Comair Inc., a unit of Delta Air Lines Inc., on Monday asked a New York bankruptcy court to let it toss out contracts with its 970 flight attendants as part of an effort to cut $42 million in annual costs the regional carrier says it needs to climb out of bankruptcy.
Without the cuts, Comair warned it would have to cease operations.
Comair, based in Erlanger, Ky, near Cincinnati, filed for bankruptcy protection on Sept. 14, the same day that Delta filed for protection from its creditors under Chapter 11 of the bankruptcy laws. Comair is asking its flight attendants for $8.9 million in wage and benefits cost cuts.
The carrier has already reached an agreement with its pilots for $17.3 million in cost cuts and for $1 million from its mechanics.
A failure to get cost reductions from flight attendants would jeopardize the agreements with Comair's mechanic and pilot unions because these agreements are contingent on the carrier reaching a similar pact with the flight attendants.
Comair told the bankruptcy court that a failure to cut costs may prompt Delta, its only customer, to no longer use it as a regional carrier. Comair flights carry passengers between Delta's hub airports and smaller market airports.
"Every day that passes is crucial," said Robert Span, an attorney for Comair. "This is a brutally competitive industry ... Comair must lower its controllable costs," he said.
He told Judge Adlai Hardin that Comair "must reduce its controllable costs to be competitive, or it must close up shop."
Hardin is also overseeing Delta's bankruptcy case.
The flight attendants, meanwhile, have threatened to strike over Comair's motion to do away with their contracts.
"We just had a strike vote on Friday with a 93 percent 'yes' vote in favor of a strike which indicates that the people are committed to fighting the disparity of this demand," Victoria Grey, a spokeswoman for the flight attendants union, told The Associated Press.
Grey said the vote gave the union's executive board the authority to call a strike. The union is local 513 of the International Brotherhood of Teamsters.
Comair was acquired by Atlanta-based Delta in 2000. The company filed its request to toss out its employee contracts in February. The judge has until April 10 to rule, although that could be extended.
The regional carrier has met with its flight attendants for two rounds of discussions since February on the cuts in wages and benefits. The carrier's attorney said Comair wants to reach an agreement even as it asks for court approval to dump the contracts.
Comair has cut as many as 1,000 people that included unionized workers to reduce costs.
Delta's chief financial officer, Edward Bastian, meanwhile, said Delta may look to "monetize" its investment in Comair, meaning sell it outright or take the regional carrier public through an initial public offering.
Bastian testified on behalf of Comair on Monday.
Speaking to reporters after his testimony, Bastian said Comair has to return to profitability before Delta would consider spinning off the company. "Comair needs to fix itself. Comair needs to be restructured" before any possible sale, Bastian said.
He added that Delta is still looking to emerge from bankruptcy in the first half of 2007.
In closing the first day of hearings devoted to the motion, Judge Hardin suggested that the two sides should come to an agreement.
"What is coming through to me ... is a sense of wonderment that either side would have the slightest interest in having the court decide this motion," Hardin said.
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