The pilots were prepared for action. They had raised a $10 million fund and gained international support for a strike they vowed they would begin without an acceptable compromise contract.
This is the fourth time a major carrier in bankruptcy reorganisation has come within days of a strike and then won a pilot union deal. The other legacies in Chapter 11 protection, United, US Airways and Northwest Airlines, have faced similar crises, although the well-publicised strike preparation of Delta’s pilots has succeeded in scaring away significant forward bookings.
Delta management and most observers were certain that even a short jobs action would force the carrier into liquidation, and the Air Line Pilots Association (ALPA) had not suggested that the carrier would survive their threatened walkout. The airline was seeking an 18% pay cut and benefit concessions worth $305 million in annual savings as part of an effort to cut $1.9 billion in yearly costs. ALPA offered $140 million in cuts, countering that management’s request was too steep, coming after the $1 billion that pilots provided in 2004 to help keep Delta out of bankruptcy. The two sides also disagreed over how to compensate the 6,000 pilots for the likely termination of their pension funds. Delta, which has lost $12.3 billion in five years, is targeting summer 2007 to emerge from bankruptcy.
The tentative deal goes to local pilots leaders for review and recommendation, if any, and then to rank-and-file pilots for a vote. ALPA leaders are expected to adopt a similar stance to their counterparts at Northwest: that the contract is distasteful, unattractive and deeply concessionary, but is better than any terms that Delta would have been able to impose and better than any contract likely to be produced by the arbitration panel that, by prior agreement, would have crafted a compromise contract had Delta-ALPA negotiations failed.
ALPA leader Lee Moak, anticipating considerable pilot scepticism, says the union will take time to present and explain the agreement to members and vows “we will not hurry”. Neither side will reveal specifics of the pact, which Delta has said would limit average annual salaries to about $132,000, down from a range between $151,000 and $157,000 a year. Pilot incomes would drop from the industry’s undisputed highest to third rank, behind Southwest and American, respectively.
Delta chief executive Gerry Grinstein urges calm, telling employees: “Emotions are running high. Now, more than ever, we need to respect each other.” Standard and Poor’s analyst Phil Baggaley adds that a contract that does not cut deeply “could cause friction between the pilots and other employees”. ■
DAVID FIELD / WASHINGTON
Source: Flight International
