Delta pilots authorize strike
No deadline is set, but a walkout could mean the end of the nation's No. 2 airline.
By Chris Isidore, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) - Pilots at Delta Air Lines voted overwhelmingly to authorize a strike against the nation's No. 2 airline, the union announced Tuesday, though no date was set for a walkout.

The vote was 95 percent in favor, the Air Line Pilots Association said in a statement.

pic
Delta pilots picketing near the Cincinnati Airport last month. The airline is seeking $155 million in annual cuts on its 6,000 pilots.
Air turbulence
Air carrier says it needs severance plan to keep senior managers but union says it stirs rank-and-file anger and bigger problems. (more)
Government report shows nearly 10,000 lost bags a day, increase in arrival delays. (more)
After years of battling low-cost rivals and struggling to cut costs, the nation's older airlines are finally expected to post profits this year. (more)
Ireland's Ryanair gives away tickets to earn big profits from other aspects of the travel experience. (more)

Many experts say Delta could be forced to halt operations permanently if the pilots shut down the airline for even a short time. But those same observers generally agree that a strike is unlikely at the airline, which is already in bankruptcy, even with the vote announced Tuesday.

Management and the union are locked in discussions on another round of wage concessions as an arbitration panel weighs whether the Atlanta-based airline can dump its union contract. A decision from that panel is due by April 15.

Management says it needs another $155 million a year in concessions from the pilots, in addition to the $150 million in savings agreed to by the union in December, and about $1 billion in annual savings that they gave the airline in October 2004.

"The pilots have contributed a lot already. They feel that's enough. But it's a very competitive atmosphere out there," said Ray Neidl, airline analyst with Calyon Securities. "Delta needs the full amount they're asking for if they're going to be a long-term competitor."

Both Delta (Research) management and the Air Line Pilots Association are taking these steps to try to gain leverage in talks on further wage concessions at the airline, which has been operating in bankruptcy since Sept. 14.

If management can impose wage and work rules, that could force the pilots to agree to pay cuts and other concessions they were unlikely to accept otherwise.

But the threat of a pilots' strike, which many believe could lead to permanent closure of the airline, could stop management from taking that step.

"We seek a consensual comprehensive agreement, but we will not be bullied into accepting the overreaching demands currently on the table," Lee Moak, head of the Delta chapter of the pilots union, said in a letter to members. "We will not capitulate to these demands based on a fear of what may lie ahead. We understand the risks. If our contract is rejected, we will strike."

Delta spokesman Bruce Hicks said that the average pilot pay at the airline was $157,000 last year. That's after the one-third pay cut they agreed to in 2004, but is not affected by the additional pay cut agreed to in December. The number is inflated by the fact that staff cuts have left Delta with no pilots with less than five years seniority. But some senior pilots at Delta made more than $300,000 in 2005, according to Hicks.

Delta: No service interruption

Delta issued a statement stressing that there will be no immediate interruption in service.

"Today's outcome will not disrupt Delta service," it said. "Together with our pilots and all of our employees, we remain focused on our number-one priority -- taking good care of our customers. The traveling public can continue to book Delta with confidence."

But some business travelers may start to book on other airlines to protect themselves in case of a strike, said Kevin Mitchell, chairman of the Business Travel Coalition, a trade group that represents fliers' interest.

"I think at the very least, they'll start looking at this fairly carefully," said Mitchell. "Where there are alternatives, I'd be recommending booking away right now until there's better visibility about how this will play out."

But Jack O'Neill, chief operating officer CWT North America, a corporate travel manager, said that his firm had not been getting many calls of concern from their business travel clients on news of the strike vote.

"I think the general public has more of a reaction to these things than does the business traveler," he said. "We're doing what we need to do to monitor this. Noone wants to be surprised, but we're not getting any sense of concern from our clients."

Delta's statement repeated its earlier position that it is working to reach a negotiated agreement with the pilots.

Even if management wins the right to dump the pilot's contract, that doesn't mean it would immediately impose lower wages on the pilots. And a pilots' union spokeswoman said that even if the contract is thrown out, it wouldn't necessarily result in an immediate strike. The union would decide on when the best time would be for a walkout, she added.

But the stakes are high for both sides if either miscalculates.

Industry consultant Michael Boyd said Delta was unlikely to survive even a relatively short walkout that shut down the airline.

"If there's a strike for any more than 24 hours, it's gone," he said. "This is not normal bargaining."

But Boyd said he thinks there is only about a 10 percent chance that a strike will be called at Delta, and he believes that despite the strong vote Tuesday, many might cross a picket line and keep flying even if there is a strike.

"If you're a pilot, you have to vote in favor of a strike or you don't have leverage. That doesn't mean they'd really go out," Boyd said. "There aren't a lot of folks hiring pilots out there, and even if you get a job, you start at the bottom, at $15,000 or $20,000 a year."

Pilots vow unity

Moak's letter to members said pilots will be unified if a strike is called, with many members having already walked "informational picket lines" and held a practice strike.

"All too often over the past months, management has attempted to mischaracterize the defense of our contract as posturing, gamesmanship and, most recently, saber-rattling. They are wrong," said Moak's letter.

But Boyd said that if management wins the right to void the contracts, it will have the greater leverage at the bargaining table than will the union, even with the pilots having authorized a strike.

"Management would have the upper hand, because guess what who has the most to lose -- the pilots," he said. But he doubts that the management would move in the near term to impose new wages on the union, even if they win that right next week.

"I think that's a long way down the road," he said.

The pilots union, which represents about 6,000 active and 500 furloughed pilots at the bankrupt airline, agreed to about a one-third cut in their pay in October 2004, but 11 months later rising fuel prices and continued weakness in fares led the airline to file for bankruptcy court protection, the same day that competitor Northwest Airlines also filed.

Northwest has reached a tentative agreement with most of its unions on further concessions since its bankruptcy filing, although the union that represents its mechanics has been on strike since Aug. 19, with maintenance work being done by outside contractors and replacement workers.

Since Delta's bankruptcy filing, the airline's pilots have agreed to another pay cut of about 14 percent, but the union and management have yet to agree on further wage concessions.

Delta pilots reached a four-year agreement on an industry-leading pay raise in April 2001, shortly before the Sept. 11 terrorist attacks. Pilots at Delta continued to get paid under that contract until 18 months ago, while Delta was posting huge losses.

The pilots are the only major union representing employees at Delta.

Management says that even with rising fares and demand for air travel, it needs additional labor concessions to put together a plan to emerge from bankruptcy.

For a look at the improved economic outlook for the airline industry as a whole, click hereTop of page

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.