By Rajesh Kumar Singh
CHICAGO (Reuters) -Pilots at Delta Air Lines have ratified a new contract, widely expected to be a benchmark for contract negotiations at rival airlines, that includes over $7 billion in cumulative increases in pay and benefits over four years, their union said on Wednesday.
Both American Airlines and United Airlines have promised an “industry-leading” contract to their pilots. As a result, their pilots say that any proposal seen as inferior to Delta’s will likely have no takers.
The new contract provides a 34% cumulative pay increase, a lump-sum one-time payment, reduced health insurance premiums and improvements in holiday pay, vacation, company contributions to 401(k) and work rules. It will cover 15,000 Delta pilots and come into effect on Thursday, The Air Line Pilots Association (ALPA) said.
ALPA said that 78% of Delta pilots voted in favor of the contract.
The new contract showcases the bargaining power pilots are enjoying as carriers rush to staff up to keep up with travel demand.
But some airline executives are concerned that hefty pay raises for pilots will inflate fixed costs and make it tougher to repair debt-laden balance sheets.
Delta has forecast a hit on its earnings in the first quarter as the pilot deal is estimated to drive up its operating costs.
Its shares were little changed, down 0.4% at $38.21.
(Reporting by Rajesh Kumar Singh; Editing by Chizu Nomiyama and Mark Porter)
