Panel Scolds Delta, Pilots; 'This is Your Mess. You Fix It,' Arbitrator Says

Washington --- Calling the past two weeks of hearings a "shameful exercise," an arbitrator in the contract dispute between Delta Air Lines and its pilots told both sides to immediately resume talks on a consensual deal rather than make his panel hand down a decision.

"You both got us here, this is your mess, you fix it," arbitrator Richard Bloch said in a scathing conclusion to the hearings, which wound up Thursday. "Because, unlike us, when you go home, you're going to have to live with this."

Bloch said the two sides should start talks "today, tonight" toward reaching a deal before his panel's April 15 deadline for ruling on whether Delta can void the pilot contract and impose more than $300 million in annual cost cuts. Pilot union leaders have said they expect a strike if the airline imposes terms.

Bloch said the three-man panel will issue a ruling if it must, but he told the two sides that would amount to an "abandonment of responsibility that will and should haunt all of you."

Reading from a statement on behalf of the panel, Bloch quoted a hearing witness who said leadership means not being able to "unvolunteer" in a crisis. He added that "if the parties here allow us to write this opinion, you both will not only have unvolunteered, you will have bailed out."

Delta and the Air Line Pilots Association submitted their dispute to the arbitration panel after failing to meet a March 1 deadline for a new long-term contract agreement. ALPA is offering about $140 million worth of cuts, less than half of what Delta says is needed for its Chapter 11 recovery plan to work.

Despite missing the March 1 deadline, nothing has prevented Delta and ALPA from continuing talks.

"This is a shameful exercise by two groups who, it appears, have bargained successfully in fat times," Bloch said. "But in hard times the talk turns to nuclear options --- shredding the labor agreement, eviscerating pensions, striking the company and generally taking actions that challenge ... a 65-year relationship."

Over the past two weeks, lawyers and representatives argued for the two sides' respective positions. ALPA says Delta's demands are too high and unfair; Delta says they are fair and critical to its recovery.

Bloch said the panel members saw "real flaws, oversights, exaggerations and shortcomings" in both sides' arguments. If forced to decide the case, he said, "we'll be choosing the less unpalatable plan."

Bloch said pilots, whose pay rose almost 35 percent from 2000 to 2004, got "an unprecedented, and very rich contract" that was signed just as the airline's financial crisis began in 2001.

He added that "management, too, has done very well for itself," noting the big bonuses and bankruptcy-proof pension trust funds the company gave top executives in 2002, amid losses and job cuts. While those executives have since been largely replaced by new management, he called such perks "both lavish and beyond reason, and, considering their timing, inexplicable."

Despite the withering criticism of both sides, Bloch said his remarks were "not intended to disparage," and he offered the arbitrators' help in forging a deal.

To prod progress, he told the parties to submit confidential progress reports on April 3 and 7.

"You need to get back to your committees. You need to get down to it now, privately," he said.

ALPA Chairman Lee Moak said afterward that "the ball is in the company's court. It takes two parties to negotiate, and they haven't negotiated to this point. We'll see if the panel's words can bring them to the table willing to negotiate in good faith."

A quick return to negotiations "is certainly the company's hope and expectation," said Delta financial chief Ed Bastian. "I would expect there to be talks as the panel suggested ... as soon as we can organize them."