Delta management amends its proposals to reach agreement
March 8, 2006
While Delta Air Lines pilots and management say their goal is reach a contractual agreement, both sides appear miles apart, and the clock is ticking.
Spokesperson for Delta management Bruce Hicks argues that the company has worked diligently to reach a "consensual, negotiated, comprehensive agreement." Hicks, an airline consultant hired by Delta a month ago, says Delta has made significant changes in its proposals to the pilots’ union in order to demonstrate its commitment to reaching an agreement.
Hicks notes that last week, the company reduced its request from $315 million to $305 million in concessions from pilots. In addition, Delta is offering pilots pay increases in 2008 and 2009 and an equity stake in the company equal to five percent of the company’s earnings once the company becomes profitable.
The company is also considering the loss of pilots’ pension plans.
"In recognition that the pilot pension plan may be terminated, we’ve proposed ways to make up some of the loss with a $330 million long-term interest-bearing note that would protect active pilots," Hicks said.
If negotiations are agreeable, the company hopes to emerge from bankruptcy in 2007, Hicks said.
Recommended Stories For You
A pilot strike would mean the loss of 50,000 jobs and economic benefits for the communities the airlines serves, Hicks observed.
"A strike would be fatal to the company," he said. "We know that if we’re going to get out of bankruptcy, we’re going to have to have a consensual agreement. We could never get a reorganization plan approved without it. Who would lend us money if we didn’t have a pilot contract in place, right?"
Pilots, however, continue to prepare for a strike should the arbitrators choose to allow management legal termination of there contracts.
Delta pilot and Park City resident Ed Thiel left for Amsterdam on Tuesday to meet with airline employee representatives from around the world. As the Air Line Pilot Association chairman for more than 700 Salt Lake City-area pilots, he will be asking the international air line association Sky Team to support Delta pilots.
Delta will request other airlines from Mexico to Europe and Korea not fly extra flights in the event that Delta pilots choose to strike.
"A number of years ago, pilots formed the Sky Team Pilots Alliance to keep managements of airlines from seesawing pilot groups against each other," Thiel explained. "Two years ago when there was a strike at Air France, for example, Delta pilots refused to fly extra flights between the United States and France. That’s what we’re going for to get another formal, mutual-aid pact."
According to Thiel, international flights make up 30 percent of all Delta’s business. The pilots’ union therefore has also made similar agreements with domestic carriers, Continental and Northwest Airlines.
Though Hicks argues that the company is dealing with pensions as a separate issue, Thiel counters pensions are being ignored by management.
"They key point here for us is that our retirement plan is $250 million a year and they’re not giving us any credit for it even though they’re not funding it," he said. "That’s why we’re so far apart from reaching an agreement. In addition to [$305 million] they want our retirement plan."
More than 170 Park City area pilots will have until April 6 to cast strike ballots alongside their colleagues.
Arbitrators have until April 15 to decide whether a termination of Delta Pilot contracts will be legal. Arbitration hearings begin next week in Washington, D.C.