Delta Air Lines Inc., the least-unionized major U.S. carrier, reached a tentative agreement on a new contract with its pilots, a step that may enable the company to already lock in some labor expenses for next year.
Details of the deal won’t be released until elected union representatives get a chance to review it, the Air Line Pilots Association said in a statement Thursday. If they approve, the agreement will be submitted to the pilots for ratification.
Under federal law, airline labor contracts don’t expire, so existing pay scales and work rules stay in place pending a new accord. With a new agreement not taking effect until January, reaching a deal more than six months ahead of time seems early, said Savanthi Syth, an airlines analyst at Raymond James Financial Inc. in St. Petersburg, Florida.
“It will provide certainty and stability into their costs,” Syth said. “It goes to show the level of working together between the pilots and management.”
The shares fell less than 1 percent to close at $42.92 in New York, and were little changed in extended trading following the union’s statement. In an e-mailed statement, Delta declined to comment on the tentative agreement beyond confirming that an accord had been reached.
Some Delta pilots have called for a contract similar to one their counterparts signed with American Airlines Group Inc. in January, which has a higher base pay. Delta’s workers can, however, make more when the Atlanta-based company’s profit-sharing program for employees is included, Syth said.
Syth and Helane Becker, an analyst with Cowen & Co. in New York, said Delta pilots have shared in the company’s growing profitability in recent years.
“They get more profit-sharing than United, and American doesn’t get profit sharing,” Becker said.