Delta Air Lines, which received billions of dollars in federal aid last year, is paying managers bonuses ranging from a few thousand dollars to more than $100,000 to help make up for pay cuts at the start of the Covid pandemic last year.
Front-line workers like flight attendants, pilots and others in nonmanagerial positions are not receiving bonuses.
Delta’s CEO, Ed Bastian, said in a note to employees on Monday that the payments brings those managers’ pay to 20% to 30% below the year-earlier levels, from cuts that previously were around 50%.
“Fairness is one of the fundamental values we share at Delta, as is our mandate to always do right by our people,” Bastian said. “That’s why we made the decision to make a one-time adjustment payment to better align the percentage impact to overall compensation for everyone below the executive officer level.”
In addition to cutting managers’ pay, Delta last year also reduced thousands of workers’ hours by 25% to help weather the pandemic’s plunge in travel demand, a policy that was criticized by some lawmakers. The Atlanta-based airline avoided involuntary furloughs or job cuts, partially thanks to the 18,000 employees, roughly 20% of Delta’s pre-pandemic workforce, who accepted buyouts and early retirement packages last year. The carrier posted a record loss of $12.4 billion in 2020.
Delta received $5.6 billion in federal aid last year as part of a $25 billion program passed as part of in the CARES Act in March that prohibited airlines from cutting employees. The carrier expects to receive $2.9 billion this quarter as part of an extension of the program that Congress passed late last year, Delta said in a filing last month.
The pilots’ union criticized the move, which was first reported Sunday by the View from the Wing travel blog, saying it went against the spirit of the CARES Act.
“While we are confident that Delta will recover quickly once the country comes through the pandemic, the payment of special bonuses to management while the airline is still burning cash is premature and inappropriate,” said Chris Riggins, spokesman for the Air Line Pilots Association, in a statement. “We also believe the payment of bonuses limited to management is inconsistent with the spirit of the CARES Act. This was an unfortunate and shortsighted decision.”
Delta says it is following the CARES Act terms, which placed limits on top executive compensation. Managers’ compensation can vary depending on company performance. Delta says it continued to pay rewards to front-line and other employees for hitting operational targets but those amounts are lower than the bonuses.
The carrier and its U.S. competitors are on track to receive additional federal payroll aid.
On Friday, the House passed a $1.9 billion coronavirus relief package that includes a third round of federal payroll support for airlines. If the bill passes the Senate, U.S. airlines would get $14 billion in exchange for keeping workers paid until Sept. 30. U.S. airlines have already received $40 billion in payroll support in two other coronavirus aid packages.
Source: Business - cnbc.com
