Delta to give pay hikes, bonuses
No. 3 airline promises employees they will be rewarded when carrier emerges from bankruptcy.
NEW YORK (CNNMoney.com) -- After a series of deep pay and benefit cuts since 2004, Delta Air Line employees are about to get improved pay and cash bonuses.
The nation's No. 3 airline sent a letter to all employees this week with broad outlines of the improved compensation they can expect when the Atlanta-based Delta (Charts) emerges from bankruptcy later this spring.
The letter does not give any specifics about the improved pay or the size of the cash bonuses or stock grants planned, other than to say that it would be instituting a profit sharing plan to distribute 15 percent of its pre-tax income.
Delta imposed or reached concession contracts with unions that saved $1.6 billion in labor costs in 2004 as it struggled to avoid bankruptcy, but a year later rising fuel costs forced it into bankruptcy court. While in bankruptcy, it won or imposed an additional $930 million a year in labor cost cuts.
The company said that when the airline emerges from bankruptcy, all employees will receive a lump sum cash bonus equal to a percentage of their pay. Delta had 55,700 employees as of its most recent filing with the bankruptcy court. Employees will also receive a grant of unrestricted stock that they will be able to sell without restrictions. The airline's 1,000 top executives will also be granted restricted shares, options and performance shares.
The information on pay is similarly vague in the company's letter.
"We're moving towards an industry-standard pay structure to ensure your pay rate becomes and remains competitive with network and low-cost carriers, including American (Charts), United (Charts), AirTran (Charts), JetBlue (Charts) and Southwest (Charts)," said the company's letter.
"While we won't be able to do that all in one step, we'll take the first step in that direction this summer - and officers and directors won't have any across-the-board pay increases until all those steps are complete," the letter continues.
The company said the pool of money that Delta has allocated for merit pay raises will be distributed based on performance and current pay position.
There will also be new retirement benefits into defined contribution plans. The company terminated the traditional pension plans for pilots while it was in bankruptcy.
More than 80 percent of Delta's employees are not union members. A spokesperson for the Air Line Pilots Association, the one major union at the company, could not be reached for comment on the letter Wednesday.