The below post references numerous facts and figures sited by Delta in their recent May 2020 Advance Entitlement/Surplus Bid Posting. When reading the bullets from the Delta memo, you will notice the numbers published are confusing at times. For instance, Delta has stated in an open company memo that they are overstaffed by 7,000 pilots come this fall, yet in this recent bid posting they go on to say that by Q3 2021, they will be overstaffed by between 2,500 and 3,500 pilots. Please read carefully and if you have any questions, don’t hesitate to reach out.
Delta Airlines published the May 2020 Advance Entitlement/Surplus Bid Posting. We believe this will be the first of multiple displacement bids as the company continues to appropriately forecast demand into the future while trying to determine the expensive cascading training events caused by a displacement of this scale.
The document details the need to “align staffing for the projected flying in summer of 2021 and 2022” with awarded training beginning as soon as June. Delta Airlines has approximately 14,657 pilots on their seniority list, with around 13,000 active pilots month-month with the rest in various non-flying roles, personal and military leave. Delta is forecasting “a requirement for approximately 9,400 [active] pilots in Q3 2021.”
ALPA is currently in negotiations with DAL to determine the various terms for programs such as early-out retirements.
- “The bid plan incorporates the flexibility to adjust initially to the evolving landscape (e.g., potential early out programs, increased early retirements, or a change in the economic environment following the bid award).”
- “When this bid is awarded there will be approximately 10,730 active pilot positions, a reduction of approximately 2,500 active positions (inclusive of the approximately 300 new hire pilots who had their Advanced Entitlements removed with the cancellation of the January 2020 AE).”
There will be a significant number of pilots that will not be awarded a position, instead they will be awarded ‘UNA’ with neither a captain or first officer designation. Pilots awarded UNA will be paid Boeing 717 First Officer pay rates, which could be a significant reduction from their current pay. Delta is closing 18 of their 98 bid categories which will result in multiple base realignments.
Thank you to our trusted sources for sharing this memo.
- “Delta Air Lines Inc. said it would remove Boeing Co. 777 aircraft from its fleet by the end of the year, a sign the airline believes international travel will recover slowly from the coronavirus pandemic.”
- “Airline executives have said they believe domestic travel will be first to resume, as people may feel ready to visit friends and relatives or take relatively short flights before they will venture abroad.”
- “That means Delta has more pilots than it needs. John Laughter, senior vice president of flight operations, told employees in a separate memo that the airline will likely be overstaffed by 7,000 pilots this fall.”
- “First Officer Chris Riggins, a spokesman for the union that represents Delta’s pilots, said retiring the 777 and shrinking the airline’s fleet will hinder its ability to benefit when demand for travel eventually recovers.”
- “Delta has 18 of the aircraft in its fleet and had recently spent $100 million to refurbish their cabins—a sign it had planned to continue flying the planes for years.”
- “Many airlines and industry observers believe it could be years before travel fully recovers, particularly for long flights. Delta said its more fuel-efficient Airbus A330 and A350-900 can handle the job when demand returns. Delta said the A350-900 burns 21% less fuel per seat than the 777s it will replace.”
Coming on the heels of the massive 4,000+ pilot displacement bid and news that United is overstaffed by 22,000 flight attendants, two United Regionals are now starting to prepare for their decreased demand. ExpressJet Airlines and Air Wisconsin have both pushed out displacement bids to their pilot group this week.
ExpressJet, an airline of 1,451 pilots, approximates their new required pilot staffing levels at 1,115 active total pilots; only 160 will hold onto Captain positions. In total ExpressJet pilots will experience 382 displacements with this bid.
Air Wisconsin published a realignment bid with 181 Captain downgrades decreasing their active Captain list to 125 pilots total. Earlier in the year Air Wisconsin was forecasting June block hours at 14,200, as of now they are only scheduled to fly 1,800 block hours for United Airlines.
The memo we read stated “Though we are hopeful for a strong recovery, we must face the reality that this is very unlikely. This realignment does not start the furlough process, but begins to adjust our staffing in such a way that we can react to a number of possibilities in the fall – including the possibility of furloughs.”
These airlines are making these moves for a big “IF”. If they are forced into a furlough situation this fall, they need to make these moves now, to be ready. Restoring pilots back to the Captain seat can be done relatively quickly and inexpensively at these carriers.
However, if this market decline continues, and legacy airlines are unable to provide the block-time necessary for their regional partners to continue, they need to put themselves in the best situation to adjust quickly and make the unfortunate moves necessary to survive.
Thank you to the clients that forwarded us these documents.
This morning I called up a friend and asked him how his flight department was doing. He informed me that he had flown his first flight in over two months. Bad news right? Not necessarily, his expectations were high that they were about to pick-up travel quite a bit. The flight that they had flown was a surprising one; a quick out-and-back to the west coast to pick up one passenger. I asked him, “why didn’t you buy them an airline ticket?”, as this is what they typically would have done in the past. He stated, “the company can’t take a risk of having their employees get infected on a flight, what if that passenger visited one of our manufacturing plants and infected line workers? It is far cheaper for the company to spend the money on the jet as opposed to risking a manufacturing line going down.” This made me wonder, what lengths are corporations, and high-net-worth-individuals going through to ensure their safety traveling during the pandemic?
This week gave us some positive news for corporate aviation, unfortunately it seems this may not be great news for the airlines that are dependent upon business travelers.
Flexjet Chairman Kenn Ricci held a weekly conference call on Sunday May 10th, with much exuberance he announced the following exciting and uplifting news.
- “Revenue hours so far in May have been up 50% over what they were in April. In fact, for this weekend for May 15, we’re going to be north of 200 revenue hours and that’s three times what we were flying at our April low.”
- Twenty-five aircraft will be returning to the fleet from storage.
- “We’re just starting to see and we’re participating in a tremendous amount of large-cabin international opportunities…There is certainly a tremendous amount of demand in large-cabin and international and so part of bringing back our aircraft will be to significantly, in very short order, activate our full fleet of our large-cabin aircraft.”
- “We’re in a position to end all of our salary deferrals and return everybody back to their full salaries as they were before the crisis.”
- “You’ll also receive any deferred monies that you received that were deferred during the month of April.”
- “And finally, we will be paying the Q4 2019 pilot bonuses at the end of June on-schedule as planned.”
The Private Jet Rebound is Continuing Day-by-Day:
- “Global business aviation is down 58% so far in May compared to a 70% drop in April.”
- “Palm Beach International is the world’s busiest airport so far in May.”
- “Over the past weeks, numerous industry executives have reported signs that private jets will help lead global travel recovery. Companies that already use private aviation are planning to expand their use.”
- “UHNWs who previously eschewed private jets are now turning to the segment, not for time savings or privacy, but health. One analysis shows potential COVID-19 exposure is 30 times lower when flying privately.”
- “Business aviation activity globally is still at least 50% below normal, but the trend this month is stronger than last month, and steadily recovering in all regions, in contrast to still-idle scheduled airline capacity.”
Will Private Jets Soar Because of Covid-19?
- “In the coming weeks and months, Dan Early predicts there will be “a fairly significant uptick in demand” for charter flights like those operated by his firm, St. Paul-based Best Jets International.”
- “At a time when people are worried about being infected with the coronavirus, flying private avoids a TSA security line, as well as a large airport terminal. Also, if a family or corporation purchases a charter, they obviously have control over who is on the flight.”
- “One was a group of businesspeople that were in a [undisclosed] location and they opted not to fly back commercially,” Early says. “So we sent an airplane out to get them.”