Cowen & Company has released a new report on the long-debated issue if pilot retirement in the US.
Cowen predicts that pilot retirements at several of the US airlines begin to increase in 2021 – the peak for American is 2023, Delta is 2022, United and Southwest are 2026. By the end of 2026, ~42% of the active pilot workforce at the five largest airlines will retire, says the report. Cowen determines that regional carriers will need to “aggressively recruit pilots in an attempt to navigate pilot attrition.”
As a result of the dearth of pilots now and into the future, salaries are expected to increase. Currently, most US airlines have negotiated pay increases with their pilot unions and further contractual increases are expected. Regional pilot pay is also expected to increase, says Cowen. “We expect pilot pay to increase at [a] level to attract people to the profession,” says Cowen. “The senior captains can see their pay go to highs of $120 / hour, but at current hiring rates at the majors, it is more likely for experienced pilots to move to the majors where pay starts at $85 or $86 / hour.”
Salary increases will impact airline earnings across the board but regional carriers will see a bigger negative impact on earnings than the major airlines, says the report. “As more pilots retire, the number of captains at the senior most levels should decline, while the number of captains in the middle of their careers increase. The overall impact on operating expenses should actually decrease, as there should be a greater percentage of pilots in years 1 through 10, where average pay at the captain level is closer to $270 / hour vs. the top pay of $328 - $330 / hour in years 12 and later.”