Delta's 34% Raise a Likely Benchmark for Other Legacy Carriers

United Airlines CEO Scott Kirby believes the recent Delta Air Lines deal will point the way on upcoming pilot contracts, with a rumored 34% cumulative pay bump. 

The rising tide will likely raise more than Delta pilots' dinghy, especially with so many pilot contracts up for negotiation this year. As airlines begin to catch up postponed contract debates, worsening inflation and a sometimes tenuous fuel supply cast a pall over the process. A recent leak of Delta's offer gives raises that ramp up over the next 4 years, while granting catch-up pay for services rendered while the contract was up for renegotiation through 2020 and 2021. 

Delta's deal at 34% likely spooked more than a few airline execs in the industry, and a ratifying vote might even start a run on nitroglycerine once it goes through. Should Delta pilots agree to the 34% raise, it would put an exclamation point on months of contract debates throughout the industry, showing exactly where pilots' bottom line may be. Last month, American Airlines pilots squashed a proposed 19% pay hike over the next 2 years, and before that, United's blew off a 14.5% raise with overtime and training pay. 

Catching up with United CEO Scott Kirby at a Washington event, reporters were able to see where his head is at following the Delta deal. "It's a rich contract but I think the really good news is it means we'll all get deals done essentially on the same terms and can move forward."

"The biggest news for an investor perspective is cost convergence in the industry means that what is different now is all the low cost carriers are going to have to come up to these much higher pay rates. This is going to wind up like oil prices -- it's going to be a pass through."

"Prices are still in historical terms 40-50% lower in real terms," Kirby said. "They are going to go up but it's still going to be the best value of your travel," said Kirby, pointing towards the battery of price increases seen throughout the rest of the travel industry. 

FMI: www.united.com