Delta Air Lines (DAL) is investing half a billion dollars in hiking its workers’ wages this year as its share price and the industry continue to be bashed by higher fuel prices and costs in the Iran war.
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Pay Rise of 4%
Delta said it would be raising global employees’ pay by 4% this year, a similar increase to the hike it made last year. It marks the fifth consecutive raise for workers in as many years costing $500 million.
“Following a $1.3 billion profit sharing bonus to employees worldwide this year, Delta is once again investing in our people with a 4% pay raise,” the company said in a statement today.
In an internal memo to employees, CEO Ed Bastian said despite industry pressures, “Caring for our people is the heart of Delta’s culture. This core value guides our approach to making consistent and meaningful investments in you and your colleagues.”
Value of Employees
There is clear value in investing in employees even in trying times. According to TipRanks Statistics tool Delta has 100,000 employees. Its revenues per employee are 633.4K and profit per employee is 50.06K. This compares with rivals such as American Airlines (AAL) which has 133,100 with revenues per employee of 410.47K.
The announcement comes as airlines try to navigate their way through the turbulence caused by the war in the Middle East that has battered margins. The DAL share price is down nearly 2% in the last three months.
In its recent Q1 earnings report Delta said its fuel price assumption for the June quarter ~ $4.30/gallon – was roughly double last year and added more than $2 billion of incremental fuel expense in the quarter. Its Q1 fuel costs averaged $2.62/gallon, around $0.40 higher than planned.
It has also cut capacity and some routes including those to Israel during these times of tension.
Is DAL a Good Stock to Buy Now?
On TipRanks DAL has a Strong Buy forecast based on 15 Buy ratings. Its highest price target is $90. DAL stock’s consensus price target is $81.21, implying a 17.94% upside.
