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Comair pilots deal reached
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June 14, 2001: 6:22 p.m. ET
Delta unit Comair and pilots reach deal that could end 81-day strike
By Staff Writer Chris Isidore
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NEW YORK (CNNfn) - Negotiators from the Air Line Pilots Association and Comair Inc. have reached a tentative contract settlement that, if ratified, could end the 81-day strike at the Delta Air Lines feeder airline unit, the National Mediation Board announced late Thursday afternoon.
Terms of the agreement were not immediately available. It was reached after three days of mediated talks in Washington, D.C. The airline, which will still be grounded through August even with ratification, was carrying 25,000 passengers a day before the strike started March 26.
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Comair jets could be back in the air after a tentative deal by the Delta Air Lines unit and pilots union to end an 81-day strike. | |
"Our negotiating committee and elected leaders endorse this agreement, recommending that our members adopt it because we believe it satisfies the pilots' fundamental requirements," said J.C. Lawson, a Comair captain and chairman of the union's unit at Comair, in a statement released by the company.
That endorsement is important in getting the necessary rank-and-file ratification of the agreement. Membership rejected a previous settlement offer from the NMB last month by a 1,042 to 99 vote after the leadership did not back the offer.
Management at Comair also praised the agreement.
"This is good news for our customers, the communities we serve and our employees," said Comair President Randy Rademacher. "We saw this latest negotiating session as an opportunity to bridge the remaining gap between the company and its pilots, and we're very pleased to have arrived at terms that the union representatives could embrace."
The company could not give estimates as to when it will be back in the air. It has cancelled all flights through Aug. 13, and it will be faced with filling positions of 2,400 of its 4,000 non-striking employees who were laid off during the strike and found other jobs. But Mike Linenberg, analyst with Merrill Lynch, said he believes that Comair could have at least limited operations within two-to-three weeks.
The strike had been closely watched in the airline industry. The regional jets, which carry fewer than 100 people, have been a fast-growing and extremely profitable segment of the industry in recent years, as airlines used the smaller planes to open up new markets cheaply. If the lower pay levels for pilots were to rise too much, analysts worried that it would change the basic economics of the segment.
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Leadership of the Air Line Pilots Association have recommended an end to the strike at Comair. | |
The strike has severely disrupted operations and profitability at Delta's second-largest hub in Cincinnati, and led analysts to project a loss for the airline during the current quarter. Analysts surveyed by earnings tracker First Call now forecast the company will lose 57 cents a share in the second quarter, an improvement from the first quarter loss of $1.02 a share, but much worse than the $2.85 a share profit in the year ago period.
Linenberg said that without the details it is impossible to say whether this was good or bad news for Delta and the other airlines, even if it did stop the financial bleeding at the nation's third-largest carrier.
"The devil is in the details," he said. "Costs are definitely moving up. But if you jack up costs too much, you could potentially destroy the economics of the plane."
Pilots at Comair receive a fraction of the pay and benefits of the mainline carrier. Starting pilots were being paid as little as $14,562 a year according to the union, while management put the figure at $16,180.
Management said its offer would have made the 1,350 pilots at the airline when the strike started the best paid in that segment of the industry, raising top pay to $96,000 a year from $66,000 under the previous contract.
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Comair, which was acquired by Delta in January 2000, had flown about half the flights under the Delta Connection name before the strike. It had pioneered the use of commuter jets carrying less than 100 people to expand the reach of a regional carrier. Other Delta Connection flights, such as those feeding into Delta hubs in Atlanta, Salt Lake City and Los Angeles, had not been affected by the strike.
Comair disposed of 37 of its 119 planes during the strike as well as canceling future deliveries. It said that reduced the number of pilots it would need to about 950 from 1,350 at the start of the strike. But the demand for pilots is very high right now and the union reported that many pilots found other jobs during the strike, so the company may have to fill some pilots' positions.
The agreement came after the close of trading Thursday. Shares of Delta (DAL: Research, Estimates) lost 98 cents to $42.96 ahead of the agreement. 
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