More labor pains for Delta
March 20, 2001: 5:14 p.m. ET

Pilots of commuter carrier Comair set to strike Monday after contract rejection
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NEW YORK (CNNfn) - Delta Air Lines, already facing labor unrest by its pilots, now faces a strike by pilots at one of its feeder airline units, Comair.

Pilots at Comair are authorized to strike as soon as Monday, March 19, at 12:01 a.m., after members rejected a proposed contract by a 1,090 to 6 vote.

The National Mediation Board, the federal agency that oversees labor relations in the airline and railroad industries, authorized a 30-day cooling-off period that is required under federal law before an airline strike can take place, but it did so only if the rank and file crew members at Comair were given a chance to vote on management's last offer.

graphicDelta's pilots, who like those at Comair are represented by the Air Line Pilots Association, authorized a strike last month, and ALPA and the airline jointly asked the NMB to start a 30-day cooling-off period after they missed a self-imposed Feb. 28 deadline for an agreement. But the NMB has yet to start that cooling-off period, and it brought the two sides back to the table in Washington this week. Jim Armshaw, an NMB spokesman, would say only that those talks were continuing Tuesday.

The union said the largest issues for the commuter pilots are retirement, scheduling rules, job security, and compensation.

"With seven days left to a possible strike, I hope that our management is ready to get real in these negotiations," said a statement from Captain J.C. Lawson, chairman of the union's unit at Comair, which has 1,133 members. "Our goal remains to achieve a negotiated settlement that rewards pilots fairly and at the same time preserves our future."

Comair issued a statement Tuesday saying that its offer would have made the pilots the best paid among regional carriers. It said it is still hopeful of reaching an agreement before the deadline. It said it expects to join the union in federally mediated talks in Washington later this week. Officials with Comair were not available for comment Tuesday, and Delta officials referred all calls to Comair.

Hubs in Cincinnati, Orlando face disruption

Comair is not the only regional carrier providing service under the name Delta Connection, but it carries just less than half of its passengers flying under that name. It flies primarily out of Delta hubs in Cincinnati and Orlando, but other carriers not affected by these labor negotiations handle most of the feeder flights to and from its hubs at Atlanta Hartsfield International Airport, Salt Lake City and Los Angeles.

graphicComair carries more than 8 million passengers a year and operates 800 departures each day to 95 cities in the United States, Canada, the Bahamas, and Mexico. It has 119 aircraft, all but nine of which are the smaller regional jets that the airline was a pioneer in using. Comair used to be an independent, publicly-traded carrier, but Delta acquired it as a wholly-owned subsidiary in a $1.8 billion deal that closed in early 2000.

Analysts said that while a strike probably wouldn't affect Delta's results in the soon-to-be-completed first quarter, a strike of a week or two would hit Delta's results for the second quarter. The airline already warned last week that concerns about a possible strike by pilots had cost the airline $300 million-to-$350 million in revenue and would cause a loss rather than the expected profit in the period.

"It's not minor, but it's not enough to cause major problems," said Ray Neidl, analyst with ING Barings "I'd say (a two-week Comair strike) would equal no more than 5 cents a share, but that's a very rough guess."

The Air Line Pilots Association said that union has committed $2 million for a strike fund for members at Comair, who have been in contract negotiations since June 1998 and in mediation since July 1999.

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President Bush could stop a strike almost as soon as it starts by ordering the union members back to work and setting up a Presidential Emergency Board to investigate the labor dispute. He did that last week at Northwest Airlines (NWAC: Research, Estimates) as soon as it was struck by its mechanics. But PEBs to settle airline disputes are rare, and Bush's justification for using one at Northwest, his concern about the impact on the economy of a strike at a major carrier, might not apply to a strike at a regional carrier. Neidl speculated Bush would not name a PEB in this case.

Shares of Delta (DAL: Research, Estimates) slipped 2 cents to close at $39.34 Tuesday. graphic