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I don't want to alarm anyone but if you're planning to fly on Delta (like me) you better keep an eye on the news and have a backup plan.
Delta, Pilots Walk A Precarious Line
By RUSSELL GRANTHAM
The Atlanta Journal-Constitution
Published on: 11/15/05
As Delta Air Lines and its pilots union fly toward a courtroom clash Wednesday in New York, where the airline has asked a bankruptcy judge to tear up the pilots' labor contract, they're battling in thinly charted territory.
Most other big airlines that have preceded the Atlanta carrier into Chapter 11 have inked concession settlements with their union employees before showing up in court.
On Monday, Northwest Airlines pilots approved a pay cut deal reached before that airline was to take matters before a bankruptcy judge in the same New York courthouse.
But Delta's standoff with its 6,100 pilots — its only large employee union — showed no signs of easing on Monday. Indeed, the rhetoric intensified, with Delta saying in a court filing that a union threat to strike if the contract is tossed out amounts to a promise to commit "murder-suicide."
Referring to a pilots union court filing opposing Delta's move to toss out the contract, Delta said: "Deny the motion to reject, the court is told, or the association will call a post-rejection strike that will kill the company and eliminate every pilot job — indeed every Delta job."
While few industry experts expect a strike, the standoff raises the specter that the Air Line Pilots Association could be considering disruptive actions during the busy holiday season if the two sides don't settle and the bankruptcy court sides with Delta.
Pilots reject savings figure
Delta, which filed for Chapter 11 protection on Sept. 14, says it needs about $325 million in cost savings from pilots to emerge from bankruptcy as a viable airline. The Air Line Pilots Association says that number is too high, and last week offered a deal it says would cut Delta's annual costs by $90.7 million over four years.
Delta earlier this month filed a motion asking U.S. Bankruptcy Court Judge Prudence Beatty to reject the current contract and impose concessions — an option available to a company in Chapter 11.
Beatty is set to hear opposing arguments Wednesday on Delta's so-called Section 1113 motion, assuming the two sides have no deal by then. The company wants a 19 percent pay cut — down slightly from an initial 19.5 percent request — plus work rule changes and rights to expand flying by regional carriers.
Delta's request comes as the carrier imposed pay cuts up to 10 percent on Nov. 1 on nonunion employees to save $605 million annually. Last week, Delta reported a $1.1 billion loss for the third quarter, boosting its red ink to $11.1 billion over the past four years.
The official committee of Delta's unsecured creditors supports Delta's motion, saying it was "abundantly clear" that Delta needs to lower its pilot labor costs.
Even if its terms are imposed, Delta says its pilots will remain higher paid than Northwest pilots under their deal.
A midcareer captain on a Boeing 757 would make $146.26 per flight hour at Delta, 3 percent more than a Northwest captain's $142.36 per hour after a nearly 24 percent pay cut at the Minneapolis-based carrier.
In a recent Securities and Exchange Commission filing, Delta said the same captain is now paid $181 per hour, while colleagues at American, Continental, United and US Airways are paid $166 to $144 per flight hour.
ALPA, whose offer last week included a 9 percent pay cut that later drops to 5 percent, has filed motions in opposition to Delta's move to reject the contract, saying the carrier is seeking more cost cuts than it needs. A retired pilots group also has filed in opposition.
ALPA is "committed to reach a settled agreement," said spokesman John Culp, but "we will not be bullied into what we consider to be excessive concessions."
"We will defend ourselves," he said, calling a strike "a legal option."
Uncharted territory
Delta officials believe a strike would be illegal, and that the union would remain subject to the sometimes protracted negotiating process dictated by the Railway Labor Act even if the court cancels the contract.
No major airlines have recently retooled union labor contracts through a judge's decision or weathered a strike as a result. Unions at other airlines have reached concessionary settlements before a judge's decision, partly out of concerns that a shutdown could doom the airline.
Delta's pilots are "using this as a strategic argument that they may not want to exercise," said Darryl Laddin, an Atlanta lawyer who represented the trustee for Eastern Airlines during its bankruptcy case. He said a strike would be the "nuclear option" that would devastate both Delta and the pilots.
Still, to discourage Beatty from rejecting the contract, Laddin added, ALPA must "convince her that they've got a pretty good legal argument [to be able to strike] and that they really might exercise it."
In its court motion, Delta said it "takes no joy" in asking Beatty to impose new cuts on pilots, who last year took wage cuts of 32.5 percent as part of a plan that helped the company temporarily avert a bankruptcy filing. But it said ALPA's new offer is too small and based on flawed economic analysis of the airline's situation.
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