Delta pilots get 30 percent raise by 2019 in new contract

Thu Dec 1, 2016 2:48pm EST
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By Allison Lampert and Jeffrey Dastin

MONTREAL/NEW YORK (Reuters) - Delta Air Lines Inc (DAL.N: Quote) pilots on Thursday agreed to a new contract that delivers a 30 percent pay raise by 2019, as the aviation industry deals with mounting demand for higher wages to fly planes at a time of big profits.

Delta's pilots last year rejected a tentative contract deal that would have increased wages but cut profit sharing in certain cases. The new contract, backed by 82 percent of pilots at the No. 2 U.S. airline by traffic who voted on ratification, keeps existing gains on profit sharing, according to Delta's unit of the Air Line Pilots Association, International (ALPA).

The Delta contract, a four-year deal retroactive to the beginning of this year, could have a snowball effect for higher pay in the industry when the next round of bargaining between pilots and top U.S. airlines gets underway in 2019.

United Continental Holdings Inc (UAL.N: Quote) pilots, who approved a 19 percent raise in a deal reached earlier this year, will get an extra bump to match Delta's gains thanks to a clause in their current contract.

The deal with Delta's 13,000 pilots raises their pay by 18 percent immediately and a cumulative 30 percent by Jan. 1, 2019. For instance, a Boeing Co (BA.N: Quote) 737 captain of 12 years would see wages rise to $284.01 per hour in 2019 from $218.15 in 2015.

"The new pilot agreement contains an industry-leading package of pay, benefits and work rules," Delta said in a statement.

Delta and United shares were down slightly in afternoon trading.

"Higher labor costs are going to pressure earnings next year, so the best way the airlines can counteract that is raising airfares," said Adam Hackel, an airline analyst at Imperial Capital LLC in New York.   Continued...

Delta planes line up at their gates while on the tarmac of Salt Lake City International Airport in Utah September 28, 2013. REUTERS/Lucas Jackson/File Photo