Delta, pilots reach temporary deal
Published December 13, 2005
ATLANTA - For months, Delta Air Lines Inc. insisted its pilots concede to $325-million in pay and benefit cuts, and the company asked a bankruptcy court judge to help it impose its will.
The union voted last week to ask its members to authorize a strike, but Delta refused to budge. Then, suddenly, late Sunday the two sides inked a tentative deal on temporary pay cuts worth more than $152-million a year, less than half what the nation's No. 3 carrier wanted.
While experts say Delta may ultimately get what it wants, for now it appears the airline's pilots have a victory that has been a rarity at other major carriers that have used the bankruptcy court's big stick to meet their goals.
"The pilots came out on top of this skirmish, but I've been around for a long time and I know who is going to win the war," said Minneapolis airline expert Terry Trippler, who runs travel Web site cheapseats.com.
United Airlines, a unit of UAL Corp. of Elk Grove Village, Ill., has used the leverage of federal bankruptcy law to extract not one, but two, rounds of hefty wage and benefit cuts from employees during its restructuring. It also succeeded in dumping their defined-benefit pension plans, replacing them with much less costly plans. During three years in Chapter 11, a judge has sided with the nation's No. 2 carrier in almost every one of its labor-related requests.
At Northwest Airlines Corp. of Eagan, Minn., pilots, flight attendants and ground workers are all working under temporary cuts, won under the nation's No. 4 carrier's threat that a bankruptcy judge might allow it to impose even harsher terms. That still could happen. Northwest is set to ask for permission on Jan. 17 to reject those union contracts, which would allow it to impose whatever terms it wants. All three groups have said they will try to make a deal with Northwest before then.
At Atlanta-based Delta, the pilots held their ground, longer than some experts thought they would. They held a rally that gathered more than 800 pilots and their wives to protest the company's effort to void the union contract. The union formed a strike preparedness committee, threatened repeatedly to strike if the contract was thrown out and ultimately voted to seek a strike authorization from members.
The tentative agreement, which followed meetings between the sides over the weekend brokered by United States Trustee Deirdre Martini in New York, includes a 14 percent across-the-board wage cut for pilots and reductions in other pilot pay and cost items equal to an additional 1 percent hourly wage reduction. Based on the pilots' average annual salary of $169,393, the cuts would save Delta $152.5-million annually.
"The other airlines have not been making significant compromises," said New York airline bankruptcy lawyer William Rochelle. "United Airlines certainly didn't. It's hard to imagine that Delta would cave, but who knows?"
Delta spokesman John Kennedy noted that the agreement is only an interim one, and management will still seek a more comprehensive deal by March, but he acknowledged that even the company felt the need for give and take.
Asked if the pilots won the battle, Kennedy responded, "The answer is this symbolizes the Delta spirit of people working together to resolve situations to save the company."
Down the road, Delta could still get the concessions it wants from its pilots, said airline analyst Ray Neidl, adding that he thinks it was the union, not the company, that saw the writing on the wall.
Still, the pilots union isn't conceding anything, and has vowed to keep its threat to strike in the background in case the two sides can't reach a comprehensive deal and a third-party arbitration panel rejects the pilot contract.
[Last modified December 13, 2005, 01:30:24]
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