Delta Air Lines, the largest U.S. carrier to seek bankruptcy protection this year, must still negotiate a contract with its pilots union...
Delta Air Lines, the largest U.S. carrier to seek bankruptcy protection this year, must still negotiate a contract with its pilots union by March under terms of an interim accord reached late Sunday.
If the two sides can’t agree by March, a neutral panel will decide whether the company can scrap its present contract, said John Culp, a spokesman for the Air Line Pilots Association (ALPA).
Had Sunday’s agreement not been reached, U.S. Bankruptcy Judge Prudence Carter Beatty would have made the decision after hearings on a Delta motion to end the contract.
Delta, the third-largest U.S. carrier, and the pilots union negotiated in secret most of last week with encouragement from the U.S. trustee overseeing the Chapter 11 proceedings, Culp said. Sunday’s agreement reduces base pay by 14 percent and is subject to a pilot vote this month.
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The pilots had threatened to walk off the job if the company tried to impose wage cuts.
“It basically takes the finger off the trigger as far as a strike is concerned,” said Bob Mann, a labor consultant in Port Washington, N.Y.
Delta and the union, which represents 6,000 Delta pilots, will ask the court tomorrow to halt the bankruptcy-court proceedings on the airline’s motion to throw out the present contract, pending the results of the vote, the company said. The changes take effect Dec. 15 if pilots accept the agreement.
“The long-term effect of the deal struck [Sunday] is not decided by this deal, it’s decided by the next deal,” Culp said Sunday.
Delta had proposed a 19.5 percent reduction of the average pilot’s pay to $136,362, part of a plan to save the company $325 million. The airline is seeking to restore profitability by trimming $3 billion from annual costs and already has shaved the wages of other employees, most of whom aren’t unionized.
Neither the company nor the union would say whether the interim agreement achieves the $325 million in annual savings on a temporary basis. The interim agreement gives the company about $218 million of the savings it sought, estimated Helane Becker, an analyst for Benchmark in New York.
The terms of the next agreement are more important and can change any or all of the terms of the interim agreement, Culp said.
Delta and the union will seek to reach the broader agreement by March 1.
“Our energy is now going to turn to reaching a long-term comprehensive agreement,” Delta spokeswoman Gina Laughlin said in an interview Sunday.