U.S.-based airline, Delta Air Lines, Inc., has recently announced that it intends to furlough 1,941 pilots by the end of October. The decision comes amidst the COVID-19 crisis where the company as well as the entire industry is struggling to keep up with mounting financial losses.
With the CARES Act coming to an end in September, Delta is forced to minimize its workforce to maintain its liquidity in these dire times. The federal bailout act was targeted to prohibit involuntary furloughs, pay cuts, or employee layoffs in the airline industry. Delta got $5.4 billion in the form of unsecured loans and grant funds from the CARES Act.
As of now, Delta has 11,200 active pilots and according to the latest projections, the company would be needing only 9,450 pilots by the summer of 2021 to function effectively. Delta predicts that the summer of 2021 would be a peak flying period.
Earlier in May, Delta had warned its employees of potential employee cuts and had urged its employees to take advantage of voluntary exit programs and early buyout. The voluntary exit initiatives included a retirement package that was applicable for all Delta employees that had served over 25 years.
Even after getting considerable participation from employees, these programs weren’t strong enough to avoid furloughs. Since the start of this health crisis, Delta has managed to recover only 25% of its total revenue.
Speaking on the move, John Laughter, Senior Vice President of Flight Operations, Delta Air Lines, said that the company expected premature retirement plans would help mitigate the problem of pilot overstaffing amidst the COVID-19 epidemic. However, these furloughs could be avoided or reduced if the government extends the CARES Act or the union meets in the middle with the airline over cost-reducing agreements.
Laughter stated that the company is simply overstaffed, and during such struggling situations, they are forced to take incredibly difficult decisions.
Source Credit: https://edition.cnn.com/2020/08/24/business/delta-airlines-pilot-furloughs/index.html