work schedules.

Current Contract Overview

The existing contract for Delta pilots took effect on March 2, 2023, and can be adjusted starting December 31, 2026. In the aviation industry, it's not uncommon for contracts to remain unnegotiated until the expected end date; however, under the Railway Labor Act, the terms will remain in effect until a new agreement is signed.

Starting negotiations now is advantageous, as these agreements often take considerable time to finalize. For instance, the contract from March 2023 began negotiations on April 5, 2019, and Delta required federal mediation starting January 6, 2020, but talks were paused due to the pandemic in March 2020.

Previous Negotiation Success

The prior contract secured a 34% salary increase for Delta pilots over its duration, amounting to a total cost of $7.2 billion over four years. Specifically, pilots received an 18% raise in 2023, followed by 5% on January 1, 2024, and 4% on January 1 for both 2025 and 2026.

Since then, the airline's financial situation has significantly improved, boasting over $18 billion in pre-tax income over the past four years.

Current Salary and Industry Context

Pilots assert that if Delta positions itself as a premium brand, their salaries should reflect that status. Presently, they enjoy higher salaries compared to their peers, although other airlines are gradually closing the gap in base pay. Delta has set the market salary standard for 2023.

However, the current salary advantage relies heavily on profit-sharing rather than base pay. In the large aircraft segment, Delta, American, and United are nearly on par: a captain flying an Airbus A350, Boeing 777, or 787 can earn $465.13 per hour, while first officers earn $317.73.

Future Potential

For smaller aircraft like the Airbus A330 or 767, the salary next year will be $404.92 for captains and $276.56 for first officers, compared to $417.07 for captains and $284.86 for first officers at American and United. While Delta's agreement extends to 2026, pilots at other airlines will receive raises next year, leaving Delta pilots in need of a new agreement to secure similar increases.

Currently, a Delta 737 captain earns $388.27. Next year, American will pay $402.01 and United $399.92, while Southwest will offer $401.04. Despite this, Delta continues to generate the highest profits and shares the most with its pilots.

Negotiation Pressure

Delta pilots are keen to drive the negotiation process forward and keep proposals focused. While profits are currently high, the situation could deteriorate quickly due to economic conditions and rising oil prices. Fluctuations could occur swiftly if not interrupted by macroeconomic factors.

In 2012, Delta and ALPA reached an agreement just seven months before the contract could be adjusted. Presently, job scope and equipment issues are hot topics of discussion.

Future Opportunities

Delta has ordered 30 Boeing 787-10 aircraft, in addition to previous orders for the 737-10 MAX, placing them in a strong position to negotiate salaries for these planes. With projections indicating that 506 Delta pilots will retire this year and ongoing recruitment efforts, the union has a negotiation opportunity—though this is limited by the President's control over the National Mediation Board.

Strikes in the aviation industry are rarely permitted, and this has not occurred during the Biden administration, making it even less likely under the current administration. Delta pilots are re-entering negotiations with strong leverage, but they understand this advantage is time-sensitive.

While Delta maintains its premium brand and high profitability, the current salary agreement no longer stands out compared to other airlines. The time to finalize these agreements is now, in case the situation worsens.