Delta Air Made To Pay $8 Million to Settle Pandemic Cover Up Lawsuit

Delta Air Lines has agreed to pay $8.1 million to settle a lawsuit brought by the Department of Justice that accused the Atlanta-based carrier of falsifying financial records to cover up the fact that it had broken compensation limits for senior corporate officers.

The compensation limits had been introduced during the COVID-19 pandemic when Delta and other US-based airlines accepted billions of dollars of financial aid from the government.

Delta alone received $11.9 billion, nearly 70% of which didn’t have to be repaid, as part of a Payroll Support Program to keep employees in their jobs during the height of the pandemic when travel demand had tumbled.

In order to access the PSP, Delta agreed to abide by strict caps on corporate officers who earned $425,000 or more. Those caps were to remain in place until April 2023, well after the PSP program came to an end.

While the PSP saved tens of thousands of jobs from being lost across the US airline industry, seemingly working exactly as intended, a financial researcher whistleblower alleged that the airline had brazenly exceeded the compensation caps for some high-earning executives.

Delta then allegedly produced falsified financial documents that were submitted to the US Treasury to show that it had complied with the compensation cap.

The Payroll Support Program was conceived by aviation unions at the start of the pandemic in early 2020, when airlines began to sound the alarm that mass job losses would be necessary to stem the losses from the devastation of travel restrictions on their businesses.

Unions such as the Association of Flight Attendants (AFA-CWA) campaigned in Washington DC, to get the PSP included in the wider Coronavirus Aid, Relief, and Economic Security Act (CARES Act), with all of the funds meant to go to frontline employees.

The unions were quickly supported by senior executives from a number of major Us airlines, although the AFA has slammed Delta and its chief executive, Ed Bastian, for being mysteriously absent from these meetings to secure the crucial funding.

“We fought tooth and nail for a program that protected the workers who were at risk of losing everything in the pandemic and ensure our airlines could remain intact to meet demand when travel returned,” Sara Nelson, president of the AFA, commented after the settlement agreement was announced on Tuesday.

“Delta stood alone during that time – using all of the airline’s political capital on one thing: to remove the one provision that would’ve required them to simply follow the law and not interfere with Delta employees’ free and fair right to choose union representation.”

Nelson added: “We applaud the whistleblowers who came forward to shine a light on this gross injustice and violation of a law that simply required Delta to use government relief funds to pay their workers and not their executives.”

The PSP was introduced in early 2020 and was originally only meant to run through September 2020. In the end, the program had to be extended twice, although some airlines didn’t accept additional funding after the initial bailout.

Despite the PSP, some airlines also sought to dramatically reduce their workforces, offering early outs and retirements, or slashing the working hours of employees to reduce their payroll expenses.

In the first few months of the pandemic, 40,000 Delta employees volunteered to take unpaid leaves of absence, and 17,000 opted to leave the airline earlier than they may have originally planned.

At the time, Bastian talked up the sacrifices that senior leaders were taking, boasting that he voluntarily gave up at least three months of pay in 2020, while other senior executives had their pay cut by 50% between September and December 2020.