(March 2): Delta Air Lines Inc. is making payments to management employees to help offset reductions imposed a year ago when the burgeoning coronavirus pandemic decimated travel demand and prompted workers to take unpaid leave or retire early to help slash spending.
The carrier is making the payouts after accepting billions of dollars in federal aid dedicated to preventing broad involuntary furloughs, and as Congress considers a new round of economic stimulus spending that would include a further US$14 billion for U.S. airlines.
The payments brought the reduction in total compensation for employee groups below executive-officer levels to 20% to 30%, Chief Executive Officer Ed Bastian said in a memo to employees Monday. Before, some managers’ compensation had been reduced by about 50%, he said.
The “one-time payments were entirely consistent and in compliance with” terms of federal payroll aid provided by the U.S., Bastian said.
The payouts were reported earlier by the View From the Wing aviation-industry blog, which cited information from a Delta employee with knowledge of the payments as saying they ranged from US$8,000 for managers to US$250,000 or more for senior vice presidents. Delta trimmed work hours by 25% for management and most front-line employees last year from April 1 through Dec. 31, while Bastian gave up his salary and other officers took a 50% pay cut.
The funds were intended to cover portions of at-risk salary that wasn’t paid last year because the carrier didn’t hit operational or financial goals, as the coronavirus limited travel to about a third of 2019 levels or less.
Some of the payments were “very significant sums,” Jason Ambrosi, chairman of the Air Line Pilots Association unit at Delta, said Monday in a letter to members.
“As the company has not yet reached its zero daily cash burn target, and many employees are still shouldering financial burdens brought on by the pandemic, we find these bonuses are ill-timed and tone-deaf, especially for a management team that has stressed the need for shared sacrifices throughout the pandemic,” he said.
About 50,000 Delta workers last year chose to take voluntary unpaid leave, ranging from 30 days to 12 months, while 18,000 more elected to leave the carrier or retire early. The moves were meant to help pare spending and offset tens of millions of dollars in daily losses as costs outpaced revenue.