If ratified, a new tentative agreement between Delta Air Lines and its pilot union will allow Delta to acquire up to 70 more two-class, 76-seat regional jets as well as the 88 Boeing 717s that Delta has agreed in principle to sublease from Southwest Airlines.
The tentative agreement between Delta Air Lines and the Delta Air Line Pilots Association (ALPA) was approved on May 21 by the union’s Master Executive Council (MEC) and now will be presented to Delta’s pilots for review and ratification through June 30.
According to Delta, the tentative agreement with the union provides career growth opportunities as well as pay and benefits improvements for Delta pilots, while providing Delta productivity gains and additional aircraft flexibility. This flexibility will include an opportunity to accelerate its domestic fleet restructuring to provide a better customer travel experience, according to Delta.
If ratified, the agreement will accelerate Delta’s domestic fleet-restructuring strategy. Delta says its agreement in principle with Southwest Airlines and Boeing to lease 88 AirTran Airways Boeing 717s is conditioned upon pilot ratification of the tentative agreement.
According to Delta, the 88 Boeing 717 jets would primarily replace inefficient 50-seat regional jets and some older McDonnell Douglas DC-9s still in service, on a capacity-neutral basis.
Delta also says the tentative agreement also allows it to acquire up to 70 larger, two-class, 76-seat regional jets as the Boeing 717s are delivered to Delta. Including about 100 65-seat Bombardier CRJ700s, Delta currently operates 255 larger, two-class regional jets; Delta says the fleet would be increased to 325 aircraft should its acquisition go ahead.
At present the only 76-seat regional jet types operated within the Delta Connection regional network are the Bombardier CRJ900, of which 101 are in service with Delta Connection carriers; and the Embraer 175, of which 52 are in service.
It appears likely that if the Delta Connection network acquires up to 70 more regional jets configured to seat 76 passengers in dual-class configuration, the deals would be for one or both of these types.
“These actions pave the way for us to restructure and up-gauge our domestic fleet, which will lower our costs, provide more pilot jobs and improve the onboard experience for our customers,” says Delta CEO Richard Anderson.
“The addition of the Boeing 717s, additional large regional jets and the planned replacement of 50-seat aircraft continue Delta’s commitment to operating an efficient, flexible domestic fleet that offers customers even more opportunities to upgrade to our First Class and Economy Comfort cabins,” adds Anderson.
In addition to aircraft flexibility, the tentative agreement (if ratified) provides for productivity enhancements as well as improvements to the total compensation package for Delta pilots, including increases to base pay.
The agreement also provides for a modification of the profit-sharing program for Delta pilots, so that it pays 10 per cent of profits, compared with 15 per cent today, on the first $2.5 billion of profits from January 1, 2013.
According to Delta, the plan will continue to pay 20 per cent of profits above $2.5 billion. A voluntary early retirement option recently offered to Delta’s other employee groups also will be available to Delta pilots upon ratification of the tentative agreement.
“Delta, our pilots and ALPA continue to benefit from a very constructive, proactive relationship, one that is unprecedented in our industry,” says Mike Campbell, Delta’s executive vice president – Human Resources and Labor Relations.
“This tentative agreement represents an investment in our pilots and our company as it gives Delta significant fleet flexibility, the ability to continue running a reliable operation for our customers, and a profitable enterprise for shareholders and for all Delta people,” adds Campbell. “The fleet changes provided by this agreement, coupled with the productivity and profit sharing changes, cover the investments in our employees.”
Campbell concludes: “We strongly support the Delta MEC’s endorsement and are optimistic that Delta pilots will ratify the tentative agreement.”
Delta’s pilots have approximately five weeks to review and ratify the tentative agreement. If approved by the June 30 deadline, the agreement would take effect on July 1. The agreement becomes amendable on December 31, 2015.
Negotiating committees for Delta and ALPA announced on May 15 that a tentative agreement had been reached. During the next several days the tentative agreement was reviewed and was subsequently approved by the Delta MEC on May 21.