Delta Air Lines (NYSE: DAL) this week joined the growing number of commercial airlines threatening penalties for unvaccinated workers as a way to combat the ongoing coronavirus pandemic. This move by one of the largest carriers in the United States may spark a trend for the industry.
Delta Chief Executive Ed Bastian announced to employees in a public memo Wednesday that unvaccinated employees enrolled in the company's account-based healthcare plan will be subject to a $200 monthly price hike starting Nov.1, with Bastian highlighting the increased cost to cover employee hospitalizations.
"The average hospital stay for COVID-19 has cost Delta $50,000 per person," Bastian wrote in the memo. "This surcharge will be necessary to address the financial risk the decision to not vaccine is creating for our company. In recent weeks since the rise of the B.1.617.2 (Delta) varinat, all Delta employees who have been hospitalized with COVID were not fully vaccinated."
Unvaccinated employees will face other penalties as well, including indoor mask requirements effective immediately and mandatory weekly COVID testing effective Sept. 12. By the end of September, Delta will only provide COVID pay protection to fully vaccinated employees--meaning those who have received both Moderna (NASDAQ: MRNA) or Pfizer (NYSE: PFE)-BioNTech (NASDAQ: BNTX) vaccines or one dose of the Johnson & Johnson (NYSE: JNJ) vaccine--who are experiencing a breakthrough infection.
Bastian noted that about 75% of Delta's roughly 75,000 employees are already vaccinated against COVID and that "aggressiveness of the [Delta] variant means we need to get many more of our people vaccinated, and as close to 100 percent as possible."
Delta's new COVID measures are the latest attempt by a U.S. airline to increase vaccination rates among its staff. Although the above measures seem very restrictive, Delta's policy is less strict than competitor United Airlines (NASDAQ: UAL), who mandated that employees get vaccinated earlier this month by Oct. 25 or risk termination. Other carriers like Frontier Airlines (NASDAQ: ULCC) are requiring that all employees must be vaccinated or be subject to frequent COVID testing.
The effort by airlines to vaccinate employees could be helped by the recent full Food and Drug Administration approval of the Pfizer-BioNTech COVID vaccine earlier this week. Alaska Airlines (NYSE: ALK) told staff earlier this month that the company was planning to require employees to be vaccinated once a vaccine is approved by the FDA.
For investors looking for a way to add airlines to their 'recovery play' portfolio without the risk of picking and choosing potential winners, airline focused exchange-traded funds (ETF) are a great place to start. Popular airline funds to consider include the iShares U.S. Aerospace & Defence ETF (NYSE: ITA) as well as the U.S. Global Jets ETF (NYSE: JETS), which contains multiple carriers including Delta.