Delta Air Lines Inc. said a pilots' proposal that includes raises of almost 40 percent compounded over three years isn't reasonable, suggesting contract talks with its 13,000 aviators may drag on.
December's offer "does not provide a reasonable framework for negotiations," the airline told the pilots' union in a Jan. 29 memo obtained by Bloomberg. Delta said the Air Line Pilots Association's request for raises and other benefits would cost the carrier an extra $1.6 billion a year by the end of the three-year period, according to the memo, the contents of which were confirmed by the company.
The proposal "would be a departure from the balanced investments and disciplined approach to running our business that have led to sustainable, industry-leading compensation increases and more secure careers for our people," Delta said in the memo.
The union has taken an aggressive stance in negotiations with the Atlanta-based airline, saying that the carrier's profits justify the reversal of pay and benefits cuts adopted in the early 2000s. In December, the union proposed terms including a raise of 22 percent this year, followed by 7 percent increase in each of the following two years. The pilots rejected an agreement in July that would have provided an immediate 8 percent raise and smaller boosts in future years.
A spokesman for the union declined to comment on Delta's memo.
Delta has enjoyed relatively good labor relations in recent years. It is one of the least unionized airlines, with only its pilots and dispatchers represented by collective-bargaining groups. Several attempts to organize its flight attendants have failed.
In a separate letter to pilots on Jan. 29, Steve Dickson, Delta's senior vice president of flight operations, acknowledged that some pilots believed the July proposal hadn't provided them with enough "value."
"The company is committed to reaching an agreement that appropriately recognizes and rewards you for your significant contributions to our success," Dickson said.
A Delta spokesman confirmed the authenticity of Dickson's letter but declined to comment on it.
The pilots' contract with Delta became amendable in December. Under federal law, airline labor contracts don't expire, so existing pay scales and work rules stay in place pending a new accord.
Richard Anderson, who oversaw Delta Air Lines' transformation into one of the world's most profitable airlines, will retire this May. His right-hand man, airline president Ed Bastian, will take over as CEO, the airline said Wednesday.
Anderson started as CEO in 2007, just after Delta exited bankruptcy protection.
Information for this article was contributed by Scott Mayerowitz of The Associated Press.
Business on 02/05/2016