Delta Air Lines employees are receiving word this week of something they haven't gotten in a while --- pay raises.
Employees will get pay raises this summer and a "significant stake" in company stock as part of broad-based compensation packages after the airline's expected emergence from bankruptcy this spring, Chief Executive Gerald Grinstein said.
"It will be the first time ever on so large a scale that a company emerging from bankruptcy has awarded stock to nonunion employees," Grinstein said in a pamphlet sent to employees this week.
Delta will also begin reversing some of the pay cuts the carrier imposed over the last three years to "move toward an industry standard pay structure .... with the first pay increases coming this summer," Grinstein said.
The pamphlet was short on specifics, but it said employees will also receive cash lump sums, profit-sharing and company contributions to a new retirement savings plan.
Delta expects to emerge from Chapter 11 this spring.
Paul Lapides, director of Kennesaw State University's corporate governance center, said such an announcement without specific pay raise percentages or other details is unusual and might get a skeptical reception from employees at many companies, but probably not at Delta.
"I think Grinstein really has a lot of credibility with the employees" at Delta, he said. "I think most employees will see it as a positive thing even without the numbers."
Most nonunion Delta employees' pay dropped more than 20 percent after the airline imposed two rounds of pay and benefit cuts and froze their pensions.
Delta's unionized pilots also took bigger pay cuts, and their separate pension plan was terminated as part of a concession deal that also will result in a future equity stake, pay raises, retirement savings and other compensation.
Delta's message about the widely rumored employee perks could be timed to head off potential complaints once the carrier unveils details of executives' and managers' compensation in about two weeks.
"About 1,000 leaders will also be granted ownership stakes in Delta, but those shares will come in different forms, such as restricted stock, stock options and performance stock" that can't be sold for up to three years, Delta said in the pamphlet.
Delta said employees will get "actual shares of common stock" within days after the airline emerges from bankruptcy that they can sell or keep.
Delta said its executives, unlike most employees, won't receive the cash lump sums, which will be based on a percentage of pay.
Delta's management has been treading carefully around the executive pay issue as it has tried to rebuild employee morale damaged by years of job cuts, falling pay and a 2003 controversy over executive pensions and bonuses that angered many workers.
The pool of 1,000 Delta executives and midlevel managers will receive a 2.6 percent stake in the new Delta worth roughly $260 million, with another 1.4 percent in reserve for future rewards.
That's about half of the share United Airlines' management got after that company emerged from Chapter 11.
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Not only did he forgo part of a comparatively low salary while leading Delta through its Chapter 11 case, Grinstein will get none of the usual payouts. No stock. No cash bonus. Nada.
Based on the figures provided by Delta, the average total lump sum and equity payout for non-contract employees would be $12,000, while the average equity payout for managers would be $200,000.
Delta employees will get a lump-sum cash payment from the airline based on a percentage of their salary and will receive an equity stake in the reorganized company.
IN the 30 years since the the government deregulated the airline industry, only two major carriers, American and Southwest, have avoided bankruptcy. Some, such as Houston's own Continental, US...