Delta reaches deal with pilots
Death-blow strike averted for now, but labor's seeming lack of urgency raises concern.
NEW YORK (CNNMoney.com) - Delta Air Lines and its pilots union said Friday they reached a tentative agreement over a contract dispute.
The agreement, subject to the approval of a bankruptcy court, must first be ratified by the union leadership, then sent to the general membership for approval. The union said details of the agreement will emerge in the coming days.
"Delta passengers can continue to book on Delta with confidence," Edward Bastian, Delta's executive vice president, said in a statement. "There has been no disruption to our service. Our pilots are performing professionally, flying as scheduled, and together with all Delta employees, are taking good care of our customers."
But the union, in a recorded phone message announcing the deal to its members, said they aren't in any rush to ratify the contract.
One analyst said that wasn't good news.
"This company needs to get an agreement in place very quickly," said Michael Boyd, an aviation consultant. "This is not a normal negotiation, this is not a drill. It's either get the costs down or hit the road."
But Boyd said he believes the pilots will ratify some type of deal and that the company will return to profitability.
The two sides were facing a Saturday deadline which could have allowed Delta to dump its union contracts and triggered a union strike. Boyd said a strike would have meant the airline would cease to exist within 48 hours. Delta, currently under Chapter 11 bankruptcy protection, flies more than 300,000 passenger a day on about 1,700 daily flights.
Earlier in the month pilots at Delta Air Lines voted overwhelmingly to authorize a strike against the nation's No. 2 airline, though no date was set for a walkout. The vote was 95 percent in favor, the Air Line Pilots Association said.
Many experts said Delta could be forced to halt operations permanently if the pilots shut down the airline for even a short time. But most also agreed that such a move was unlikely.
In the current contract negotiations the airline was arguing that it needed concessions from the pilots to compete against low cost carriers and other legacy airlines that have recently won similar deals with labor. The pilots union argued that its members had already sacrificed enough.
Delta has been operating in bankruptcy since Sept. 14.
Management said earlier it needed 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.
But a union representative told CNNMoney.com earlier this week that even though the current wage concession being sought by Delta was only a fraction of what the union had already agreed to, other changes in work rules, scheduling and benefits had made management's demands unacceptable.
Delta says the average pay for a Delta pilot was $157,000 last year, even after the members there took nearly a one-third pay cut in October 2004 in an unsuccessful effort to keep the airline out of bankruptcy court.
The union said much of that pay was due to extra hours of flying due to short staffing at the carrier, as well as the high pay of its most senior pilots.
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.
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