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Delta pilots question deal
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May 2, 2001: 1:38 p.m. ET
Opposition by union leaders, members, threatens deal; CEO says it'll win OK
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Officials with the Air Line Pilots Association leadership at Delta Air Lines held a fifth day of meetings on a tentative labor agreement with the airline, amid signs of growing dissatisfaction with the deal by rank-and-file pilots and even some of the union's leadership.
But Leo Mullins, the CEO of the nation's third-largest airline, said he's not surprised by the length of the union's deliberation, and he's confident that the leadership and membership will both approve the four-year deal.
He also said the he expects the airline to return to profitability "reasonably quickly" after a first-quarter loss that was hit by labor relations problems.
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Delta pilots, shown here holding an informational picket, could be on strike if union leadership or rank and file members reject the tentative contract agreement reached last week. (Courtesy: Air Line Pilots Association) | |
Shares of Delta were up slightly Wednesday, after losing ground the first two days this week following reports of pilot dissatisfaction with the proposed contract.
Mullins told reporters Wednesday that the additional cost of the new labor pact would be covered by greater efficiency of Internet ticket purchases by customers as well as decreases in fuel costs. The airline has said it believes the new deal will raise costs by $2.4 billion during the four-year life of the pact.
If the contract were rejected by either the union's master executive council or rank and file, it would raise the risk once again of a strike at the airline, although the airline has said it has been given assurances by federal officials that President Bush would use his powers to keep the pilots working while a "presidential emergency board" weighs the contract proposals for a 60-day period.
At the end of that 60-day period the pilots would again have the right to go on strike unless Congress votes to impose terms of a contract suggested by the PEB.
The four-year deal raises the pay of about 9,800 pilots at Delta by 24-to-34 percent, and hikes the pay of more than 500 pilots at low cost carrier Delta Express by 63 percent over the life of the agreement, closing much of the gap in their pay with pilots who fly the same planes at Delta. The union and company termed the deal, reached the tentative agreement April 22, a week before the pilots were set to go on strike.
Some pilots question whether deal is industry leader
Officials with the union had no comment about the meetings taking place between its negotiating team and the union's MEC, except to say that the meeting that started Saturday is now expected to conclude Wednesday. Its original statement said that it expected the meeting to take "several days."
One Delta pilot, a former union official who spoke on the condition his name not be used, said the length of the meeting is a reflection of the criticism to the tentative pact by both rank-and-file members and union leadership.
"I'll bet it's a pretty heated meeting," said the pilot, a captain based at Kennedy International Airport in New York. "I'm not hearing or seeing many favorable comments on the deal either on the job or on (online) message boards. I know the MEC members getting a lot of e-mails and phone calls from members opposing the deal. If approval was a slam dunk, they would have been out of meeting by Sunday or Monday."
But in response to a question at a Wednesday press conference Wednesday, Mullins said that the agreement is a complex one and he believes the length of the meeting is a result of the need of union membership to get all the details.
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Leo Mullin
Delta CEO says he's confident tentative deal with pilots will win approval. (Source: Delta Air Lines) | |
Mullin also said he didn't believe that there needed to be changes in the tentative agreement in order to overcome opposition of some pilots to the deal.
The former union official said that he believe the meeting is discussing strategy for the union in the face of possible federal intervention in talks.
"I'm sure the big debate is if the contract is rejected by the MEC or membership, where does it go from there?" he said. "Will that mean that Congress and the president impose something worse than we have now?"
Mullin said pilots object to some of the changes in scheduling procedures. He said that while the contract is described as the best in the industry, pilots of some planes, such as the MD-88 jets, are paid less than United pilots flying a similar size aircraft. The airline has 120 MD-88's, more than any other specific aircraft type. He also said that while the gap for Delta Express pilots almost closes in the last year of the contract, it doesn't disappear immediately as a lower wage scale did at United.
"I don't expect to get everything, but it seems like in too many areas where we come up short," he said.
But Mullin said that he believes if the MEC does eventually endorse the contract, he thinks that may convince enough rank and file members to vote for the deal and allow it to win narrow passage.
Analysts forecasts falling
Ray Neidl, airline analyst for ING Barings, said he believes that winning support for the pact would be tough, but he's still hopeful it will win approval.
"If not, we have trouble in River City," Neidl said. "You wouldn't want Bush to step in right away -- you'd hope you go back and see if there's something that can be changed to win approval. It's never good to have a contract imposed."
Neidl has lowered his earnings forecast for Delta for the second quarter to 50 cents a share, which is still above the 36 cents a share consensus forecast from earnings tracker First Call.
He said his forecast assumes that a strike by more than 1,000 pilots at Delta subsidiary Comair Inc. ends by next month. The consensus forecast had been for a second quarter earnings per share of $2.46 before a March warning from the company that it was being hurt by passenger worries about its labor problems.
Feeder airline strike still hurting Delta
Comair, which was carrying about 25,000 passengers a day before the strike started March 26, flies about half of the airline's feeder flights under the name Delta Connection, serving the hubs in Cincinnati and in Orlando, Fla. The two sides returned to the negotiating table last Wednesday for the first time since the start of the strike, and talks continued for an eight straight day Wednesday.
Mullin said Wednesday he was encouraged that talks had resumed, but had no further comment on that dispute, and officials with the union and Comair were prevented from talking by a news blackout imposed by federal mediators. 
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