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Exclusive: Delta pilots received record overtime while MAX crisis hit rivals - unions

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10/09/2019 | 05:37pm EDT
Delta planes line up at their gates while on the tarmac of Salt Lake City International Airport in Utah

CHICAGO (Reuters) - Delta Air Lines pilots are receiving record overtime, straining the airline's labor costs, in part because it has added more flights to fill a supply gap left by the grounding of the Boeing 737 MAX at rival carriers, union officials told Reuters.

The surge in overtime highlights a split in the fortunes of U.S. airline workers as carriers like Delta, which does not fly the MAX, scramble to meet demand while staff at rivals like Southwest Airlines and American Airlines sit at home on basic pay.

Delta issued a record 40,554 "green slips" - double-pay for overtime flying - between May and August, double the same period in 2018, according to pilot union Delta Master Executive Council, a unit of the Air Line Pilots Association.

"There were weekend days that I would get up to 10 calls a day to pick up an extra shift or an extra flight," Delta pilot Dana Dann-Messier, who flies a Boeing 717, told Reuters.

"There were times when the pace of the summer was so hectic that guys wouldn't be volunteering because they were so wiped out," said Dann-Messier, who is based in Atlanta.

Delta, due to publish third-quarter results on Thursday before the market opens, last week raised its estimate for growth in third-quarter cost per available seat mile, excluding fuel costs, to about 2.5%, in part due to employee wage increases.

"Maintaining the operational reliability customers have come to expect and love about Delta required additional pilot flying this summer, largely due to severe weather impacting our operation and some incremental flying above our previous plan," Delta spokesman Michael Thomas said.

He played down the 737 MAX grounding as a major contributing factor.

Still, Delta's third-quarter capacity growth is expected to outpace that of U.S. rivals whose capacity has stagnated or even fallen as slimmer fleets without the MAX force over 100 daily flight cancellations.

Part of that growth, which Delta has estimated at around 4% for the third quarter, reflects flying that it has covered for partners Aeromexico and WestJet, which both own the MAX.

"They had an opportunity for more flying," Raymond James analyst Savanthi Syth said, while adding that challenging weather this summer, particularly where Delta has a lot of operations in the U.S. Southeast, also likely contributed to the overtime hours.

While overtime is voluntary for pilots, the union has argued that Delta needs to increase the pace of its hiring to better cushion its ranks.

Delta said it continues to hire pilots this year and plans to add more than 900 in 2020.

Meanwhile, Southwest, the world's largest Boeing 737 MAX carrier, has delayed pilot hiring while the jetliner remains grounded.

Its pilot union this week sued Boeing Co for an alleged $100 million-plus (81.9 million pounds) in lost wages they attribute to reduced flying time because of the grounding, now in its seventh month.

American Airlines' pilots have demanded compensation over lost pay but have not filed any lawsuits.

The Boeing 737 MAX was grounded worldwide in March following two fatal crashes that killed 346 people within five months.

(Reporting by Tracy Rucinski in Chicago; Editing by Nick Zieminski and Matthew Lewis)

By Tracy Rucinski

Stocks mentioned in the article
ChangeLast1st jan.
AMERICAN AIRLINES GROUP INC. -0.78% 28.05 Delayed Quote.-12.64%
GRUPO AEROMÉXICO, S.A.B. DE C.V. -0.07% 14.43 End-of-day quote.-35.00%
WESTJET AIRLINES LTD. 0.10% 30.56 Delayed Quote.69.78%
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Financials (USD)
Sales 2019 45 960 M
EBIT 2019 3 722 M
Net income 2019 2 073 M
Debt 2019 24 808 M
Yield 2019 1,46%
P/E ratio 2019 6,24x
P/E ratio 2020 4,99x
EV / Sales2019 0,81x
EV / Sales2020 0,75x
Capitalization 12 490 M
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