Delta Pilots Union Devotes $15 million to Fight Merger

Delta Air Lines' pilots union is devoting $15 million to the fight against US Airways' hostile buyout bid and temporarily moving leaders to Washington so they can lobby politicians and investors.

Union leaders were already in Washington this week plotting strategy and buttonholing politicians when US Airways upped its offer for Delta by $1.7 billion, to about $10.3 billion.

Lee Moak, chairman of Delta's Air Line Pilots Association unit, said in a letter to pilots that the merger poses a "clear and present danger to the careers of all Delta employees."

He said the fattened offer would add more debt to the merged airline and that it raises questions about US Airways Chief Executive Doug Parker's credibility.

"Two weeks ago, Parker definitively stated that he had no intention of increasing his offer. [Wednesday], he increased his offer, while at the same time reaffirming his 'plan' for no 'frontline' employee furloughs," Moak wrote.

"But on the same day, Parker's No. 2 man was openly discussing additional divestitures beyond those originally disclosed to quell antitrust concerns that US Airways claims don't exist in the first place. With divestitures come job losses. Make no mistake --- Parker's plan will result in thousands of job losses regardless of Parker's empty promises," Moak wrote.

He said Parker "will soon come to realize that we cannot be ignored, that we are not going away, and that the Delta pilots will not be 'synergized.' "

Union spokeswoman Kelly Collins said the $15 million from the union's general treasury will be used for lobbying, legal and public relations expenses.

Industry experts say the battle for Delta is likely to escalate in the wake of US Airways' sweetened bid. US Airways has given Delta's bankruptcy court creditors a Feb. 1 deadline to indicate support.

Delta management opposes the US Airways bid, but the creditors, who will hold substantial equity in Delta when it emerges from Chapter 11, could force it to pursue the deal.

One creditor faction, representing about 15 percent of claims, has already urged Delta to take preliminary steps in that direction in light of the new offer. But the court-appointed unsecured creditors committee --- which includes major suppliers, banks and ALPA --- hasn't indicated a position.

Their decision is largely financial. But they also must gauge the chances that a merger can gain approval from federal regulators --- which Delta and ALPA argue is unlikely --- as well as whether the two companies could be smoothly integrated and make their stock more valuable in the future.

Moak repeated earlier criticisms that the merger plan ignores elements of the Delta pilot contract that would block or complicate integration.

"Parker mistakenly believes that he can somehow magically overcome the ... protections built into our contract and to date refuses to discuss the contract in anything other than superficial terms," Moak wrote in the letter to pilots.

He added: "The Delta pilots will not change any provision of our contract in order to facilitate the hostile takeover of our company."

In an e-mailed statement, a US Airways representative responded: "We have committed to no layoffs of frontline employees, just as there were no layoffs of frontline employees in the America West-US Airways merger. We will comply with provisions of the Delta ALPA contract [and our own contracts]."

The current US Airways was created by the 2005 buyout of that carrier by America West, which adopted the name.

Moak did not address reports that Delta might be talking to Northwest Airlines about a possible post-Chapter 11 merger of those two carriers, as an alternative to a US Airways deal.

But he said: "I want to caution you about the many press reports you will read and see in the coming days and weeks regarding both the US Airways' hostile merger attempt and any other industry merger activity.

"I want to make this perfectly clear. Delta remains committed to emerging from bankruptcy as a stand-alone airline, and the [union leadership] shares that commitment. Nothing will distract us from the task at hand."

Northwest filed its initial reorganization plan Friday but omitted details on how it plans to finance its emergence from bankruptcy this spring, and won the judge's permission to delay filing a more detailed disclosure statement until mid-February.



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