Delta Reaches Cost Reduction Deal with Unions, Southwest Announces Layoffs

Delta Air Lines has reached a deal with its pilots to implement pay cuts to avoid furloughs along with Southwest Airlines’ warning of massive layoffs, as both U.S. airlines attempt to implement deep cost-cutting plans to withstand one of the most painful recessions in aviation history.

Delta Air Lines pilots agreed to pay cuts after approving a cost-cutting agreement with the U.S. airline which aims to prevent them from getting furloughed until at least Jan. 1, 2022.

The Atlanta-based airline originally planned to furlough about 13% of its 12,900 pilots on Saturday if the Air Line Pilots Association at Delta would not ratify an agreement with the airline to reduce costs.

The deal has enabled Delta to cut pilots’ pay by reducing their guaranteed monthly working hours by up to 5%.

The leaders of the pilots’ union endorsed the agreement for a ratification vote by the members.

The union said on Wednesday that 74 percent of the pilots to cast votes were in favor of the cost reduction plan. The agreement has taken effect immediately after the ratification.

“This agreement will help Delta navigate the COVID crisis and emerge a stronger airline in the end,” Delta MEC spokesman Chris Riggins said in a statement.

Southwest Airlines also sent warning notices to more than 1,900 of its employees that they could lose their jobs starting in late January unless the major airline gets union concessions or more financial aid from the federal government.

“In the event that we are unable to reach agreement on temporary concessions with our Unions, we plan to — as a last resort — furlough Employees in early 2021,” Southwest Chairman and CEO Gary Kelly said in a statement. “If the federal government extends the much-needed PSP for the airline industry, we intend to discontinue or reverse these efforts through 2021.”

The Dallas-based airline said it is overstaffed by approximately $1 billion.

According to Southwest’s notices, the airline is planning to furlough 76 technicians and one inspector at Hartsfield-Jackson Atlanta International Airport, as well as four employees in the material specialists’ workgroup of the company.

The prevalent pandemic crisis has continued to hammer down global airlines, making the whole aviation industry sink deeply into one of the most painful economic recessions in history.

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